CHICAGO, June 30, 2000-Today, the Board of Trade of the City of Chicago filed a lawsuit seeking a declaration that the CBOT's reincorporation as a Delaware not-for-profit corporation would not extinguish the Exercise Right and asking the Court to prevent the Chicago Board Options Exchange from taking any action to the contrary. CBOT's reincorporation as a Delaware not-for-profit is known as Step One of the Board of Trade's restructuring strategy. Step One was resoundingly approved by over 90% of the CBOT's members in a June 28 vote.
On June 20, 2000, CBOE issued a circular stating that when Step One of CBOT restructuring is completed CBOT Full Members' CBOE Exercise Right would "disappear" as a matter of law. Yesterday, the CBOT wrote to the CBOE asking for a written confirmation that the CBOE's position had changed and that following CBOT's reincorporation in Delaware CBOE would take no action to jeopardize the Exercise Right. The CBOE refused to provide that confirmation.
CBOT Chairman David Brennan stated: "I have pledged to our members to do whatever is needed to preserve the CBOE Exercise Right as an essential element of our restructuring plan. Since CBOE persists in its unfounded claim that Step One is inconsistent with the Exercise Right and would otherwise remain free to act to attempt to encumber or eliminate that legal right at any time, we had no choice but to act. We look forward to judicial vindication of our position and to moving forward with our plan to modernize the Board of Trade's business operations."
Attached are copies of the CBOE's June 29 response, our reply, and our letter to CBOT members regarding the lawsuit.
The CBOT urges its members and membership interest holders to read the Registration Statements on Form S-4, including the proxy statement/prospectus contained within the Registration Statements, regarding the CBOT restructuring referred to herein or in connection herewith, when it becomes available, as well as the other documents that the CBOT has filed or will file with the Securities and Exchange Commission, because they contain or will contain important information. CBOT members and membership interest holders may obtain a free copy of the proxy statement/prospectus, when it becomes available, and other documents filed by the CBOT at the Commission's web site at www.sec.gov, or from the CBOT by directing such request in writing or by telephone to: Board of Trade of the City of Chicago, 141 W. Jackson Blvd., Chicago, Illinois 60604-2994, Attention: Office of the Secretary, Telephone: (312) 435-3605, Facsimile: (312) 347-3827. This communication shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of securities in any state in which offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Chicago Board of Trade Options Exchange 400 South LaSalle Street Chicago, Illinois 60605 www.cboe.com
Thomas A. Bond Vice Chairman Phone: 312 786-7088 Fax: 312 786-7407 bond@cboe.com
June 29,2000
BY MESSENGER
Mr. David P. Brennan Chairman of the Board Chicago Board of Trade 141 West Jackson Boulevard Chicago, Illinois 60604
Dear David,
Your letter of today suggests that the Chicago Board of Trade has misunderstood CBOE Information Circular IC00-64. By no means does the circular imply any change in CBOE's legal position concerning the effect of CBOT's restructuring on the exercise right. The purpose of the circular was simply to assure our members that we do not intend to bar exercisers from the CBOE's trading floor on account of the reincorporation of CBOT as a Delaware non-stock corporation.
Sincerely, Thomas A. Bond Vice Chairman
June 30, 2000
Dear Bill and Tom:
On June 20, 2000, CBOE issued a circular stating that when Step One of our Restructuring is completed our Full Members' CBOE Exercise Right would "disappear" as a matter of law. We strongly disagree with CBOE's view. After receiving your June 29 circular, I wrote to you asking for confirmation that CBOE's position had changed and that you would take no action to jeopardize the Exercise Right based on our reincorporation in Delaware. Your letter of June 29 refused to provide that confirmation.
As you know, preserving the Exercise Right is an essential ingredient of our restructuring plan. Since you have been unwilling to provide us with any assurance that you will not act to attempt to encumber or eliminate the Exercise Right after Step One is effectuated, we had no choice but to act. After careful deliberation, we have today filed a complaint in the Circuit Court of Cook County seeking a declaration that implementation of Step One does not extinguish or impair the Exercise Right and asking the Court to prevent CBOE from taking any action to the contrary.
We regret that you have forced us to resolve this dispute in the courts, but by virtue of your June 29 letter you have given us no alternative. At the same time, we are willing to continue our negotiations with you on a merger or other joint business strategies that will strengthen our two great institutions. We are hopeful that in the coming weeks we can still amicably resolve our differences.
Sincerely, David P. Brennan
The CBOT urges its members and membership interest holders to read the Registration Statements on Form S-4, including the proxy statement/prospectus contained within the Registration Statements, regarding the CBOT restructuring referred to herein or in connection herewith, when it becomes available, as well as the other documents that the CBOT has filed or will file with the Securities and Exchange Commission, because they contain or will contain important information. CBOT members and membership interest holders may obtain a free copy of the proxy statement/prospectus, when it becomes available, and other documents filed by the CBOT at the Commission's web site at www.sec.gov, or from the CBOT by directing such request in writing or by telephone to: Board of Trade of the City of Chicago, 141 W. Jackson Blvd., Chicago, Illinois 60604-2994, Attention: Office of the Secretary, Telephone: (312) 435-3605, Facsimile: (312) 347-3827. This communication shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of securities in any state in which offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
June 30, 2000
Dear Fellow Members:
On June 20, 2000, CBOE issued a circular stating that when Step One of our Restructuring is completed our Full Members' CBOE Exercise Right would "disappear" as a matter of law. We strongly disagree with CBOE's view. Yesterday, June 29, CBOE issued a new circular, and in response I wrote to CBOE asking for confirmation that its position had changed and that after our reincorporation in Delaware CBOE would take no action to jeopardize the Exercise Right. CBOE has refused to provide that confirmation. Instead, late yesterday afternoon they sent me the attached letter, which speaks for itself. My reply to CBOE's June 29 letter is also attached.
Your Board of Directors and I have pledged to preserve the CBOE Exercise Right as an essential element of our restructuring strategy. Since CBOE persists in its unfounded claim that Step One is inconsistent with the Exercise Right and that it is free to attempt to encumber or eliminate that legal right at any time, your Board of Directors had no choice but to act. After careful deliberation, we have today filed a complaint in Circuit Court of Cook County seeking a declaration that implementation of Step One does not extinguish the Exercise Right, and asking the Court to prevent CBOE from taking any action to the contrary. A copy of the complaint is available in the Legal Department.
We have told CBOE management that we are still willing to engage in negotiations, and we hope that our two great institutions can still resolve our differences amicably. At the same time, we remain committed to preserving the Exercise Right as we move forward with our restructuring initiative.
Sincerely, David P. Brennan
Email: restructuring@cbot.com Hotline: 847-326-0926 Phone: 312-347-5102 Fax: 312-341-5810 Mail: CBOT Restructuring 4015 Board of Trade Building Chicago, Ill. 60604
The CBOT urges its members and membership interest holders to read the Registration Statements on Form S-4, including the proxy statement/prospectus contained within the Registration Statements, regarding the CBOT restructuring referred to herein or in connection herewith, when it becomes available, as well as the other documents that the CBOT has filed or will file with the Securities and Exchange Commission, because they contain or will contain important information. CBOT members and membership interest holders may obtain a free copy of the proxy statement/prospectus, when it becomes available, and other documents filed by the CBOT at the Commission's web site at www.sec.gov, or from the CBOT by directing such request in writing or by telephone to: Board of Trade of the City of Chicago, 141 W. Jackson Blvd., Chicago, Illinois 60604-2994, Attention: Office of the Secretary, Telephone: (312) 435-3605, Facsimile: (312) 347-3827. This communication shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of securities in any state in which offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
