EXHIBIT 99.1
CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
DEUTSCHE BANK AG,
DEUTSCHE ACQUISITION CORP.
and
NATIONAL DISCOUNT BROKERS GROUP, INC.
Dated as of October 11, 2000
TABLE OF CONTENTS
ARTICLE I THE OFFER
Section 1.01 The Offer........................................................ 1
Section 1.02 Company Actions.................................................. 3
Section 1.03 Stockholder Lists................................................ 3
Section 1.04 Directors........................................................ 4
ARTICLE II THE MERGER
Section 2.01 The Merger....................................................... 5
Section 2.02 Consummation of the Merger....................................... 5
Section 2.03 Effects of the Merger............................................ 5
Section 2.04 Certificate of Incorporation and Bylaws.......................... 5
Section 2.05 Directors and Officers........................................... 5
Section 2.06 Conversion of Shares............................................. 5
Section 2.07 Conversion of Common Stock of Purchaser.......................... 6
Section 2.08 Stockholders' Meeting............................................ 6
Section 2.09 Merger Without Meeting of Stockholders........................... 6
Section 2.10 Withholding Taxes................................................ 6
ARTICLE III DISSENTING SHARES; PAYMENT FOR SHARES; OPTIONS
Section 3.01 Dissenting Shares................................................ 6
Section 3.02 Payment for Shares............................................... 7
Section 3.03 Closing of the Company's Transfer Books.......................... 8
Section 3.04 Existing Stock Options........................................... 8
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.01 Organization and Qualification................................... 9
Section 4.02 Capitalization................................................... 9
Section 4.03 Authority for this Agreement..................................... 11
Section 4.04 Consents and Approvals; No Violation............................. 11
Section 4.05 Reports; Financial Statements.................................... 11
Section 4.06 Absence of Certain Changes....................................... 12
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Section 4.07 Schedule 14D-9; Offer Documents and Proxy Statement.............. 13
Section 4.08 Brokers.......................................................... 14
Section 4.09 Employee Benefit and Labor Matters............................... 14
Section 4.10 Litigation, etc.................................................. 15
Section 4.11 Tax Matters...................................................... 16
Section 4.12 Compliance with Law; No Default.................................. 16
Section 4.13 Environmental Matters............................................ 16
Section 4.14 Intellectual Property............................................ 17
Section 4.15 Real Property.................................................... 19
Section 4.16 Date Compliance.................................................. 19
Section 4.17 Material Contracts............................................... 19
Section 4.18 Related Party Transactions....................................... 20
Section 4.19 State Takeover Statutes Inapplicable............................. 20
Section 4.20 Required Vote of Company Stockholders............................ 20
Section 4.21 Broker-Dealer.................................................... 20
Section 4.22 Employment Agreement of Directors, Officers and Employees........ 21
Section 4.23 Investment Company Act........................................... 21
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND
PURCHASER
Section 5.01 Organization and Qualification................................... 21
Section 5.02 Authority for this Agreement..................................... 21
Section 5.03 Offer Documents; Proxy Statement................................. 22
Section 5.04 Consents and Approvals; No Violation............................. 22
Section 5.05 Operations of Purchaser.......................................... 23
Section 5.06 Brokers.......................................................... 23
Section 5.07 Legal Proceedings................................................ 23
Section 5.08 Financing........................................................ 23
ARTICLE VI COVENANTS
Section 6.01 Conduct of Business of the Company............................... 23
Section 6.02 No Solicitation.................................................. 25
Section 6.03 Access to Information............................................ 27
Section 6.04 Reasonable Best Efforts.......................................... 28
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Section 6.05 Indemnification and Insurance.................................... 28
Section 6.06 Employee Matters................................................. 29
Section 6.07 Takeover Laws.................................................... 30
Section 6.08 Proxy Statement.................................................. 31
Section 6.09 Notification of Certain Matters.................................. 31
Section 6.10 Subsequent Filings............................................... 31
Section 6.11 Press Releases................................................... 31
Section 6.12 Employee Retention Plan and Benefit Continuation................. 31
ARTICLE VII CONDITIONS TO CONSUMMATION OF THE MERGER
Section 7.01 Conditions to Each Party's Obligation to Effect the Merger....... 32
ARTICLE VIII TERMINATION; AMENDMENT; WAIVER
Section 8.01 Termination...................................................... 32
Section 8.02 Effect of Termination............................................ 33
Section 8.03 Fees and Expenses................................................ 34
Section 8.04 Amendment........................................................ 35
Section 8.05 Extension; Waiver; Remedies...................................... 35
ARTICLE IX MISCELLANEOUS
Section 9.01 Nonsurvival of Representations and Warranties.................... 35
Section 9.02 Entire Agreement; Assignment..................................... 35
Section 9.03 Enforcement of the Agreement; Jurisdiction....................... 36
Section 9.04 Validity......................................................... 36
Section 9.05 Notices.......................................................... 36
Section 9.06 Governing Law.................................................... 37
Section 9.07 Descriptive Headings............................................. 37
Section 9.08 Parties in Interest.............................................. 37
Section 9.09 Counterparts..................................................... 38
Section 9.10 Certain Definitions.............................................. 38
Section 9.11 Drafting......................................................... 39
EXHIBIT A........................................................................... A-1
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GLOSSARY OF DEFINED TERMS
-------------------------
DEFINED TERMS DEFINED IN SECTION
------------- ------------------
Acquisition Proposal Section 6.02(f)
Agreement Opening Paragraph
CERCLA Section 4.13
Certificates Section 3.02(b)
Closing Section 2.02
Code Section 2.10
Company Opening Paragraph
Company Intellectual Property Rights Section 4.14(e)
Company Permits Section 4.12
Company SEC Reports Section 4.05(a)
Company Securities Section 4.02(b)
Confidentiality Agreement Section 6.02(a)
Continuing Directors Section 1.04(b)
Copyrights Section 4.14(d)(ii)
Date Compliant Section 4.16
DGCL Recitals
Disclosure Letter Article IV
Dissenting Shares Section 3.01
Effective Time Section 2.02
ERISA Section 4.09(a)
ERISA Affiliate Section 4.09(b)
Exchange Act Section 1.01(a)
Existing Stockholder Agreement Section 1.02(a)
Existing Stock Options Section 3.04
Expiration Date Exhibit A
GAAP Section 4.05(b)
Governmental Entity Section 4.04
HSR Act Section 4.04
Intellectual Property Rights Section 4.14(d)
Knowledge Section 9.10
Material Adverse Effect Section 9.10
Material Contracts Section 4.17
Merger Section 2.01
Merger Agreement Exhibit A
Merger Consideration Section 2.06
Minimum Tender Condition Exhibit A
NASD Section 4.21
Offer Section 1.01(a)
Offer Conditions Section 1.01(a)
Offer Documents Section 1.01(b)
Offer Price Section 1.01(a)
Option Consideration Section 3.04
Parent Opening Paragraph
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Parent Plans Section 6.06(d)
Patents Section 4.14(d)(iii)
Paying Agent Section 3.02(a)
Payment Fund Section 3.02(a)
Person Section 9.10
Plan Section 4.09(a)
Potential Acquiror Section 6.02(b)
Preferred Stock Section 4.02(a)
Preliminary Proxy Statement Section 6.08
Principal Subsidiary Section 4.21
Proxy Statement Section 4.07(b)
Purchaser Opening Paragraph
Real Property Leases Section 4.15(b)
Schedule TO Section 1.01(b)
Schedule 14D-9 Section 1.02(b)
SEC Section 1.01(a)
Securities Act Section 4.05(a)
Shares Section 1.01(a)
Significant Stockholders Recitals
Special Meeting Section 2.08
Software Section 4.14(d)(iv)
Stockholder Tender Agreement Recitals
Stock Option Plans Section 3.04
Subsidiary Section 9.10
Subsidiary Securities Section 4.02(b)
Superior Proposal Section 6.02(f)
Surviving Corporation Section 2.01
Takeover Laws Section 1.02(a)
Tax Section 9.10
Tax Return Section 9.10
Termination Fee Section 8.03(b)
Trademarks Section 4.14(d)(i)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of
October 11, 2000, by and among Deutsche Bank AG, an AKTIENGESELLSCHAFT organized
and existing under the laws of the Federal Republic of Germany ("PARENT"),
Deutsche Acquisition Corp., a Delaware corporation and a wholly owned subsidiary
of Parent ("PURCHASER"), and National Discount Brokers Group, Inc., a Delaware
corporation (the "COMPANY").
RECITALS
WHEREAS, each of Parent, by action of its Management Board
(VORSTAND), and the Board of Directors of each of Purchaser and the Company has
determined that this Agreement and the transactions contemplated hereby,
including the Merger (as defined in Section 2.01), are advisable and fair to,
and in the best interests of, its respective stockholders;
WHEREAS, the Board of Directors of the Company has adopted
resolutions approving the acquisition of the Company by Parent, this Agreement
and the transactions contemplated hereby and by the Stockholder Tender Agreement
(as defined below), and has agreed to recommend that the Company's stockholders
approve the agreement of merger (as such term is used in Section 251 of the
General Corporation Law of the State of Delaware (the "DGCL")) contained in this
Agreement and the transactions contemplated hereby and tender their Shares (as
defined in Section 1.01) in the Offer (as defined in Section 1.01);
WHEREAS, concurrently with the execution hereof and in order
to induce Parent and Purchaser to enter into this Agreement, Purchaser is
entering into a Stockholder Tender Agreement dated as of the date hereof (the
"STOCKHOLDER TENDER AGREEMENT") with the stockholders of the Company named
therein (the "SIGNIFICANT STOCKHOLDERS") under which each such stockholder is,
among other things, agreeing to tender all of such stockholder's Shares in the
Offer upon the terms and conditions specified therein; and
WHEREAS, Parent, Purchaser and the Company desire to make
certain representations, warranties, covenants and agreements in connection with
this Agreement;
NOW THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements set forth herein, and intending to be
legally bound hereby, the parties hereto agree as follows:
ARTICLE I
THE OFFER
Section 1.01 THE OFFER. (a) (i) Provided that this Agreement
shall not have been terminated in accordance with Section 8.01 and that none of
the events set forth in clause (iii) of Exhibit A hereto shall have occurred or
be existing, Purchaser shall, and Parent shall cause Purchaser to, as promptly
as practicable (but in no event later than seven business days following the
public announcement of the terms of this Agreement) commence (within the meaning
of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT")) an offer to purchase all outstanding shares of common stock of
the Company, par value $.01 per
share (the "SHARES"), at a price (such price, or any higher price as may be paid
in the Offer, the "OFFER PRICE") of $49.00 per Share, net to the seller in cash
(the "OFFER"). The obligation of Purchaser to consummate the Offer and to accept
for payment and to pay for any Shares tendered pursuant thereto shall be subject
to only those conditions set forth in Exhibit A hereto (the "OFFER CONDITIONS"),
any of which may be waived by Purchaser in its sole discretion; provided that
the Minimum Tender Condition (as defined in Exhibit A) may not be waived without
the prior written consent of the Company. The initial expiration date of the
Offer shall be the twentieth business day following the commencement of the
Offer (determined in accordance with Rule 14d-1(e)(6) under the Exchange Act).
Purchaser expressly reserves the right to modify the terms of the Offer, except
that, without the prior written consent of the Company, Purchaser shall not (A)
decrease or change the form of the 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, it being
agreed that neither a waiver by Purchaser of any of the Offer Conditions (other
than the Minimum Tender Condition) in whole or in part at any time in its
discretion, nor the extension of the Offer as permitted below, shall be deemed
to be adverse to the holders of Shares, or (E) except as provided below, extend
the Offer beyond any scheduled Expiration Date.
(ii) Subject to the terms and conditions of this Agreement and
to the satisfaction or waiver of the Offer Conditions as of any scheduled
expiration of the initial offering period of the Offer, Purchaser shall accept
for payment and pay for Shares validly tendered and not withdrawn pursuant to
the Offer as soon as practicable after such scheduled expiration.
Notwithstanding the foregoing, Purchaser may, without the consent of the
Company, (A) extend the offering period of the Offer at any time or from time to
time not to exceed ten business days in the aggregate beyond the scheduled
expiration of the initial offering period, (B) extend the Offer for any period
required by any regulation, interpretation or position of the Securities and
Exchange Commission (the "SEC") or the staff thereof applicable to the Offer or
(C) elect to provide a subsequent offering period for the Offer in accordance
with Rule 14d-11 under 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 in each case without the consent of the Company.
(b) On the date of commencement of the Offer, Parent and
Purchaser shall file or cause to be filed with the SEC a Tender Offer Statement
on Schedule TO (together with all amendments and supplements thereto, the
"SCHEDULE TO") with respect to the Offer which shall contain (including as an
exhibit) or incorporate by reference the offer to purchase and related letter of
transmittal and other ancillary Offer documents and instruments pursuant to
which the Offer will be made (collectively with any supplements or amendments
thereto, the "OFFER DOCUMENTS"). The Company and its counsel shall be given a
reasonable opportunity to review and comment on the Offer Documents prior to
their filing with the SEC. Parent and Purchaser agree to provide the Company
with, and to consult with the Company regarding, any comments that may be
received from the SEC or its staff with respect to the Offer Documents promptly
after receipt thereof. Parent, Purchaser and the Company each agrees promptly to
correct any information provided by it for use in the Offer Documents if and to
the extent that it shall have become false or misleading in any material respect
and Parent and Purchaser further agree to take all steps necessary to cause the
Offer Documents as so corrected to be filed with the SEC
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and be disseminated to holders of Shares, in each case, as and to the extent
required by applicable law.
Section 1.02 COMPANY ACTIONS. (a) The Company hereby consents
to the Offer and represents and warrants that (i) the making of any offer and
proposal and the taking of any other action by Parent or Purchaser pursuant to
this Agreement, the Stockholder Tender Agreement and the transactions
contemplated hereby and thereby have been consented to by the Board of Directors
of the Company in accordance with the terms and provisions of the Stockholder
Agreement, dated as of June 15, 2000, between Parent and the Company (the
"EXISTING STOCKHOLDER AGREEMENT"), (ii) its Board of Directors (at a meeting or
meetings duly called and held prior to the date hereof) has (A) determined that
the Offer and the Merger (as hereinafter defined) are advisable and fair to and
in the best interests of, the stockholders of the Company (other than Parent 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 this Agreement by the stockholders
of the Company, provided, however, that such recommendation may be withdrawn,
modified or amended as provided in Section 6.02, (C) irrevocably taken all
necessary steps to render Section 203 of the DGCL inapplicable to Parent 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 this Agreement or the
Stockholder Tender Agreement and (iii) U.S. Bancorp Xxxxx Xxxxxxx Inc., one of
the Company's independent financial advisors, has advised the Company's Board of
Directors that, in its opinion, the consideration to be paid in the Offer and
the Merger to the Company's stockholders is fair, from a financial point of
view, to such stockholders (other than Parent or any of its wholly owned
Subsidiaries).
(b) Upon commencement of the Offer, the Company shall file
with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 (together
with all amendments and supplements thereto, the "SCHEDULE 14D-9") containing
the recommendations of its Board of Directors described in Section 1.02(a) and
hereby consents to the inclusion of such recommendations in the Offer Documents
and to the inclusion of a copy of the Schedule 14D-9 with the Offer Documents
mailed or furnished to the Company's stockholders. Parent, Purchaser and their
counsel shall be given a reasonable opportunity to review and comment on the
Schedule 14D-9 prior to its filing with the SEC. The Company agrees to provide
Parent and Purchaser with, and to consult with Parent and Purchaser regarding,
any comments that may be received from the SEC or its staff with respect to the
Schedule 14D-9 promptly upon receipt thereof. Parent, Purchaser and the Company
each agrees promptly to correct any information provided by it for use in the
Schedule 14D-9 if and to the extent that it shall have become false or
misleading in any material respect and the Company further agree to take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the
SEC and be disseminated to holders of Shares, in each case, as and to the extent
required by applicable law.
Section 1.03 STOCKHOLDER LISTS. In connection with the Offer,
the Company shall promptly furnish Parent and Purchaser with mailing labels,
security position listings and any available listing or computer file containing
the names and addresses of the record holders of the
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Shares as of the latest practicable date and shall furnish Parent and Purchaser
with such information and assistance (including periodic updates of such
information) as Parent or Purchaser or their agents may reasonably request in
communicating the Offer to the record and beneficial holders of the Shares.
Information obtained by Parent or Purchaser pursuant to this Section 1.03 shall
be subject to the provisions of the Confidentiality Agreement (as defined below
in Section 6.02(a)), the terms of which are incorporated herein by reference.
Section 1.04 DIRECTORS. (a) Promptly upon the purchase by
Purchaser pursuant to the Offer or otherwise of such number of Shares as
represents at least a majority of the outstanding Shares, and from time to time
thereafter, Purchaser shall be entitled to designate such number of directors,
rounded up to the next whole number, on the Board of Directors of the Company as
will give Purchaser representation on the Board of Directors of the Company
equal to the product of the number of directors on the Board of Directors of the
Company and the percentage that such number of Shares so purchased bears to the
number of Shares outstanding, and the Company shall, upon request by Purchaser,
promptly increase the size of the Board of Directors of the Company or use its
best efforts to secure the resignations of such number of directors as is
necessary to provide Purchaser with such level of representation and shall cause
Purchaser's designees to be so elected. The Company 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 the Company to be on (i)
each committee of the Board of Directors of the Company and (ii) each Board of
Directors and each committee thereof of each Subsidiary of the Company. The
Company's obligations to appoint designees to its Board of Directors shall be
subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder and applicable law. At the request of Purchaser, the Company shall
take all actions necessary to effect any such election or appointment of
Purchaser's designees, including mailing to its stockholders the information
required by Section 14(f) of the Exchange Act and Rule 14f-l promulgated
thereunder which, unless Purchaser otherwise elects, shall be so mailed together
with the Schedule 14D-9. Parent and Purchaser will supply to the Company all
information with respect to themselves and their respective officers, directors
and affiliates required by such Section and Rule.
(b) Following the election or appointment of Purchaser's
designees pursuant to Section 1.04(a) and prior to the Effective Time (as
defined below), and so long as there shall be at least one Continuing Director
(as defined below), any amendment of this Agreement requiring action by the
Board of Directors of the Company, any extension of time for the performance of
any of the obligations or other acts of Parent or Purchaser under this Agreement
and any consent pursuant to or waiver of compliance with any of the agreements
or conditions under this Agreement for the benefit of the Company will require
the concurrence of a majority of the directors of the Company then in office who
are directors of the Company on the date hereof (the "CONTINUING DIRECTORS").
The Continuing Directors shall have the authority to retain such counsel and
other advisors at the expense of the Company as are reasonably required in
connection with the exercise of their duties, and shall have the authority to
institute any action, on behalf of the Company to enforce performance of this
Agreement.
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ARTICLE II
THE MERGER
Section 2.01 THE MERGER. Upon the terms and subject to the
conditions hereof, and in accordance with the relevant provisions of the DGCL,
Purchaser shall be merged with and into the Company (the "MERGER") as soon as
practicable following the satisfaction or waiver, if permissible, of the
conditions set forth in Article VII hereof. The Company shall be the surviving
corporation in the Merger (the "SURVIVING CORPORATION") and shall continue its
existence under the laws of Delaware. In connection with the Merger, the
separate corporate existence of Purchaser shall cease.
Section 2.02 CONSUMMATION OF THE MERGER. Subject to the
provisions of this Agreement, Purchaser and the Company shall cause the Merger
to be consummated by filing with the Secretary of State of the State of Delaware
a duly executed certificate of merger, as required by the DGCL, and shall take
all such other and further actions as may be required by law to make the Merger
effective. Prior to the filing referred to in this Section, a closing (the
"CLOSING") will be held at the offices of Xxxxxx, Xxxxx & Xxxxxxx LLP, 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx (or such other place as the parties may agree) for
the purpose of confirming all the matters contained herein. The time the Merger
becomes effective in accordance with applicable law is referred to as the
"EFFECTIVE TIME."
Section 2.03 EFFECTS OF THE MERGER. The Merger shall have the
effects set forth herein and in the applicable provisions of the DGCL.
Section 2.04 CERTIFICATE OF INCORPORATION AND BYLAWS. The
Certificate of Incorporation of the Company, as in effect immediately prior to
the Effective Time, shall be the Certificate of Incorporation of the Surviving
Corporation. The Bylaws of Purchaser as in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation.
Section 2.05 DIRECTORS AND OFFICERS. The directors of
Purchaser immediately prior to the Effective Time and the officers of the
Company immediately prior to the Effective Time shall be the directors and
officers, respectively, of the Surviving Corporation until their respective
death, permanent disability, resignation or removal or until their respective
successors are duly elected and qualified.
Section 2.06 CONVERSION OF SHARES. Each Share issued and
outstanding immediately prior to the Effective Time (other than Shares owned by
Parent, Purchaser or any Subsidiary of Parent, Purchaser or the Company or held
in the treasury of the Company, all of which shall be canceled without any
consideration being exchanged therefor, and other than Dissenting Shares, as
defined in Section 3.01 hereof) shall, 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 specified in Section 2.10 hereof) equal to the Offer Price,
without interest (the "MERGER CONSIDERATION"), upon the surrender of the
certificate representing such Shares as provided in Section 3.02. At the
Effective Time, each Existing Stock Option (as defined in Section 3.04) shall be
converted into
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the right to receive the Option Consideration (as defined in Section 3.04)
pursuant to Section 3.04 hereof.
Section 2.07 CONVERSION OF COMMON STOCK OF PURCHASER. Each
share of common stock, no par value, of Purchaser issued and outstanding
immediately prior to the Effective Time shall, 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.
Section 2.08 STOCKHOLDERS' MEETING. Unless the Merger is
consummated in accordance with Section 253 of the DGCL as contemplated by
Section 2.09, and subject to applicable law, the Company, acting through its
Board of Directors, shall, in accordance with applicable law, duly call, give
notice of, convene and hold a special meeting (the "SPECIAL MEETING") of its
stockholders as soon as practicable following the consummation of the Offer for
the purpose of approving and adopting the agreement of merger (within the
meaning of Section 251 of the DGCL) set forth in this Agreement; and include in
the Proxy Statement (as defined in Section 4.07(b)) the recommendation of its
Board of Directors that stockholders of the Company vote in favor of the
adoption of the agreement of merger set forth in this Agreement. Parent and
Purchaser each agree that, at the Special Meeting, all of the Shares acquired
pursuant to the Offer or otherwise owned or acquired by Parent or Purchaser or
any of their affiliates will be voted in favor of the Merger.
Section 2.09 MERGER WITHOUT MEETING OF STOCKHOLDERS. If
Purchaser, or any other direct or indirect Subsidiary (as defined in Section
9.10) of Parent, shall hold at least 90 percent of the outstanding shares of
each class of capital stock of the Company entitled to vote on the Merger, each
of Parent, Purchaser and the Company shall 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 stockholders of the Company, in
accordance with Section 253 of the DGCL.
Section 2.10 WITHHOLDING TAXES. Parent, Purchaser and the
Surviving Corporation shall be entitled to deduct and withhold from the
consideration otherwise payable to a holder of Shares pursuant to the Offer or
the Merger any amounts that are required to be withheld under the Internal
Revenue Code of 1986, as amended (the "CODE"), or any applicable provision of
state, local or foreign tax law. To the extent that amounts are so withheld,
such withheld amounts shall be treated for all purposes of this Agreement and
the Offer as having been paid to the holder of the Shares in respect of which
such deduction and withholding was made.
ARTICLE III
DISSENTING SHARES; PAYMENT FOR SHARES; OPTIONS
Section 3.01 DISSENTING SHARES. Notwithstanding anything in
this Agreement to the contrary, Shares which are issued and outstanding
immediately prior to the Effective Time and which are held by stockholders who
exercise appraisal rights available under Section 262 of the DGCL (the
"DISSENTING SHARES") shall not be converted into or be exchangeable for the
right to receive the Merger Consideration, unless and until such holders shall
have failed to perfect or
6
shall have effectively withdrawn or lost their rights to appraisal under the
DGCL. Dissenting Shares shall be treated in accordance with Section 262 of the
DGCL. If any such holder shall have failed to perfect or shall have effectively
withdrawn or lost such right to appraisal, such holder's Shares shall thereupon
be converted into and become exchangeable only for the right to receive, as of
the Effective Time, the Merger Consideration without any interest thereon. The
Company shall give Parent and Purchaser (a) prompt notice of any written demands
for appraisal of any Shares, attempted withdrawals of such demands, and any
other instruments served pursuant to the DGCL and received by the Company
relating to rights to be paid the "fair value" of Dissenting Shares, as provided
in Section 262 of the DGCL and (b) the opportunity to direct all negotiations
and proceedings with respect to demands for appraisal under the DGCL. The
Company shall not, except with the prior written consent of Parent, voluntarily
make any payment with respect to any demands for appraisals of capital stock of
the Company, offer to settle or settle any demands or approve any withdrawal of
any such demands.
Section 3.02 PAYMENT FOR SHARES. (a) Promptly following the
Effective Time, Parent will cause Purchaser to make available to a bank or trust
company designated by Parent (the "PAYING AGENT") sufficient funds to make the
payments pursuant to Section 2.06 hereof on a timely basis to holders (other
than Parent or Purchaser or any of their respective Subsidiaries) of Shares that
are issued and outstanding immediately prior to the Effective Time (such amounts
being hereinafter referred to as the "PAYMENT FUND"). The Paying Agent shall,
pursuant to irrevocable instructions, make the payments provided for in the
preceding sentence out of the Payment Fund. The Payment Fund shall be invested
by the Paying Agent as directed by Purchaser in direct obligations of the United
States, obligations for which the full faith and credit of the United States is
pledged to provide for the payment of principal and interest, commercial paper
rated of the highest quality by Xxxxx'x Investors Services, Inc. or Standard &
Poor's Ratings Group or certificates of deposit, bank repurchase agreements or
bankers' acceptances of a commercial bank having at least $1,000,000,000 in
assets and, after the Effective Time, the Surviving Corporation and shall not be
used for any other purpose, except as provided in this Agreement.
(b) As soon as reasonably practicable after the Effective
Time, the Surviving Corporation shall cause the Paying Agent to mail to each
record holder, as of the Effective Time, of an outstanding certificate or
certificates which immediately prior to the Effective Time represented Shares
(the "CERTIFICATES"), a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the Paying Agent) and
instructions for use in effecting the surrender of the Certificate and receiving
payment therefor. Following surrender to the Paying Agent of a Certificate,
together with such letter of transmittal duly executed, the holder of such
Certificate shall be paid in exchange therefor cash in an amount (subject to any
applicable withholding tax as specified in Section 2.10 hereof) equal to the
product of the number of Shares represented by such Certificate multiplied by
the Merger Consideration, and such Certificate shall forthwith be canceled. No
interest will be paid or accrued on the cash payable upon the surrender of the
Certificates. If payment is to be made to a Person (as defined in Section 9.10)
other than the Person in whose name the Certificate surrendered is registered,
it shall be a condition of payment that the Certificate so surrendered shall be
properly endorsed or otherwise in proper form for transfer and that the Person
requesting such payment pay any transfer or other taxes required by reason of
the payment to a Person other than the registered holder of the
7
Certificate surrendered or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. From and after the
Effective Time and until surrendered in accordance with the provisions of this
Section 3.02, each Certificate (other than Certificates representing Shares
owned by Parent or Purchaser or any of their respective Subsidiaries, and
certificates representing Dissenting Shares) shall represent for all purposes
solely the right to receive, in accordance with the terms hereof, the Merger
Consideration in cash multiplied by the number of Shares previously evidenced by
such Certificate, without any interest thereon.
(c) If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such person of a bond in such reasonable
amount as the Surviving Corporation may direct as indemnity against any claim
that may be made against it with respect to such Certificate, the Paying Agent
will deliver in exchange for such lost, stolen or destroyed Certificate the
applicable Merger Consideration with respect to the Shares formerly represented
thereby.
(d) Any portion of the Payment Fund (including the proceeds of
any investments thereof) that remains unclaimed by the former stockholders of
the Company for six months after the Effective Time shall be repaid to the
Surviving Corporation. Any former stockholders of the Company who have not
complied with Section 3.01 hereof prior to the end of such six-month period
shall thereafter look only to the Surviving Corporation (subject to abandoned
property, escheat or other similar laws) but only as general creditors thereof
for payment of their claim for the Merger Consideration, without any interest
thereon. Neither Parent nor the Surviving Corporation shall be liable to any
holder of Shares for any monies delivered from the Payment Fund or otherwise to
a public official pursuant to any applicable abandoned property, escheat or
similar law.
Section 3.03 CLOSING OF THE COMPANY'S TRANSFER BOOKS. At the
Effective Time, the stock transfer books of the Company shall be closed and no
transfer of Shares shall thereafter be made. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be canceled
and exchanged for cash as provided in this Article III, subject to applicable
law in the case of Dissenting Shares.
Section 3.04 EXISTING STOCK OPTIONS. At the Effective Time,
each option to acquire Shares (the "EXISTING STOCK OPTIONS") granted under The
Sherwood Group, Inc. 1995 Stock Option Plan, the National Discount Brokers
Group, Inc. 1999 Non-Qualified Stock Option Plan, as amended, or the 2000
National Discount Brokers Group, Inc. Compensation Plan (collectively, the
"STOCK OPTION PLANS"), whether or not then exercisable or vested, shall by
virtue of the Merger and without any action on the part of the Company but
subject to the written consent of the holder thereof if Parent shall require
such written consent, be converted into and shall 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 Merger Consideration 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 Merger Consideration that are held by employees who
are not listed on Schedule 6.12, the Option Consideration payable in respect of
each Share subject to such Existing Stock Options shall be $2.00. No later than
30
8
days following the Effective Time, each holder of an Existing Stock Option shall
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 (i) the product of (x) the Option Consideration,
multiplied by (y) the number of Shares subject to such Existing Stock Option,
reduced by (ii) all 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 shall
be treated for all purposes of this 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 shall be deemed a release of any and all
rights the holder thereof had or may have had in respect of such Existing Stock
Option. Except as otherwise agreed to by the parties, the Stock Option Plans
shall 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 the Company or
any Subsidiary of the Company shall be canceled as of the Effective Time. At the
request of Parent, the Company shall 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 as provided in this Section 3.04.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
Except as set forth in (i) the Company SEC Reports (as defined
in Section 4.05) filed and available prior to the date of this Agreement or,
(ii) with respect to any Section of this Article IV, as set forth in the section
of the disclosure letter previously delivered by the Company to Parent with
respect to this Agreement (the "DISCLOSURE LETTER") that specifically relates to
such Section, the Company represents and warrants to Parent and Purchaser as
follows:
Section 4.01 ORGANIZATION AND QUALIFICATION. The Company and
each of its Subsidiaries is a duly organized and validly existing corporation,
limited partnership or limited liability company (as the case may be) in good
standing under the laws of its jurisdiction of formation, with all corporate,
limited partnership or limited liability company (as the case may be) power and
authority to own its properties and conduct its business as currently conducted
and is duly licensed or qualified and in good standing as a foreign corporation,
limited partnership or limited liability company (as the case may be) authorized
to do business in each of the jurisdictions in which the character of the
properties owned or held under lease by it or the nature of the business
transacted by it makes such qualification necessary, except where the failure to
be so qualified and in good standing, individually or in the aggregate, would
not have a Material Adverse Effect (as defined in Section 9.10). The Company has
heretofore made available to Parent and Purchaser accurate and complete copies
of the Certificate of Incorporation and Bylaws (or similar governing documents)
as currently in effect of the Company and its Principal Subsidiaries (as defined
in Section 4.21 below). Except for ownership interests acquired in its market
making and retail brokerage businesses in the ordinary course, neither the
Company nor any of its Subsidiaries, directly or indirectly, owns any interest
in any Person other than in the Company's Subsidiaries.
9
Section 4.02 CAPITALIZATION. (a) The authorized capital stock
of the Company consists of 51,000,000 shares, of which 50,000,000 shares are
common stock, par value $.01 per share, and 1,000,000 shares are Preferred
Stock, par value $.01 per share (the "PREFERRED STOCK"). As of the close of
business on the day immediately preceding the date hereof: 21,005,037 Shares
were issued and outstanding, no shares of Preferred Stock were issued and
outstanding and 328,164 Shares were held in the Company's treasury. In addition,
as of such date, there were outstanding Existing Stock Options to purchase an
aggregate of 1,899,551 Shares. Since such date the Company has not issued any
Shares other than upon the exercise of Existing Stock Options outstanding on
such date, has not granted any options, warrants or rights or entered into other
agreements or commitments (except any obligation of the Company under the Stock
Option Plans to accept Shares in connection with the exercise of Existing Stock
Options, including in satisfaction of withholding tax obligations) to purchase
Shares and has not split, combined or reclassified any of its shares of capital
stock. All of the outstanding Shares have been duly authorized and validly
issued and are fully paid and non-assessable and are free of preemptive rights.
Section 4.02(a) of the Disclosure Letter contains a true, accurate and complete
list, as of the date hereof, of the name of each Existing Stock Option holder,
the number of outstanding Existing Stock Options held by such holder, the grant
date of each such Existing Stock Option, the number of Shares such holder is
entitled to receive upon the exercise of each Existing Stock Option and the
corresponding exercise price. Except as disclosed in Section 4.02(a) of the
Disclosure Letter, there are no outstanding (i) securities of the Company
convertible into or exchangeable for shares of capital stock or voting
securities or ownership interests in the Company, (ii) options, warrants, rights
or other agreements or commitments to acquire from the Company, or obligations
of the Company to issue, any capital stock, voting securities or other ownership
interests in (or securities convertible into or exchangeable for capital stock
or voting securities or other ownership interests in) the Company, (iii)
obligations of the Company to grant, extend or enter into any subscription,
warrant, right, convertible or exchangeable security or other similar agreement
or commitment relating to any capital stock, voting securities or other
ownership interests in the Company (the items in clauses (i), (ii) and (iii),
together with the capital stock of the Company, being referred to collectively
as "COMPANY SECURITIES") or (iv) obligations by the Company or any of its
Subsidiaries to make any payments based on the price or value of the Shares.
There are no outstanding obligations of the Company or any of its Subsidiaries
to repurchase, redeem or otherwise acquire any Company Securities. There are no
voting trusts or other agreements or understandings to which the Company or any
of its Subsidiaries is a party with respect to the voting of capital stock of
the Company or any of its Subsidiaries. All of the issued and outstanding shares
of the Company have been offered, issued and sold by the Company in compliance
with applicable federal and state securities laws.
(b) Except for the Existing Stockholder Agreement and as
disclosed in Section 4.02(b) of the Disclosure Letter, the Company or another
Subsidiary of the Company is the record and beneficial owner of all the
outstanding shares of capital stock of each of its Subsidiaries, free and clear
of any lien, mortgage, pledge, charge, security interest or encumbrance of any
kind, and there are no irrevocable proxies with respect to any such shares.
There are no outstanding (i) securities of the Company or any of its
Subsidiaries convertible into or exchangeable for shares of capital stock or
other voting securities or ownership interests in any Subsidiary of the Company,
(ii) options, warrants, rights or other agreements or commitments to acquire
from the Company or any of its Subsidiaries (or obligations of the Company or
any of its Subsidiaries to issue) any capital stock, voting securities or other
10
ownership interests in, or any securities convertible into or exchangeable for
any capital stock, voting securities or ownership interests in, any of its
Subsidiaries, (iii) obligations of the Company or any of its Subsidiaries to
grant, extend or enter into any subscription, warrant, right, convertible or
exchangeable security or other similar agreement or commitment relating to any
capital stock, voting securities or other ownership interests in any of the
Company's Subsidiaries (the items in clauses (i), (ii) and (iii), together with
the capital stock of such Subsidiaries, being referred to collectively as
"SUBSIDIARY SECURITIES") or (iv) obligations of the Company or any of its
Subsidiaries to make any payment based on the value of any shares of any such
Subsidiary. There are no outstanding obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any outstanding
Subsidiary Securities.
(c) Except for the Existing Stockholder Agreement and as
disclosed in the Company SEC Reports, there are no voting trusts, registration
rights agreements or stockholder agreements to which the Company or any
Subsidiary thereof is a party with respect to the voting of the capital stock of
the Company or any Subsidiary thereof or with respect to the granting of
registration rights for any of the capital stock of the Company or any
Subsidiary thereof.
Section 4.03 AUTHORITY FOR THIS AGREEMENT. The Company has all
necessary corporate power and authority to execute and deliver this Agreement
and, subject to obtaining any necessary stockholder approval of the agreement of
merger (as such term is used in Section 251 of the DGCL) contained in this
Agreement, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by the Company and the consummation by the Company of
the transactions contemplated hereby have been duly and validly authorized by
the Board of Directors of the Company and no other corporate proceedings on the
part of the Company are necessary to authorize this Agreement or to consummate
the transactions so contemplated, other than, with respect to the Merger, the
approval and adoption of the agreement of merger (as such term is used in
Section 251 of the DGCL) contained in this 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 Section 253 of the DGCL). This
Agreement has been duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery of this Agreement by
Parent and Purchaser, constitutes a legal, valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms.
Section 4.04 CONSENTS AND APPROVALS; NO VIOLATION. Neither the
execution and delivery of this Agreement by the Company nor the consummation of
the transactions contemplated hereby will (a) conflict with or result in any
breach of any provision of the respective Certificate of Incorporation or Bylaws
(or other similar governing documents) of the Company or any of its
Subsidiaries, (b) require any consent, approval, authorization or permit of, or
filing with or notification to, any foreign, federal, state or local government
or subdivision thereof, or governmental, judicial, legislative, executive,
administrative or regulatory authority, agency, commission, tribunal or body, or
non-governmental regulating body to the extent that the rules, regulations or
orders of such body are binding upon the Company or otherwise have the effect of
law (a "GOVERNMENTAL ENTITY") except as may be required under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), any applicable non-U.S. laws regulating competition or antitrust, the
Exchange Act, the DGCL, the "takeover" or "blue sky" laws of various states and
the applicable provisions of laws relating to the regulation of banks,
11
broker-dealers and investment advisers and the rules and requirements of any
self-regulatory organization, (c) require any consent, waiver or approval or
result in a default (or give rise to any right of termination, cancellation,
modification or acceleration) under any of the terms, conditions or provisions
of any note, license, agreement, contract, indenture or other instrument or
obligation to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries or any of their respective assets
may be bound except for the lease covering 00 Xxxxxxxx Xxxxx, Xxxxxx Xxxx, Xxx
Xxxxxx, (x) result in the creation or imposition of any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind on any asset of the Company
or any of its Subsidiaries or (e) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company or any of its Subsidiaries
or by which any of their respective assets are bound, except in the case of (b),
(c) and (d) for any of the foregoing that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect or a
material adverse effect on the ability of the parties to consummate the Offer or
the Merger.
Section 4.05 REPORTS; FINANCIAL STATEMENTS. (a) Since June 1,
1997, the Company has timely filed all forms, reports and documents required to
be filed by it with the SEC, all of which have complied as of their respective
filing dates in all material respects with all applicable requirements of the
Securities Act of 1933, as amended (the "SECURITIES ACT"), the Exchange Act and
the rules and regulations of the SEC promulgated thereunder. None of the filings
made by the Company with the SEC since such date and prior to the date hereof
(the "COMPANY SEC REPORTS"), including any financial statements or schedules
included or incorporated by reference therein, at the time filed, contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(b) The audited and unaudited consolidated financial
statements of the Company included (or incorporated by reference) in the Company
SEC Reports have been prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis and fairly
present the consolidated financial position of the Company and its Subsidiaries
as of their respective dates, and the consolidated income, stockholders' equity,
results of operations and changes in consolidated financial position or cash
flows for the periods presented therein, except as specifically provided in the
notes thereto and subject, in the case of unaudited statements, to normal
year-end audit adjustments, none of which were, or are anticipated to be,
material.
(c) Except as reflected or reserved against or disclosed in
the financial statements of the Company included in the Company SEC Reports, and
except as incurred in the ordinary course of business consistent with past
practice since May 31, 2000 or in connection with the transactions contemplated
hereby, neither the Company nor any of its Subsidiaries has any liabilities of
any nature, whether accrued, absolute, fixed, contingent or otherwise, whether
due or to become due and whether or not required to be recorded or reflected on
a balance sheet under GAAP. Since May 31, 2000, neither the Company nor any of
its Subsidiaries has incurred any liabilities other than liabilities that (i)
have been incurred in the ordinary course of business consistent with past
practice or in connection with the transactions contemplated hereby and
12
(ii) have not had and are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect.
Section 4.06 ABSENCE OF CERTAIN CHANGES. Except as set forth
in Section 4.06 of the Disclosure Letter, since May 31, 2000, (a) the Company
and its Subsidiaries have not suffered any Material Adverse Effect or any
change, condition, event or development that could reasonably be expected to
have a Material Adverse Effect, (b) the Company and its Subsidiaries have
conducted their respective businesses only in the ordinary course consistent
with past practice, except for the negotiation and execution and delivery of
this Agreement and (c) there has not been (i) any declaration, setting aside or
payment of any dividend or other distribution in respect of the Shares or any
repurchase, redemption or other acquisition by the Company or any of its
Subsidiaries of any outstanding shares of capital stock (except any obligation
of the Company under the Stock Option Plans to accept Shares in connection with
the exercise of Existing Stock Options, including in satisfaction of withholding
tax obligations) or other securities in, or other ownership interests in, the
Company or any of its Subsidiaries or any amendment (or agreement to amend) the
terms of any such shares, securities or ownership interests), (ii) any entry
into any employment, change in control, retention, incentive or deferred
compensation or severance agreement, plan or arrangement with or for the benefit
of, or any increase in the rate or modification in the terms (including any
acceleration of the right to receive or the timing of payment) of any
compensation payable or to become payable by the Company or any of its
Subsidiaries to, any of their respective directors, officers or employees,
except base salary, guaranteed draw or hourly wage increases to employees who
are not members of the executive committee of the Company or directors of the
Company that have been granted in the ordinary course of business in accordance
with its customary past practices, (iii) any increase in the rate of
compensation or benefits payable or accruing under, or, modification of the
terms (including any acceleration of the right to receive payment) of, any
existing Plan (as defined in Section 4.09) (except as disclosed in the Company
SEC Reports) or any adoption or implementation of any new Plan, in any such
case, for or with any such directors, officers or employees, (iv) any action by
the Company which, if taken after the date hereof, would constitute a breach of
any of the clauses of Section 6.01 hereof, (v) any change by the Company in
accounting methods, principles or practices except as required by changes in
GAAP, (vi) any labor dispute or other employment related problem, other than
routine individual grievances, or any activity or proceeding by a labor union or
representative thereof to organize any employees of the Company or any
Subsidiary, which employees were not then subject to a collective bargaining
agreement, or any lockouts, strikes, slowdowns, work stoppages or threats
thereof by or with respect to such employees, (vii) any revaluation by the
Company or any of its Subsidiaries of any of their respective assets, including
write-downs of inventory or of accounts receivable other than in the ordinary
course of business consistent with past practice, (viii) any entry into any
agreement, commitment or transaction by the Company which is material to the
Company and its Subsidiaries taken as a whole or (ix) any commitment to do any
of the foregoing.
Section 4.07 SCHEDULE 14D-9; OFFER DOCUMENTS AND PROXY
STATEMENT.
(a) None of the information supplied or to be supplied by or
on behalf of the Company or any affiliate of the Company for inclusion in the
Offer Documents will, at the times such documents are filed with the SEC and are
mailed to stockholders of the Company, contain
13
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they are made, not misleading, or to
correct any statement made in any communication with respect to the Offer
previously filed with the SEC or disseminated to the stockholders of the
Company. The Schedule 14D-9 will not, at the time the Schedule 14D-9 is filed
with the SEC and at all times prior to the purchase of Shares by Purchaser
pursuant to the Offer, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they are made,
not misleading, except that no representation or warranty is made by the Company
with respect to information supplied in writing by Parent, Purchaser or an
affiliate of Parent or Purchaser expressly for inclusion therein. The Schedule
14D-9 will comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations of the SEC thereunder.
(b) The Proxy Statement (as defined below), and any other
schedule or document required to be filed by the Company in connection with the
Merger, will not, at the date of filing with the SEC, at the time the Proxy
Statement is first mailed and at the time of the Special Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they are made, not misleading, or to correct any
statement made in any earlier communication with respect to the solicitation of
any proxy or approval for the Merger in connection with which the Proxy
Statement shall be mailed, except that no representation or warranty is made by
the Company with respect to information supplied in writing by Parent, Purchaser
or an affiliate of Parent or Purchaser expressly for inclusion therein. The
Proxy Statement will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations of the SEC
promulgated thereunder. The letter to stockholders, notice of meeting, proxy
statement and form of proxy, or the information statement, as the case may be,
that may be provided to stockholders of the Company in connection with the
Merger (including any amendments or supplements), and any schedules required to
be filed with the SEC in connection therewith, as from time to time amended or
supplemented, are collectively referred to as the "PROXY STATEMENT."
Section 4.08 BROKERS. No Person or entity (other than the
financial advisors identified to Purchaser, a true and complete copy of each of
whose engagement letters as in effect has been furnished to Parent and
Purchaser) is entitled to receive any brokerage, finder's or other fee or
commission in connection with this Agreement or the transactions contemplated
hereby based upon agreements made by or on behalf of the Company, any of its
Subsidiaries or any of their respective officers, directors or employees.
Section 4.09 EMPLOYEE BENEFIT AND LABOR MATTERS. (a) Except as
disclosed in the Company SEC Reports, neither the Company nor any of its
Subsidiaries is a party to, maintains or contributes to, has any obligation to
contribute to or has any liability (including a liability arising out of an
indemnification, guarantee, hold harmless or similar agreement, any statutory
joint and several liability obligation and any contingent liability) in respect
of any "employee benefit plan" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or any employment,
consulting, severance, termination, change in control, retention, incentive or
deferred compensation, bonus, stock option or other
14
equity based, fringe benefit or other employee benefit plan, program,
arrangement, agreement or commitment (individually, a "PLAN," or collectively,
the "PLANS"). No Plan is (i) a "multiemployer plan" (within the meaning of
Section 3(37) or Section 4001(a)(3) of ERISA) or (ii) subject to Section 302 or
Title IV of ERISA or Section 412 of the Code.
(b) No event, transaction or condition has occurred or exists
or is reasonably likely to occur or exist as a result of which any of the
Company, any of its Subsidiaries or any other Person that would be treated as a
single employer with the Company or any of its Subsidiaries pursuant to Section
414 of the Code as of any date of determination within the preceding six years
(any such Person, an "ERISA AFFILIATE") has incurred or is reasonably likely to
incur any liability (including any liability arising out of an indemnification,
guarantee, hold harmless or similar agreement, any statutory joint and several
liability obligation and any contingent liability) pursuant to Title I or IV of
ERISA, any penalty or excise tax provisions of the Code relating to employee
benefit plans or any similar provision of any laws or regulations of a non-U.S.
jurisdiction, except for any such liability that, individually and in the
aggregate, has not had and could not reasonably be expected to have a Material
Adverse Effect. No Plan is under audit or is subject of an investigation by the
Internal Revenue Service, the U.S. Department of Labor or any other Governmental
Entity.
(c) With respect to each Plan, (i) all contributions required
to have been made in respect of each such Plan pursuant to applicable law or the
terms of any applicable agreement have been timely made and all other material
contributions, payments, premium amounts and expenses in respect of each such
Plan have been paid or adequately accrued as liabilities of the Company and its
Subsidiaries in the financial statements of the Company included in the Company
SEC Reports or have accrued or been incurred since May 31, 2000 in the ordinary
course of business, consistent with past practice, (ii) each such Plan which is
intended to qualify under Section 401 of the Code has received a favorable
determination letter from the Internal Revenue Service with respect to such
qualification and nothing has occurred since the date of such letter that has
adversely affected or is likely to adversely affect such qualification, (iii)
there are no actions, suits or claims pending (other than routine claims for
benefits) or, to the Knowledge of the Company, threatened in respect of any such
Plan or against the assets of such Plan, and (iv) such Plan has been operated
and administered in compliance with its terms and all applicable laws and
regulations, other than in the case of clause (iii), any such actions, suits or
claims or in the case of clause (iv), any noncompliance that has not had and is
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect.
(d) Except as disclosed in the Company SEC Reports, the
consummation of the transactions contemplated by this Agreement (either alone or
together with any other event) will not (i) entitle any officer, director or
employee of the Company or any of its Subsidiaries to any increased or
additional compensation or benefit, (ii) accelerate the time of payment
(including the transfer of any property), vesting or funding of any compensation
or benefits payable in respect of any officer, director or employee of the
Company or any of its Subsidiaries or (iii) give rise to the payment of any
amount (including the transfer of any property but not including any amount
attributable to the acceleration of the vesting of the Existing Stock Options)
that could be treated as an "excess parachute payment" under Section 280G of the
Code.
15
(e) Neither the Company nor any of its Subsidiaries is a party
to any collective bargaining agreement or other agreement or understanding with
a labor union or labor organization. There are no labor unions or other
organizations representing, purporting to represent or attempting to represent,
any employee of the Company or any of its Subsidiaries.
(f) Neither the Company nor any of its Subsidiaries has
violated any provision of any applicable law, rule or regulation, or any order,
ruling, decree, judgment or arbitration award of any court, arbitrator or
Governmental Entity regarding the terms and conditions of employment or of
termination of employment of employees, former employees or prospective
employees or other labor related matters, including such laws, rules,
regulations, orders, rulings, decrees, judgments and awards relating to wages,
hours, civil rights, discrimination, fair labor standards, occupational health
and safety, wrongful discharge or violation of the personal rights of employees,
former employees or prospective employees, other than any such violation which
has not had and is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect.
Section 4.10 LITIGATION, ETC. Except as disclosed in the
Company SEC Reports or in Section 4.10 of the Disclosure Letter, there is no
claim, action, suit, proceeding or governmental investigation pending or, to the
Knowledge of the Company, threatened against or relating to the Company or any
of its Subsidiaries that, if adversely determined, could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect or that in
any manner challenges or seeks to prevent, enjoin, alter or materially delay the
Offer or the Merger or any of the other transactions contemplated hereby. Except
as set forth in Section 4.10 of the Disclosure Letter, neither the Company nor
any Subsidiary of the Company is subject to any outstanding order, writ,
injunction or decree that, individually or in the aggregate, has had or could
reasonably be expected to have a Material Adverse Effect.
Section 4.11 TAX MATTERS. The Company and each of its
Subsidiaries have filed all material Tax Returns (as defined in Section 9.10)
(including statements of estimated Taxes (as defined in Section 9.10) owed)
required to be filed within the applicable periods for such filings (taking into
account any extensions) and have paid all Taxes required to be paid as indicated
by the applicable Tax Return. All such Tax Returns are true, correct and
complete, except where the failure to be true, correct and complete in the
aggregate would not be likely to have a Material Adverse Effect. The Company and
each of its Subsidiaries have filed all other Tax Returns required to be filed
within the applicable periods for such filing (taking into account any
extensions) and have paid all amounts due with respect to Taxes (regardless of
whether such amounts are shown on a Tax Return), except to the extent that the
failure to file such Tax Returns or pay such Taxes would not in the aggregate be
likely to have a Material Adverse Effect. All Tax liabilities of the Company and
its Subsidiaries have been adequately provided for in the consolidated financial
statements of the Company in accordance with GAAP consistently applied by the
Company.
Section 4.12 COMPLIANCE WITH LAW; NO DEFAULT. Neither the
Company nor any of its Subsidiaries is in conflict with, in default with respect
to or in violation of, (a) any statute, law, ordinance, rule, regulation, order,
judgment or decree applicable to the Company or any of its Subsidiaries or by
which any property or asset of the Company or any of its Subsidiaries is bound
or affected or (b) any note, bond, mortgage, indenture, contract, agreement,
lease, license,
16
permit, franchise or other instrument or obligation to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries, or any property or asset of the Company or any of its
Subsidiaries, is bound or affected, in each case except for any such conflicts,
defaults or violations that have not had and are not reasonably expected to have
a Material Adverse Effect or a material adverse effect on the ability of the
parties to consummate the Offer or the Merger. The Company and its Subsidiaries
have all permits, licenses, authorizations, consents, approvals and franchises
from Governmental Entities required to conduct their businesses as currently
conducted (the "COMPANY PERMITS"), except for such permits, licenses,
authorizations, consents, approvals and franchises the absence of which,
individually or in the aggregate, have not had and are not reasonably expected
to have a Material Adverse Effect or a material adverse effect on the ability of
the parties to consummate the Offer or the Merger. The Company and its
Subsidiaries are in compliance with the terms of the Company Permits, except
where the failure so to comply in the aggregate has not had and is not
reasonably expected to have a Material Adverse Effect or a material adverse
effect on the ability of the parties to consummate the Offer or the Merger.
Section 4.13 ENVIRONMENTAL MATTERS. There are no legal,
administrative, arbitral or other proceedings, claims, actions, causes of
action, private environmental investigations or remediation activities or
governmental investigations of any nature seeking to impose, or that could
reasonably result in the imposition, on the Company or any of its Subsidiaries,
of any liability or obligation arising under common law or under any local,
state or federal environmental statute, regulation or ordinance including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), pending or threatened against the
Company or any of its Subsidiaries. There is no reasonable basis for any such
proceeding, claim, action or governmental investigation that would impose any
liability or obligation.
Section 4.14 INTELLECTUAL PROPERTY. (a) Except as would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect:
(i) With respect to each of the Company Intellectual Property
Rights, the Company and its Subsidiaries at and immediately following the
Effective Time will either (x) be the sole and exclusive owners of the Company
Intellectual Property Rights free and clear of any royalty or other payment
obligation, lien or charge or (y) have sufficient rights to use such Company
Intellectual Property Rights in the conduct of the business of the Company and
its Subsidiaries as such business is currently conducted or is proposed by the
Company or its Subsidiaries to be conducted, under a valid and enforceable
license agreement.
(ii) (x) The Company Intellectual Property Rights are valid
and enforceable, (y) the Company Intellectual Property Rights and the products
and services of the Company and its Subsidiaries do not infringe on Intellectual
Property Rights of any person or entity and (z) all maintenance taxes, annuities
and renewal fees have been paid with respect to the Company Intellectual
Property Rights owned by the Company or any of its Subsidiaries, and all other
necessary actions to maintain the Company Intellectual Property Rights have been
taken through the date hereof and will continue to be paid or taken by the
Company or its Subsidiaries through the Effective Time.
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(iii) The Company and its Subsidiaries have taken reasonable
steps to protect the Company Intellectual Property Rights and, where applicable,
to preserve the confidentiality of the Company Intellectual Property Rights.
(iv) Neither the Company nor any of its Subsidiaries has received
any notice of claim that any of the Company Intellectual Property Rights is
expired, is not valid or enforceable in any country or that it infringes upon or
conflicts with Intellectual Property Rights of any third party, and no
litigation with respect thereto to which the Company or any of its Subsidiaries
is a party currently exists.
(v) During the two-year period immediately preceding the date of
this Agreement, neither the Company nor any of its Subsidiaries has given any
written notice of infringement to any third party with respect to any of the
Company Intellectual Property Rights, nor does the Company have any Knowledge of
the infringement by any third party of any of the Company Intellectual Property
Rights, and no litigation with respect to any such alleged infringement to which
the Company or any of its Subsidiaries is a party currently exists.
(vi) To the extent customary and appropriate, certificates of
registration and renewal, letter patents and copyright registration certificates
and all other instruments evidencing ownership of the Company Intellectual
Property Rights owned by the Company or its Subsidiaries are in the possession
or control of the Company or its Subsidiaries.
(b) The term "INTELLECTUAL PROPERTY RIGHTS" means all
proprietary and other rights, including rights granted under license, in and to
the following:
(i) trademarks, service marks, trademark registrations, service
xxxx registrations, trade names and applications for registration of trademarks
and service marks ("TRADEMARKS");
(ii) copyrights, copyright registrations and applications for
registration of copyrights ("COPYRIGHTS");
(iii) patents, design patents and utility patents, all
applications for grant of any such patents pending as of the date hereof or as
of the Effective Time or filed within five years prior to the date hereof, and
all reissues, divisions, continuations-in-part and extensions thereof
("PATENTS");
(iv) computer software, including source code, object code,
algorithms, databases, and all related documentation ("SOFTWARE");
(v) technical documentation, trade secrets, designs, inventions,
processes, formulae, know-how, operating manuals and guides, plans, new product
development, technical and marketing surveys, material specifications, product
specifications, invention records, research records, labor routings, inspection
processes, equipment lists, engineering reports and drawing, architectural or
engineering plans, marketing and licensing records, sales literature, customer
lists, trade lists, sales forces and distributor networks lists, advertising and
promotional materials, service and parts records, warranty records, maintenance
records and similar records; and
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(vi) all rights and incidents of interest in and to all
noncompetition or confidentiality agreements;
in each case including any all applications therefor or registrations, renewals,
modifications and extensions thereof.
(c) The term "COMPANY INTELLECTUAL PROPERTY RIGHTS" shall mean
all Intellectual Property Rights owned or held by the Company or any of its
Subsidiaries and used in the business of the Company and its Subsidiaries as
such business is currently conducted or is proposed by the Company or its
Subsidiaries to be conducted.
Section 4.15 REAL PROPERTY. (a) Each of the Company and its
Subsidiaries has good and marketable title to each parcel of real property owned
by it free and clear of all mortgages, pledges, liens, encumbrances and security
interests, except (i) those reflected or reserved against in the balance sheet
of the Company dated as of May 31, 2000 and included in the Company SEC Reports,
(ii) Taxes and general and special assessments not in default and payable
without penalty and interest and (iii) other liens, mortgages, pledges,
encumbrances and security interests which do not materially interfere with the
Company's or such Subsidiary's use and enjoyment of such real property or
materially detract from or diminish the value thereof and that individually or
in the aggregate have not resulted in or are not reasonably likely to result in
a Material Adverse Effect.
(b) The Company SEC Reports describe the material real
property leases to which the Company or any of its Subsidiaries, is a party (the
"REAL PROPERTY LEASES") which are required to be described therein. Each Real
Property Lease is valid, binding and in full force and effect, all rent and
other sums and charges payable by the Company and its Subsidiaries as tenants
thereunder are current, and no termination event or condition or uncured default
of a material nature on the part of the Company or any such Subsidiary exists
under any Real Property Lease. Each of the Company and its Subsidiaries has a
good and valid leasehold interest in each parcel of real property leased by it
free and clear of all mortgages, pledges, liens, encumbrances and security
interests, except (i) those reflected or reserved against in the balance sheet
of the Company dated as of May 31, 2000, (ii) Taxes and general and special
assessments not in default and payable without penalty and interest and (iii)
other liens, mortgages, pledges, encumbrances and security interests which do
not materially interfere with the Company's use and enjoyment of such real
property or materially detract from or diminish the value thereof and that
individually or in the aggregate have not resulted in or are not reasonably
likely to result in a Material Adverse Effect.
Section 4.16 DATE COMPLIANCE. All data and data sensitive
systems of the Company are fully Date Compliant. "DATE COMPLIANT" shall mean (a)
that such data and data sensitive systems are able to manage and manipulate data
involving dates, including, but not limited to, single-century formulas and
multi-century formulas, date data century recognition and calculations that
accommodate same century and multi-century formulas, comparing and sequencing,
and leap year calculations; (b) that a subsequent abnormally ending scenario
within the data and data sensitive systems or the generation of incorrect values
involving such dates will not occur; and (c) that all date-related user
interface functionalities, data fields, continuing date
19
values, date data interface values and date-related functions will provide valid
and unambiguous results.
Section 4.17 MATERIAL CONTRACTS. The Company has made
available to Parent and Purchaser true, correct and complete copies of all
contracts, agreements, commitments, arrangements, leases (including with respect
to personal property) and other instruments to which the Company or any of its
Subsidiaries is a party or by which the Company, any of its Subsidiaries or any
of their respective assets is bound which (a) involves or could involve
aggregate payments of more than $1,000,000 over any twelve month period, (b) is
with any of the Company's officers, directors or affiliates, (c) is or could
reasonably be expected to be material to the Company and its Subsidiaries taken
as a whole or (d) is a confidentiality or standstill agreement (each, a
"MATERIAL CONTRACT"). Neither the Company nor any of its Subsidiaries is, or has
received any notice or has any knowledge that any other party is, in default in
any respect under any Material Contract, and there has not occurred any event
that with the lapse of time or the giving of notice or both would constitute
such a material default, except for such defaults, individually or in the
aggregate, that have not had and are not reasonably expected to have a Material
Adverse Effect or a material adverse effect on the ability of the parties to
consummate the Offer or the Merger.
Section 4.18 RELATED PARTY TRANSACTIONS. No director or member
of the executive committee of the Company has outstanding any indebtedness or
other similar obligations to the Company or any of its Subsidiaries (except
margin indebtedness incurred in the ordinary course of business). To the
Knowledge of the Company, no director, officer, partner, employee, affiliate or
associate of the Company or any of its Subsidiaries (a) owns any direct or
indirect interest of any kind (other than the ownership of less than 5% of the
stock of a publicly traded company) in, or is a director, officer, employee,
partner, affiliate or associate of, or consultant or lender to, or borrower
from, or has the right to participate in the management, operations or profits
of, any Person or entity which is (i) a competitor, supplier, customer,
distributor, lessor, tenant, creditor or debtor of the Company of any of its
Subsidiaries, (ii) engaged in a business related to the business of the Company
or any of its Subsidiaries or (iii) participated in any transaction to which the
Company or any of its Subsidiaries is a party or (b) is otherwise a party to any
contract, arrangement or understanding with the Company or any of its
Subsidiaries which, individually or in the aggregate, is material to the
operations of the Company and its Subsidiaries on a consolidated basis.
Section 4.19 STATE TAKEOVER STATUTES INAPPLICABLE. Section 203
of the DGCL is inapplicable to the Offer, the Merger, the Stockholder Tender
Agreement and the transactions contemplated hereby and thereby.
Section 4.20 REQUIRED VOTE OF COMPANY STOCKHOLDERS. Unless
the Merger is consummated in accordance with Section 253 of the DGCL as
contemplated by Section 2.09, the only vote of the stockholders of the
Company required to adopt the plan of merger contained in this Agreement and
approve the Merger is the affirmative vote of the holders of not less than a
majority of the outstanding Shares. No other vote of the stockholders of the
Company is required by law, the Certificate of Incorporation or Bylaws of the
Company as currently in effect or otherwise to approve and adopt the
agreement of merger contained in this Agreement and
20
approve the Merger. Purchaser will have full voting power with respect to any
Shares purchased pursuant to the Offer.
Section 4.21 BROKER-DEALER. Each of the Principal Subsidiaries
(as defined below) is registered as a broker-dealer with the SEC, is a duly
qualified member of the NASD (as defined below) and is duly qualified or
registered as a broker-dealer in each jurisdiction where the failure to be so
qualified or registered is reasonably likely to have a Material Adverse Effect.
Except as set forth in SCHEDULE 4.21 of the Disclosure Letter, neither the
Company nor any Principal Subsidiary is required to obtain any registration as
an investment adviser, a commodity trading advisor, a commodity pool operator, a
futures commission merchant, an insurance agent, a sales person or in any
similar capacity with the SEC, the NASD, the Commodity Futures Trading
Commission, any clearing agency, or any other securities commission or
self-regulatory organization in the United States that has not been obtained or
is not in full force and effect, nor has the Company or any Principal Subsidiary
received notice of any requirement to register as any of the foregoing in any
jurisdiction outside the United States where the failure to obtain such
registration would be reasonably likely to have a Material Adverse Effect. As
used herein, (i) "PRINCIPAL SUBSIDIARY" shall mean each of National Discount
Brokers Corporation and NDB Capital Markets, L.P. and their respective
successors and assigns and (ii) "NASD" shall mean the National Association of
Securities Dealers, Inc.
Section 4.22 EMPLOYMENT AGREEMENT OF DIRECTORS, OFFICERS AND
EMPLOYEES. To the Knowledge of the Company, no director, officer or employee of,
or consultant to, the Company or any Principal Subsidiary is in violation of any
terms of any employment contract, non-competition contract, non-disclosure
contract, patent disclosure or assignment contract or other contract containing
restrictive covenants relating to the right of any such director, officer,
employee or consultant to be employed or engaged by the Company or any Principal
Subsidiary because of the nature of the business conducted or proposed to be
conducted by the Company or any Principal subsidiary or relating to the use of
trade secrets or proprietary information of others.
Section 4.23 INVESTMENT COMPANY ACT. The Company is not an
"investment company," or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended.
ARTICLE V
REPRESENTATIONS AND
WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser jointly and severally represent and
warrant to the Company as follows:
Section 5.01 ORGANIZATION AND QUALIFICATION. Parent is an
AKTIENGESELLSCHAFT duly organized and validly existing under the laws of the
Federal Republic of Germany. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. All of
the issued and outstanding capital stock of Purchaser is owned directly or
indirectly by Parent.
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Section 5.02 AUTHORITY FOR THIS AGREEMENT. Each of Parent and
Purchaser has all requisite corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by Parent and Purchaser have been duly
and validly authorized by all necessary corporate proceedings on the part of
Parent and Purchaser. The consummation of the transactions contemplated by this
Agreement has been duly and validly authorized by all necessary corporate
proceedings on the part of Purchaser and is subject, on the part of Parent, only
to the approval of the Supervisory Board (AUFSICHTSRAT) of Parent. This
Agreement has been duly and validly executed and delivered by Parent and
Purchaser and constitutes a legal, valid and binding agreement of each of Parent
and Purchaser, enforceable against each of Parent and Purchaser in accordance
with its terms, subject only to the approval of the Supervisory Board
(AUFSICHTSRAT) of Parent. The Management Board (VORSTAND) of Parent has
determined to recommend to the Supervisory Board (AUFSICHTSRAT) of Parent
approval of this Agreement and the transactions contemplated hereby.
Section 5.03 OFFER DOCUMENTS; PROXY STATEMENT.
(a) None of the Offer Documents will, at the times such
documents are filed with the SEC and are mailed to the stockholders of the
Company, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they are
made, not misleading or to correct any statement made in any communication with
respect to the Offer previously filed with the SEC or disseminated to the
stockholders of the Company, except that no representation is made by Parent or
Purchaser with respect to information supplied in writing by the Company or an
affiliate of the Company expressly for inclusion therein. The Offer Documents
will comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations of the SEC thereunder.
(b) None of the information supplied by Parent, Purchaser or
any affiliate of Parent or Purchaser specifically for inclusion in the Proxy
Statement or the Schedule 14D-9 will, at the date of filing with the SEC, and,
in the case of the Proxy Statement, at the time the Proxy Statement is mailed
and at the time of the Special Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Section 5.04 CONSENTS AND APPROVALS; NO VIOLATION. Neither the
execution and delivery of this Agreement by Parent or Purchaser nor the
consummation of the transactions contemplated hereby will (a) conflict with or
result in any breach of any provision of the respective Certificates of
Incorporation or Bylaws (or other similar governing documents) of Parent or
Purchaser, (b) require any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Entity, except (i) as may be
required under the HSR Act, any non-United States competition, antitrust and
investment laws, the Exchange Act, the DGCL, the "takeover" or "blue sky" laws
of various states and the applicable provisions of laws relating to the
regulation of banks, broker-dealers and investment advisers and the rules and
requirements of any self-regulatory organization or (ii) where the failure to
obtain such consent, approval, authorization or permit, or to make such filing
or notification, would not, individually or in the
22
aggregate, have a material adverse effect on the ability of Parent or Purchaser
to consummate the transactions contemplated hereby, (c) except for the consent
represented by the Company in Section 1.02 to have been given under the Existing
Stockholder Agreement, require any consent, waiver or approval or result in a
default (or give rise to any right of termination, cancellation, modification or
acceleration) under any of the terms, conditions or provisions of any note,
license, agreement, contract, indenture or other instrument or obligation to
which Parent or Purchaser or any of their respective Subsidiaries is a party or
by which Parent or any of its Subsidiaries or any of their respective assets may
be bound, except for such defaults (or rights of termination, cancellation,
modification or acceleration) as to which requisite waivers or consents have
been obtained or which would not in the aggregate have a material adverse effect
on the ability of Parent or Purchaser to consummate the transactions
contemplated hereby or (d) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to Parent, Purchaser or any of their respective
Subsidiaries or by which any of their respective assets are bound, except for
violations which would not, individually or in the aggregate, have a material
adverse effect on the ability of Parent or Purchaser to consummate the
transactions contemplated hereby.
Section 5.05 OPERATIONS OF PURCHASER. Purchaser was formed
solely for the purpose of engaging in the transactions contemplated hereby, has
engaged in no other business activities and has conducted and will conduct its
operations only as contemplated hereby.
Section 5.06 BROKERS. No Person or entity (other than Deutsche
Banc Alex. Xxxxx) is entitled to receive any brokerage, finder's or other fee or
commission in connection with this Agreement or the transactions contemplated
hereby based upon agreements made by or on behalf of Parent, any of its
Subsidiaries or any of their respective officers, directors or employees.
Section 5.07 LEGAL PROCEEDINGS. As of the date of this
Agreement, neither Parent nor any of its Subsidiaries is a party to any, and
there are no pending or, to the Knowledge of Parent, threatened, material legal,
administrative, arbitral or other proceedings, claims, actions or governmental
or regulatory investigations of any nature challenging the validity or propriety
of the transactions contemplated by this Agreement or that would impair the
ability of Parent to perform its obligations under this Agreement.
Section 5.08 FINANCING. At the expiration of the Offer and at
the Effective Time, Purchaser will have available all the funds necessary to
consummate the Offer and the Merger in accordance with this Agreement, and to
make all other necessary payments of fees and expenses required to be paid by
Parent and Purchaser relating to such transactions.
ARTICLE VI
COVENANTS
Section 6.01 CONDUCT OF BUSINESS OF THE COMPANY. Except as
expressly contemplated by this Agreement, during the period from the date of
this Agreement to the date on which a majority of the Company's directors are
designees of Parent or Purchaser, the Company will conduct and will cause each
of its Subsidiaries to conduct its operations according to its ordinary and
usual course of business and consistent with past practice, and the Company
23
will use and will cause each of its Subsidiaries to use its commercially
reasonable efforts to preserve intact its business organization, to keep
available the services of its current officers and employees and to preserve the
goodwill of and maintain satisfactory relationships with those Persons and
entities having business relationships with the Company and its Subsidiaries,
and the Company will promptly advise Parent and Purchaser in writing of any
material change in the Company's or any of its Subsidiaries' condition
(financial or otherwise), properties, customer or supplier relationships,
assets, liabilities, business prospects or results of operations. Without
limiting the generality of the foregoing and except as otherwise expressly
provided in or contemplated by this Agreement, during the period specified in
the preceding sentence, without the prior written consent of Parent, the Company
will not and will not permit any of its Subsidiaries to:
(a) issue, sell, grant options or rights to purchase, pledge, or
authorize or propose the issuance, sale, grant of options or rights to
purchase or pledge of (i) any Company Securities or Subsidiary
Securities, or grant or accelerate any right to convert or exchange any
Company Securities or Subsidiary Securities, other than Shares issuable
upon exercise of the Existing Stock Options or (ii) any other
securities in respect of, in lieu of or in substitution for Shares
outstanding on the date hereof;
(b) acquire or redeem, directly or indirectly, or amend any
Company Securities or Subsidiary Securities;
(c) split, combine or reclassify its capital stock or declare,
set aside, make or pay any dividend or distribution (whether in cash,
stock or property) on any shares of its capital stock (other than cash
dividends paid to the Company by its wholly-owned Subsidiaries with
regard to their capital stock);
(d) (i) make or offer to make any acquisition, by means of a
merger or otherwise, of assets or securities, or any sale, lease,
encumbrance or other disposition of assets or securities, except for
purchases of securities made in the ordinary course of business and
consistent with past practice or (ii) enter into a Material Contract or
amend any Material Contract or grant any release or relinquishment of
any rights under any Material Contract;
(e) incur or assume any long-term debt or short-term debt except
for short-term debt incurred in the ordinary course of business
consistent with past practice;
(f) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other Person except wholly-owned Subsidiaries of the
Company;
(g) make any loans, advances or capital contributions to, or
investments in, any other Person (other than wholly-owned Subsidiaries
of the Company), except in the ordinary course of its business as a
registered broker-dealer, consistent with past practice;
(h) change any of the accounting principles or practices used by
it as of May 31, 2000, except as required by changes in GAAP in
consultation with its independent auditors;
24
(i) make any material Tax election or settle or compromise any
material federal, state or local income Tax liability;
(j) propose or adopt any amendments to its Certificate of
Incorporation or Bylaws (or similar documents);
(k) grant any stock-related, performance or similar awards or
bonuses;
(l) forgive any loans to employees, officers or directors or any
of their respective affiliates or associates;
(m) enter into any new, or amend any existing, employment, change
in control, retention, incentive or deferred compensation, severance,
consulting or salary continuation agreement, plan or arrangement with
or for the benefit of any officer, director or employee, or grant any
increases in the compensation or benefits of any officer, director and
employee (other than (i) normal increases in base salary or hourly wage
rates granted to persons who are not members of the executive committee
or directors in the ordinary course of business consistent with past
practices and that, in the aggregate, do not result in a material
increase in compensation expense of the Company, (ii) the payment of
severance compensation to employees whose employment is terminated by
the Company prior to the Effective Time Date at the written direction
of Parent in such amount as is determined by the Company and approved
in writing by Parent and (iii) in connection with fixing, in good
faith, new annual guaranteed draw amounts for securities traders and
salespersons employed by NDB Capital Markets, L.P., subject, in the
case of this clause (iii), to the approval of Parent, which approval
shall not be unreasonably withheld);
(n) enter into, amend, or extend any collective bargaining or
other labor agreement;
(o) enter into, implement, adopt, amend or terminate any Plan;
(p) settle or agree to settle any suit, action, claim, proceeding
or investigation (including any suit, action, claim, proceeding or
investigation relating to this Agreement or the transactions
contemplated hereby) or pay, discharge or satisfy or agree to pay,
discharge or satisfy any claim, liability or obligation (absolute or
accrued, asserted or unasserted, contingent or otherwise) other than
the payment, discharge or satisfaction of liabilities reflected or
reserved against in full in the financial statements as at May 31, 2000
or incurred in the ordinary course of business subsequent to May 31,
2000 and other than the resolution of disputes or claims over trades
settled in the ordinary course of its business consistent with past
practice;
(q) except as specifically permitted by Section 6.02, take, or
agree to commit to take, or fail to take any action that would result
or is reasonably likely to result in any of the Offer Conditions or any
of the conditions to the Merger set forth in Article VII not being
satisfied, or would make any representation or warranty of the Company
contained herein inaccurate in any material respect at, or as of any
time prior to, the Effective Time, or that would impair the ability to
consummate the Offer or the Merger in accordance with the terms hereof
or materially delay such consummation;
25
(r) convene any regular or special meeting (or any adjournment
thereof) of the stockholders of the Company other than the meeting
contemplated by Section 2.08 of this Agreement; or
(s) agree in writing or otherwise to take any of the foregoing
actions.
Section 6.02 NO SOLICITATION. (a) The Company shall not, and
shall 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 the Company or any of its Subsidiaries to, or otherwise take
any other action to assist or facilitate, any Person or group (other than Parent
or Purchaser or any affiliate or associate of Parent or Purchaser) concerning
any Acquisition Proposal (as defined below) or the possible making of any
Acquisition Proposal. Notwithstanding the foregoing and subject to compliance
with Section 6.02(b) and the prior execution by such Person or group of a
confidentiality agreement on terms no less favorable to the Company than those
set forth in those provisions of the Mutual Confidentiality Agreement, dated as
of September 25, 2000, between the Company and Deutsche Bank Americas Holding
Corporation (the "CONFIDENTIALITY AGREEMENT") protecting information supplied by
the Company, the Company may furnish information to or enter into discussions or
negotiations with any Person or entity that has made an unsolicited bona fide
Acquisition Proposal that the Board of Directors of the Company determines in
good faith constitutes or is reasonably likely to result in a Superior Proposal
if, and only to the extent that, the Board of Directors of the Company
determines in good faith that to do so is required by the fiduciary duty of the
Board of Directors of the Company to the stockholders of the Company under
applicable law.
(b) The Company will notify Parent and Purchaser, orally and
in writing, promptly, and in any event within one business day thereafter, if
any such information is requested or any such negotiations or discussions are
sought to be initiated and will immediately communicate to Parent and Purchaser
the identity of the Person or group making such request or inquiry (the
"POTENTIAL ACQUIROR") and any other material terms of such request, inquiry or
Acquisition Proposal. If the Company (or any of its Subsidiaries or its or their
respective officers, directors, employees, representatives, agents or
affiliates) participates in discussions or negotiation with, or provides
information to, a Potential Acquiror, the Company will keep Parent advised on a
current basis of any material developments with respect thereto.
(c) The Company 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 Parent,
Purchaser or any of their respective affiliates or associates conducted prior to
the date hereof with respect to any Acquisition Proposal.
(d) Except as expressly permitted by this Section 6.02, the
Company shall not (i) withdraw or modify, or propose publicly to withdraw or
modify, in a manner adverse to Parent or Purchaser, the approval or
recommendation of the Offer or the Merger as set forth in Section 1.02(a), (ii)
approve or recommend, or propose publicly to approve or recommend, any
26
Acquisition Proposal, (iii) release any third party from any confidentiality or
standstill agreement to which the Company is a party or fail to enforce to the
fullest extent possible, or 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, the Company may,
prior to the acceptance for payment of Shares pursuant to the Offer, (x) take
any of the actions described in clauses (i), (ii) or (iii) above or (y)
terminate this Agreement in accordance with Section 8.01(e) and take any of the
actions described in clause (iv) above, but only if, prior to taking such
action, the Board of Directors of the Company 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. Without limiting any other rights of
Parent and Purchaser under this Agreement in respect of any such action, any
withdrawal or modification by the Company 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 herein for the purpose of causing Takeover Laws and the
Existing Stockholder Agreement to be inapplicable to or otherwise permit, this
Agreement, the Stockholder Tender Agreement and the transactions contemplated
hereby and thereby, which approvals and actions are irrevocable.
(e) Nothing contained in this Section 6.02 shall prohibit the
Company or its Board of Directors from taking and disclosing to the Company's
stockholders a position with respect to a tender offer by a third party pursuant
to Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act or taking any
other action required under applicable law.
(f) For purposes of this Agreement, (i) "ACQUISITION PROPOSAL"
means any offer or proposal, or any indication of interest in making an offer or
proposal, made by a Person or group at any time 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, the
Company 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 and (ii)
"SUPERIOR PROPOSAL" means any bona fide Acquisition Proposal not solicited in
violation of this Section 6.02 made after the date hereof in writing in respect
of which the Board of Directors of the Company has determined in good faith (A)
after receiving the opinion of its independent financial advisors to such
effect, that the 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.
Section 6.03 ACCESS TO INFORMATION. (a) From and after the
date of this Agreement, the Company will (i) give Parent and Purchaser and their
authorized accountants, investment bankers, counsel and other representatives
access (during regular business hours upon reasonable notice and to the extent
such access does not unreasonably interfere with conduct of business operations
in the ordinary course) to all employees, offices and other facilities and to
all
27
books, contracts, commitments and records (including Tax returns) of the Company
and its Subsidiaries and will use its reasonable best efforts to cause the
Company's and its Subsidiaries' independent public accountants to provide access
to their work papers and such other information as Parent or Purchaser may
reasonably request, (ii) permit Parent and Purchaser to make such inspections as
they may reasonably require (during regular business hours upon reasonable
notice and to the extent such access does not unreasonably interfere with
conduct of business operations in the ordinary course), (iii) cause its officers
and those of its Subsidiaries to furnish Parent and Purchaser with such
financial and operating data and other information with respect to the business,
properties and personnel of the Company and its Subsidiaries as Parent or
Purchaser may from time to time reasonably request and (iv) furnish promptly to
Parent and Purchaser a copy of each report, schedule and other document filed or
received by the Company during such period pursuant to the requirements of the
federal or state securities laws.
(b) Information obtained by Parent or Purchaser pursuant to
Section 6.03(a) shall be subject to the provisions of the Confidentiality
Agreement, the terms of which are incorporated herein by reference.
(c) The Company and its Subsidiaries shall not be required to
provide access to or to disclose information where such access or disclosure
would violate or prejudice the obligations of the Company or such Subsidiary to
customers, jeopardize the attorney-client privilege of any Person or contravene
any law, order or contract entered into prior to the date of this Agreement. The
parties hereto will make appropriate substitute disclosure arrangements under
circumstances in which the restrictions of the preceding sentence apply.
Section 6.04 REASONABLE BEST EFFORTS. (a) Subject to
applicable law and to the terms and conditions herein provided for, each of the
parties hereto agrees to use its reasonable best efforts to take, or cause to be
taken, all appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective, in the most expeditious manner practicable, the
transactions contemplated by this Agreement; PROVIDED, HOWEVER, that nothing in
this Agreement (other than as expressly provided for in Section 1.01) shall
obligate Parent or Purchaser to keep the Offer open beyond the expiration date
set forth in the Offer (as it may be extended from time to time). Without
limiting the foregoing, (i) each of the Company, Parent and Purchaser shall use
its reasonable best efforts to make promptly any required submissions under the
HSR Act which the Company or Parent determines should be made, in each case,
with respect to the Offer, the Merger or the Stockholder Tender Agreement and
the transactions contemplated hereby and thereby and (ii) Parent, Purchaser and
the Company shall cooperate with one another (A) in promptly determining whether
any filings are required to be or should be made or consents, approvals, permits
or authorizations are required to be or should be obtained under any other
federal, state or foreign law or regulation or whether any consents, approvals
or waivers are required to be or should be obtained from other parties to loan
agreements or other contracts or instruments material to the Company's business
in connection with the consummation of the transactions contemplated by this
Agreement and (B) in promptly making any such filings, furnishing information
required in connection therewith and seeking to obtain timely any such consents,
permits, authorizations, approvals or waivers. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and directors of each party to
this Agreement shall take all such necessary action.
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(b) In the event that any action, suit, proceeding or
investigation relating hereto or to the transactions contemplated hereby is
commenced, whether before or after the Effective Time, the parties hereto agree
to cooperate and use their reasonable best efforts to defend vigorously against
it and respond thereto.
(c) Nothing in this Agreement shall obligate Parent, Purchaser
or any of their respective Subsidiaries or affiliates to agree (i) to limit in
any manner whatsoever or not to exercise any rights of ownership of any
securities (including the Shares), or to divest, dispose of or hold separate any
securities or all or a portion of their respective businesses, assets or
properties or of the business, assets or properties of the Company or any of its
Subsidiaries or (ii) to limit in any manner whatsoever the ability of such
entities (A) to conduct their respective businesses or own such assets or
properties or to conduct the businesses or own the properties or assets of the
Company and its Subsidiaries or (B) to control their respective businesses or
operations or the businesses or operations of the Company and its Subsidiaries.
Section 6.05 INDEMNIFICATION AND INSURANCE. (a) Parent and
Purchaser agree that all rights to indemnification existing in favor of the
present or former directors, officers and employees of the Company or any of its
Subsidiaries as provided in the Company's Certificate of Incorporation or
Bylaws, or the articles of organization, bylaws or similar documents of any of
the Company's Subsidiaries, or contracts to which the Company or any of its
Subsidiaries is a party, in each case, as in effect as of the date hereof with
respect to matters occurring prior to and as of the Effective Time shall survive
the Merger and shall continue in full force and effect for a period of not less
than the statutes of limitations applicable to such matters, and Parent agrees
to cause the Surviving Corporation to comply fully with its obligations
hereunder and thereunder.
(b) 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 currently covered by the Company's existing directors' and officers'
liability insurance policies and providing substantially similar coverage to
such existing policies; PROVIDED, HOWEVER, that 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% of the aggregate
annual amounts currently paid by the Company to maintain the existing policies
(which amount is US$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% 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% of such amount.
(c) This Section 6.05 shall survive the consummation of the
Merger and is intended to benefit, and shall be enforceable, by any Person or
entity entitled to be indemnified hereunder (whether or not parties to this
Agreement).
(d) In the event Parent 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 shall 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 shall be made so
29
that the successors and assigns of Parent or the Surviving Corporation, as
applicable, assume the obligations set forth in this Section 6.05.
Section 6.06 EMPLOYEE MATTERS. (a) Prior to the Effective
Time, except as set forth below, the Company will, and will cause its
Subsidiaries to, and from and after the Effective Time, Parent will cause the
Surviving Corporation and its Subsidiaries to, honor, in accordance with their
terms the current employment and change in control agreements between the
Company or any of its Subsidiaries and any officer, director or employee of the
Company or any of its Subsidiaries listed in Section 4.09(a) of the Disclosure
Letter.
(b) Parent 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 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, which benefits will be in the
aggregate substantially comparable to those currently provided pursuant to the
Plans by the Company and its Subsidiaries in the aggregate to such employees.
Nothing in this Section 6.06 shall 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 the Company or any of its Subsidiaries any rights
to employment or continued employment with Parent, 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.
(c) The Company shall take, or cause to be taken, all action
necessary, as promptly hereafter as reasonably practicable, (i) to amend any
Plan, other than the Stock Option Plans, maintained by the Company or any of its
Subsidiaries to eliminate, as of the date hereof, all provisions for the
purchase or grant of Shares directly from or by the Company 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
hereof, 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, the Company shall not, and shall
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.
(d) To the extent that employees of the Company or any of its
Subsidiaries become eligible to participate in any Plans of Parent or any of
Parent's other Subsidiaries (collectively, "PARENT PLANS") following the
Effective Time, Parent 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 the Parent Plans, other than the severance
plan of Parent, to the same extent as such service was taken into account under
the corresponding Plans of the
30
Company and its Subsidiaries for those purposes and (y) for purposes of vesting,
eligibility and benefit calculation under the severance plan of Parent, (ii)
waive any pre-existing condition limitations under any Parent Plan that is a
health plan for any condition of any such employee (or the dependant of any such
employee) for which such individual would have been entitled to coverage under
the corresponding Plan of the Company or its Subsidiaries in which such
individual participated immediately prior to the Effective Time and (iii) give
such employees credit under the applicable Parent Plans for co-payments made and
deductibles satisfied by such employees prior to the Effective Time under a
corresponding Plan of the Company or its Subsidiaries for the applicable plan
year that includes the Effective Time.
(e) No later than five business days prior to its
distribution, the Company and its Subsidiaries shall provide Parent and
Purchaser with a copy of any communication intended to be made to any of their
respective employees relating to the transactions contemplated hereby, and will
provide an opportunity for Parent and Purchaser to make reasonable revisions
thereto.
Section 6.07 TAKEOVER LAWS. The Company shall, upon the
request of Parent or Purchaser, take all reasonable steps to exclude the
applicability of, or to assist in any challenge by Parent or Purchaser to the
validity, or applicability to the Offer, the Merger or any other transaction
contemplated by this Agreement or the Stockholder Tender Agreement of, any
Takeover Laws.
Section 6.08 PROXY STATEMENT. Unless the Merger is consummated
in accordance with Section 253 of the DGCL as contemplated by Section 2.09, the
Company shall prepare and file with the SEC, subject to the prior review and
approval of Parent and Purchaser (which approval shall not be unreasonably
withheld), as soon as practicable after the consummation of the Offer, a
preliminary proxy or information statement (the "PRELIMINARY PROXY STATEMENT")
relating to the Merger as required by the Exchange Act and the rules and
regulations thereunder, with respect to the transactions contemplated hereby.
The Company shall obtain and furnish the information required to be included in
the Preliminary Proxy Statement, shall provide Parent and Purchaser with, and
consult with Parent and Purchaser regarding, any comments that may be received
from the SEC or its staff with respect thereto, shall, subject to the prior
review and approval of Parent and Purchaser (which approval shall not be
unreasonably withheld), respond promptly to any such comments made by the SEC or
its staff with respect to the Preliminary Proxy Statement, shall cause the Proxy
Statement to be mailed to the Company's stockholders at the earliest practicable
date and shall, subject to Section 6.02(e), use its commercially reasonable
efforts to obtain the necessary approval of the Merger by its stockholders.
Section 6.09 NOTIFICATION OF CERTAIN MATTERS. The Company
shall give prompt notice to Parent and Purchaser, and Parent or Purchaser, as
the case may be, shall give prompt notice to the Company, of the occurrence, or
non-occurrence, of any event the occurrence, or non-occurrence, of which is
likely (a) to cause any representation or warranty of such party contained in
this Agreement (disregarding any materiality qualification contained therein) to
be untrue or inaccurate in any material respect if made as of any time at or
prior to the Effective Time and (b) to result in any material failure of such
party to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied hereunder (including the conditions set forth in
Exhibit A); PROVIDED, HOWEVER, that the delivery of any notice pursuant to
31
this Section 6.09 shall not limit or otherwise affect the remedies available
hereunder to any of the parties receiving such notice.
Section 6.10 SUBSEQUENT FILINGS. Until the Effective Time, the
Company will timely file with the SEC each form, report and document required to
be filed by the Company under the Exchange Act and will promptly deliver to
Parent and Purchaser copies of each such report filed with the SEC. As of their
respective dates, none of such reports shall contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The audited consolidated financial
statements and unaudited interim financial statements of the Company included in
such reports shall be prepared in accordance with GAAP applied on a consistent
basis (except as may be indicated in the notes thereto) and shall fairly present
the financial position of the Company and its consolidated Subsidiaries as at
the dates thereof and the results of their operations and changes in financial
position for the periods then ended, subject to normal year-end audit
adjustments, none of which shall be anticipated to be material.
Section 6.11 PRESS RELEASES. Parent, Purchaser and the Company
will consult with each other before issuing any press release or otherwise
making any public statements with respect to the Offer or the Merger or this
Agreement and shall not issue any such press release or make any such public
statement prior to such consultation (and affording the other party or parties
an opportunity to comment thereon), except as may be required by applicable law
or court order. To the extent, if any, that the Confidentiality Agreement is
inconsistent with this Section 6.11, the Confidentiality Agreement is hereby
amended.
Section 6.12 EMPLOYEE RETENTION PLAN AND BENEFIT CONTINUATION.
On or prior to the Effective Time, Parent will cause or permit the Company or
its Subsidiaries to offer a retention and guaranteed compensation package to the
employees designated on Schedule 6.12 in the amounts set forth thereon, on terms
and conditions in substantially the form of EXHIBIT A-1 attached hereto. In
addition, with effect from the Effective Time, Parent will cause or permit the
Company or its Subsidiaries to grant equity awards under Parent's Share Scheme
in such amounts and to such employees as are reasonably determined in the
discretion of the Company, subject to the approval of Parent, which approval
shall not be unreasonably withheld; provided, however, that the aggregate amount
of such equity awards shall not exceed the difference obtained by subtracting
the aggregate amount of any equity awards to be made to the employees designated
on Schedule 6.12 from $60,000,000.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT
THE MERGER. The respective obligations of each party to effect the Merger are
subject to the satisfaction or waiver, where permissible, prior to the proposed
Effective Time, of the following conditions:
(a) unless the Merger is consummated pursuant to Section 253
of the DGCL as contemplated by Section 2.09, the agreement of merger
(as such term is used in Section
32
251 of the DGCL) contained in this Agreement shall have been approved
and adopted by the affirmative vote of the stockholders of the Company
required by and in accordance with applicable law;
(b) all necessary waiting periods under the HSR Act applicable
to the Merger shall have expired or been terminated;
(c) no statute, rule, regulation, executive order, judgment,
decree or injunction shall have been enacted, entered, issued,
promulgated or enforced by any court or Governmental Entity against
Parent, Purchaser or the Company and be in effect that prohibits or
restricts the consummation of the Merger or makes such consummation
illegal (each party agreeing to use all reasonable efforts to have such
prohibition lifted); and
(d) Purchaser shall have accepted for purchase and paid for
the Shares tendered pursuant to the Offer; provided that the foregoing
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.
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
Section 8.01 TERMINATION. This Agreement may be terminated and
the Merger may be abandoned at any time (notwithstanding approval thereof by the
stockholders of the Company) prior to the Effective Time (with any termination
by Parent also being an effective termination by Purchaser):
(a) by mutual written consent of the Company and Parent;
(b) by Parent or the Company 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 this
Agreement and such order, decree, ruling or other action shall have
become final and non-appealable;
(c) by the Company if (i) Purchaser fails to commence the
Offer in violation of Section 1.01 hereof, (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 this Agreement, or (iv) Purchaser or Parent shall have
breached any of its representations, warranties or covenants of this
Agreement, which breach has had or is reasonably likely to have a
material adverse effect on the ability of Parent or Purchaser to
consummate the transactions contemplated hereby;
(d) by Parent 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
33
commenced the Offer within the time required by Regulation 14D under
the Exchange Act, (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 the Company, prior to the purchase of Shares pursuant
to the Offer, if (i) the Company has complied with its obligations
under Section 6.02, (ii) the Company has given Parent 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) the Company's Board of Directors, after
taking into account any modifications to the terms of the Offer and the
Merger proposed by Parent and Purchaser after receipt of such notice,
continues to believe such Acquisition Proposal constitutes a Superior
Proposal and (iv) the Board of Directors of the Company determines in
good faith that it is necessary to do so to comply with its fiduciary
obligations to the stockholders of the Company under applicable law;
provided that the termination described in this Section 8.01(e) shall
not be effective unless and until the Company shall have paid to Parent
all of the fees and expenses described in Section 8.03 including,
without limitation, the Termination Fee; or
(f) by Parent, prior to the purchase of Shares pursuant to the
Offer, if the Company breaches any of its covenants in Section 6.02 or
the Board of Directors shall have taken any of the actions referred to
in Section 6.02(d)(i), (ii) or (iii).
Section 8.02 EFFECT OF TERMINATION. If this Agreement is
terminated and the Merger is abandoned pursuant to Section 8.01 hereof, this
Agreement, except for the provisions of Sections 6.03(b), 8.02, 8.03 and Article
IX hereof and the Confidentiality Agreement, shall forthwith become void and
have no effect, without any liability on the part of any party or its directors,
officers or stockholders. Nothing in this Section 8.02 shall relieve any party
to this Agreement of liability for any willful breach of this Agreement.
Section 8.03 FEES AND EXPENSES. (a) Whether or not the Merger
is consummated, except as otherwise specifically provided herein, all costs and
expenses incurred in connection with the Offer, this Agreement and the
transactions contemplated by this Agreement shall be paid by the party incurring
such expenses.
(b) In the event that this Agreement is terminated pursuant to
(i) Section 8.01(e) or 8.01(f) or (ii)(x) Section 8.01(b) (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 the Company or any of
its stockholders) or (y) 8.01(c)(ii) or 8.01(d) 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) any of the actions or events described in
the condition set forth in clause (iv)(f) of Exhibit A shall exist and (in the
case of clause (ii) only) (AA) after the date hereof 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 the Company shall pay Parent a termination fee of $35 million
(the "TERMINATION FEE") in immediately available funds by wire transfer to an
account designated by Parent. If such fee becomes payable pursuant to clause (i)
of this Section 8.03(b), it shall be payable simultaneously
34
with such termination (in the case of a termination by the Company) or within
one business day thereafter (in the case of a termination by Parent). If such
fee becomes payable pursuant to clause (ii) of this Section 8.03(b), it shall be
payable simultaneously with completion of such Acquisition Proposal.
(c) Without limiting other remedies available to Parent or
Purchaser under this Agreement or otherwise, in the event this Agreement is
terminated pursuant to Section 8.01(c)(ii) or Section 8.01(d) as a result of the
failure to satisfy the conditions set forth in paragraph (f) of Exhibit A, then
the Company shall promptly (and in any event with one business day after such
termination) reimburse Parent for the out-of-pocket fees and expenses of Parent
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, this Agreement, the transactions contemplated hereby and any related
financing up to a maximum of $5 million in immediately available funds by wire
transfer to an account designated by Parent.
(d) Without limiting other remedies available to the Company
under this Agreement or otherwise, in the event this Agreement is terminated
pursuant to Section 8.01(c)(iv), then Parent shall promptly (and in any event
within one business day after such termination) reimburse the Company for the
out-of-pocket expenses of the Company (including printing fees, filing fees and
expenses of its legal and financial advisors) related to the Offer, this
Agreement and the transactions contemplated hereby up to a maximum of $5 million
in immediately available funds by wire transfer to an account designated by the
Company.
(e) The prevailing party in any legal action undertaken to
enforce this Agreement or any provision hereof shall be entitled to recover from
the other party the costs and expenses (including attorneys' and expert witness
fees) incurred in connection with such action.
Section 8.04 AMENDMENT. To the extent permitted by applicable
law, this Agreement may be amended by action taken by or on behalf of the Boards
of Directors of the Company, Parent and Purchaser, subject in the case of the
Company to Section 1.04(b), at any time before or after adoption of this
Agreement by the stockholders of the Company but, after any such stockholder
approval, no amendment shall be made which requires further approval of the
Company's stockholders under applicable law without the approval of the
stockholders of the Company. This Agreement may not be amended, changed,
supplemented or otherwise modified except by an instrument in writing signed on
behalf of all of the parties.
Section 8.05 EXTENSION; WAIVER; REMEDIES. (a) At any time
prior to the Effective Time, the parties hereto, by action taken by or on behalf
of the respective Boards of Directors of the Company, Parent and Purchaser,
subject in the case of the Company to Section 1.04(b), may (i) extend the time
for the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein by any other applicable party or in any document, certificate
or writing delivered pursuant hereto by any other applicable party or (iii)
waive compliance with any of the agreements or conditions contained herein. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
35
(b) All rights, powers and remedies provided under this
Agreement or otherwise available in respect hereof at law or in equity shall be
cumulative and not alternative, and the exercise of any thereof by any party
shall not preclude the simultaneous or later exercise of any other such right,
power or remedy by such party. The failure of any party hereto to exercise any
rights, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
ARTICLE IX
MISCELLANEOUS
Section 9.01 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The representations and warranties made in Articles IV and V shall not survive
beyond the Effective Time. This Section 9.01 shall not limit any covenant or
agreement of the parties hereto which by its terms contemplates performance
after the Effective Time.
Section 9.02 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement,
together with the Disclosure Letter and the Confidentiality Agreement,
constitutes the entire agreement between the parties with respect to subject
matter hereof and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to subject matter hereof. The
Agreement shall not be assigned by any party by operation of law or otherwise
without the prior written consent of the other parties, PROVIDED, that Parent or
Purchaser may assign any of their respective rights and obligations to any
direct or indirect Subsidiary of Parent, but no such assignment shall relieve
Parent or Purchaser, as the case may be, of its obligations hereunder.
Section 9.03 ENFORCEMENT OF THE AGREEMENT; JURISDICTION. The
parties agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement in any New York state court located in the Borough of Manhattan, City
of New York or any Federal court located in such Borough, this being in addition
to any other remedy to which they are entitled at law or in equity. In addition,
each of the parties hereto (a) consents to submit itself to the personal
jurisdiction of any New York state court located in the Borough of Manhattan,
City of New York or any Federal court located in such Borough in the event any
dispute arises out of this Agreement or any transaction contemplated by this
Agreement, (b) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, (c)
agrees that it will not bring any action relating to this Agreement or any
transaction contemplated by this Agreement in any court other than any such
court and (d) waives any right to trial by jury with respect to any action
related to or arising out of this Agreement or any transaction contemplated by
this Agreement. The parties irrevocably and unconditionally waive any objection
to the laying of venue of any action, suit or proceeding arising out of this
Agreement or the transactions contemplated hereby in the courts of the State of
New York located in the Borough of Manhattan, City of New York or in any Federal
court
36
located in such Borough, and hereby further irrevocably and unconditionally
waive and agree not to plead or claim in any such court that any such action,
suit or proceeding brought in any such court has been brought in an inconvenient
forum.
Section 9.04 VALIDITY. Whenever possible, each provision or
portion of any provision of this Agreement will be interpreted in such manner as
to be effective and valid under applicable law but if any provision or portion
of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction such invalidity, illegality or unenforceability will not affect any
other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision had
never been contained herein.
Section 9.05 NOTICES. All notices, requests, claims, demands
and other communications hereunder shall be given (and shall be deemed to have
been duly received if given) by hand delivery in writing or by facsimile
transmission with confirmation of receipt, as follows:
if to Parent or Purchaser:
Deutsche Acquisition Corp.
c/o Deutsche Bank AG
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Facsimile: 000-000-0000
with a copy to:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxx
Facsimile: 212-225-3999
if to the Company:
National Discount Brokers Group, Inc.
00 Xxxxxxxx Xxxxx Xxxxxx
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Xx.
Executive Vice President and Secretary
Facsimile: 000-000-0000
37
With a copy to:
Xxxxxx, Xxxxx & Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx, Xx.
Facsimile: 000-000-0000
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
Section 9.06 GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York, except to
the extent that the provisions of the DGCL mandatorily apply to the Merger.
Section 9.07 DESCRIPTIVE HEADINGS. The descriptive headings
herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
Section 9.08 PARTIES IN INTEREST. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied, is intended to confer upon any other
Person any rights or remedies of any nature whatsoever under or by reason of
this Agreement except for Section 6.05 (which is intended to be for the benefit
of the Persons referred to therein, and may be enforced by any such Persons).
Section 9.09 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which,
taken together, shall constitute one and the same agreement.
Section 9.10 CERTAIN DEFINITIONS.
(a) The terms "AFFILIATE" and "ASSOCIATE" shall have the
meanings given to such terms in Rule 12b-2 under the Exchange Act.
(b) The term "BENEFICIAL OWNERSHIP" shall have the meaning
given to such term in Rule 13d-3 under the Exchange Act.
(c) The term "HEREBY" shall be deemed to refer to this
Agreement in its entirety, rather than to any Article, Section, or other portion
of this Agreement.
(d) The term "INCLUDING" shall be deemed to be followed by the
phrase "without limitation."
(e) A fact, event, circumstance or occurrence shall be within
a Person's "KNOWLEDGE" if, with respect to the Company, such fact, event,
circumstance or occurrence is or was actually known by any of the Company's
executive officers or directors (or persons serving
38
in a similar capacity), or, with respect to Parent, such fact, event or
circumstance or occurrence is or was actually known by any member of Parent's
Management Board (VORSTAND).
(f) "MATERIAL ADVERSE EFFECT" shall mean any material and
adverse effect on any of the condition (financial or otherwise), business,
properties, assets, liabilities or results of operations of the Company and its
Subsidiaries, taken as a whole, and shall exclude and not give effect to events,
circumstances or conditions affecting the securities markets or the brokerage or
market making industries in the United States generally.
(g) "PERSON" shall mean any individual, corporation, limited
liability company, partnership, association, trust, estate or other entity or
organization.
(h) The term "SUBSIDIARY" shall mean, when used with reference
to an entity, any other entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions, or a majority of the outstanding
voting securities of which, are owned directly or indirectly by such entity.
(i) "TAX" shall mean all taxes, charges, fees, levies,
imposts, duties, and other assessments, including any income, alternative
minimum or add-on tax, estimated, gross income, gross receipts, sales, use,
transfer, transactions, intangibles, ad valorem, value-added, franchise,
registration, title, license, capital, paid-up capital, profits, withholding,
employee withholding, payroll, worker's compensation, unemployment insurance,
social security, employment, excise (including the federal communications excise
tax under Section 4251 of the Code), severance, stamp, transfer occupation,
premium, recording, real property, personal property, federal highway use,
commercial rent, environmental (including taxes under Section 59A of the Code)
or windfall profit tax, custom, duty or other tax, fee or other like assessment
or charge of any kind whatsoever, together with any interest, penalties, related
liabilities, fines or additions to tax that may become payable in respect
thereof imposed by any country, any state, county, provincial or local
government or subdivision or agency thereof.
(j) "TAX RETURN" shall mean a report, return or other
information (including any amendments) required to be supplied to a governmental
entity with respect to Taxes including, where permitted or required, combined or
consolidated returns for any group of entities that includes the Company or any
of its Subsidiaries.
Section 9.11 DRAFTING. The parties have participated jointly
in the negotiation and drafting of this Agreement, and, in the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties and no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement.
39
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on its behalf by its officers thereunto duly
authorized, all at or on the day and year first above written.
DEUTSCHE BANK AG
By: /s/ Xxxxx Xxxxxxxx
---------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Member of Management Board
By: /s/ Onder Unsal
---------------------------------------
Name: Onder Unsal
Title: Vice President
DEUTSCHE ACQUISITION CORP.
By: /s/ Xxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
NATIONAL DISCOUNT BROKERS
GROUP, INC.
By: /s/ Xxxxxx Xxxxxx
---------------------------------------
Name: Xxxxxx Xxxxxx
Title: President and Chief
Executive Officer
EXHIBIT A
CONDITIONS TO THE OFFER
Capitalized terms used in this Exhibit A and not otherwise
defined herein shall have the meanings assigned to them in the Agreement to
which it is attached (the "MERGER AGREEMENT").
Notwithstanding any other provision of the Offer, Purchaser
shall not be required to accept for payment, purchase or pay for any Shares
tendered in connection with 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 of the initial
offering period for the Offer (the "EXPIRATION DATE") that number of Shares
which, together with any Shares beneficially owned by Purchaser or Parent,
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 the Company
is required to issue pursuant to obligations outstanding under convertible
securities, options and otherwise on the date of purchase) on the date of
purchase (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), (iii) approval of the Offer or the Merger by Parent's Supervisory
Board (AUFSICHTSRAT) shall not have been obtained or (iv) at any time on or
after the date of the Merger Agreement and prior to the time of payment for 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 Parent, Purchaser, the Company,
any other affiliate of Parent or the Company, 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 Parent, 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 the Company, (5) require the
divestiture by Parent, Purchaser or any of their respective
Subsidiaries or affiliates of any Shares, or require Purchaser, Parent,
the Company, 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
A-1
own such assets, properties or Shares or on the ability of Parent or
Purchaser to conduct the business of the Company and its Subsidiaries
and own the assets and properties of the Company and its Subsidiaries,
(6) impose any material limitations on the ability of Parent, Purchaser
or any of their respective Subsidiaries or affiliates effectively to
control the business or operations of the Company, Parent, Purchaser or
any of their respective Subsidiaries or affiliates, or (7) result in a
material reduction in the benefits expected to be derived by Purchaser,
Parent 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 Parent, Purchaser or the
Significant 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 with respect to
the Company;
(f) the Company 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 the
Company 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
A-2
(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 Parent or Purchaser, in any case, and
regardless of the circumstances (including any action or inaction by Parent 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 Parent
and Purchaser and may be asserted regardless of the circumstances or waived by
Parent or Purchaser in whole or in part at any time or from time to time in its
discretion subject to the terms and conditions of the Merger Agreement. The
failure of Parent 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 time and from time to
time.
A-3
