<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED FEBRUARY 28, 1998
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-11758
MORGAN STANLEY DEAN WITTER & CO.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
DELAWARE 36-3145972
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
1585 BROADWAY 10036
NEW YORK, NY (ZIP CODE)
(ADDRESS OF PRINCIPAL
EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 761-4000
----------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [_]
As of March 31, 1998 there were 600,857,645 shares of Registrant's Common
Stock, par value $.01 per share, outstanding.
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<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
THREE MONTHS ENDED FEBRUARY 28, 1998
<TABLE>
<CAPTION>
PAGE
----
PART I--FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Condensed Consolidated Statements of Financial Condition--February 28,
1998 (unaudited) and November 30, 1997............................... 1
Condensed Consolidated Statements of Income--Three Months Ended Febru-
ary 28, 1998 and 1997 (unaudited).................................... 2
Condensed Consolidated Statements of Cash Flows--Three Months Ended
February 28, 1998 and 1997 (unaudited)............................... 3
Notes to Condensed Consolidated Financial Statements (unaudited)...... 4
Independent Accountants' Reports...................................... 11
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.................................................. 13
</TABLE>
PART II--OTHER INFORMATION
<TABLE>
<S> <C>
Item 1. Legal Proceedings................................................. 30
Item 5. Other Information................................................. 30
Item 6. Exhibits and Reports on Form 8-K.................................. 31
</TABLE>
i
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
FEBRUARY 28, NOVEMBER 30,
1998 1997
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Cash and cash equivalents............................ $ 6,198 $ 8,255
Cash and securities deposited with clearing
organizations or segregated under federal and other
regulations (including securities at fair value of
$2,774 at February 28, 1998 and $4,655 at November
30, 1997)........................................... 5,051 6,890
Financial instruments owned:
U.S. government and agency securities............... 12,356 12,901
Other sovereign government obligations.............. 29,550 22,900
Corporate and other debt............................ 27,887 24,499
Corporate equities.................................. 14,921 10,329
Derivative contracts................................ 17,951 17,146
Physical commodities................................ 389 242
Securities purchased under agreements to resell...... 89,302 84,516
Receivable for securities provided as collateral(2).. 15,865 --
Securities borrowed.................................. 61,655 55,266
Receivables:
Consumer loans (net of allowances of $905 at
February 28, 1998 and $884 at November 30, 1997)... 19,934 20,033
Customers, net...................................... 14,095 12,259
Brokers, dealers and clearing organizations......... 17,183 13,263
Fees, interest and other............................ 3,648 4,705
Office facilities, at cost (less accumulated
depreciation and amortization of $1,317 at February
28, 1998 and $1,279 at November 30, 1997)........... 1,718 1,705
Other assets......................................... 7,831 7,378
-------- --------
Total assets......................................... $345,534 $302,287
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Commercial paper and other short-term borrowings..... $ 28,660 $ 22,614
Deposits............................................. 9,199 8,993
Financial instruments sold, not yet purchased:
U.S. government and agency securities............... 9,370 11,563
Other sovereign government obligations.............. 11,902 12,095
Corporate and other debt............................ 4,290 1,699
Corporate equities.................................. 13,143 13,305
Derivative contracts................................ 16,781 15,599
Physical commodities................................ 723 68
Securities sold under agreements to repurchase....... 121,660 111,680
Obligation to return securities received as
collateral(2)....................................... 17,661 --
Securities loaned.................................... 19,901 14,141
Payables:
Customers........................................... 29,785 25,086
Brokers, dealers and clearing organizations......... 12,789 16,097
Interest and dividends.............................. 1,043 970
Other liabilities and accrued expenses............... 7,207 8,630
Long-term borrowings................................. 25,897 24,792
-------- --------
330,011 287,332
-------- --------
Capital Units........................................ 999 999
-------- --------
Commitments and contingencies
Shareholders' equity:
Preferred stock..................................... 875 876
Common stock(1) ($0.01 par value, 1,750,000,000
shares authorized, 605,842,952 and 602,829,994
shares issued, 605,005,581 and 594,708,971 shares
outstanding at February 28, 1998 and at November
30, 1997).......................................... 6 6
Paid-in capital(1).................................. 3,876 3,952
Retained earnings................................... 9,887 9,330
Cumulative translation adjustments.................. (3) (9)
-------- --------
Subtotal.......................................... 14,641 14,155
Note receivable related to sale of preferred stock
to ESOP............................................ (68) (68)
Common stock held in treasury, at cost(1) ($0.01
par value, 837,371 and 8,121,023 shares at
February 28, 1998 and at November 30, 1997)........ (45) (250)
Stock compensation related adjustments.............. (4) 119
-------- --------
Total shareholders' equity........................ 14,524 13,956
-------- --------
Total liabilities and shareholders' equity........... $345,534 $302,287
======== ========
</TABLE>
- --------
(1) Historical amounts have been restated to reflect the Company's two-for-one
stock split.
(2) These amounts relate to the Company's adoption of SFAS No. 127.
See Notes to Condensed Consolidated Financial Statements.
1
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN MILLIONS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED FEBRUARY 28,
-----------------------
1998 1997
----------- -----------
(UNAUDITED)
<S> <C> <C>
Revenues:
Investment banking...................................... $ 800 $ 522
Principal transactions:
Trading............................................... 903 869
Investments........................................... 72 56
Commissions............................................. 547 490
Fees:
Asset management, distribution and administration..... 676 587
Merchant and cardmember............................... 428 436
Servicing............................................. 171 200
Interest and dividends.................................. 3,933 3,369
Other................................................... 55 31
----------- -----------
Total revenues........................................ 7,585 6,560
Interest expense........................................ 3,145 2,709
Provision for consumer loan losses...................... 405 377
----------- -----------
Net revenues.......................................... 4,035 3,474
----------- -----------
Non-interest expenses:
Compensation and benefits............................. 1,788 1,490
Occupancy and equipment............................... 140 128
Brokerage, clearing and exchange fees................. 119 95
Information processing and communications............. 267 270
Marketing and business development.................... 294 288
Professional services................................. 128 93
Other................................................. 166 182
----------- -----------
Total non-interest expenses......................... 2,902 2,546
----------- -----------
Income before income taxes.............................. 1,133 928
Provision for income taxes.............................. 442 357
----------- -----------
Net income.............................................. $ 691 $ 571
=========== ===========
Preferred stock dividend requirements................... $ 15 $ 19
=========== ===========
Earnings applicable to common shares(1)................. $ 676 $ 552
=========== ===========
Earnings per common share(2)
Basic................................................. $ 1.15 $ 0.96
=========== ===========
Diluted............................................... $ 1.10 $ 0.91
=========== ===========
Average common shares outstanding(2)
Basic................................................. 586,751,340 573,410,658
=========== ===========
Diluted............................................... 616,377,562 605,691,066
=========== ===========
</TABLE>
- --------
(1) Amounts shown are used to calculate basic earnings per common share.
(2) Historical share and per share amounts have been restated to reflect the
Company's two-for-one stock split.
See Notes to Condensed Consolidated Financial Statements.
2
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED FEBRUARY 28,
--------------------
1998 1997
--------- ---------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities
Net income.............................................. $ 691 $ 571
Adjustments to reconcile net income to net cash used for
operating activities:
Non-cash charges included in net income............... 552 490
Changes in assets and liabilities:
Cash and securities deposited with clearing
organizations or segregated under federal and other
regulations........................................ 1,839 1,568
Financial instruments owned, net of financial
instruments sold, not yet purchased................ (11,473) (1,982)
Securities borrowed, net of securities loaned....... (629) (8,478)
Receivables and other assets........................ (5,272) (1,729)
Payables and other liabilities...................... 61 3,812
--------- --------
Net cash used for operating activities.................... (14,231) (5,748)
--------- --------
Cash flows from investing activities
Net (payments for) proceeds from:
Office facilities..................................... (85) (37)
Net principal disbursed on consumer loans............. (693) (1,120)
Sales of consumer loans............................... 368 --
--------- --------
Net cash used for investing activities.................... (410) (1,157)
--------- --------
Cash flows from financing activities
Net proceeds related to short-term borrowings........... 6,022 2,637
Securities sold under agreements to repurchase, net of
securities purchased under agreements to resell........ 5,194 2,578
Proceeds from:
Deposits.............................................. 206 108
Issuance of common stock.............................. 64 35
Issuance of long-term borrowings...................... 2,917 3,434
Issuance of Capital Units............................. -- 134
Payments for:
Repurchases of common stock........................... (27) (124)
Repayments of long-term borrowings.................... (1,658) (1,514)
Redemption of cumulative preferred stock.............. -- (195)
Cash dividends........................................ (134) (88)
--------- --------
Net cash provided by financing activities................. 12,584 7,005
--------- --------
Net (decrease) increase in cash and cash equivalents...... (2,057) 100
Cash and cash equivalents, at beginning of period......... 8,255 5,386
--------- --------
Cash and cash equivalents, at end of period............... $ 6,198 $ 5,486
========= ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
3
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. INTRODUCTION AND BASIS OF PRESENTATION
The Merger
On May 31, 1997, Morgan Stanley Group Inc. ("Morgan Stanley") was merged
with and into Dean Witter, Discover & Co. ("Dean Witter Discover") (the
"Merger"). At that time, Dean Witter Discover changed its corporate name to
Morgan Stanley, Dean Witter, Discover & Co. ("MSDWD"). In conjunction with the
Merger, MSDWD issued 260,861,078 shares of its common stock, as each share of
Morgan Stanley common stock then outstanding was converted into 1.65 shares of
MSDWD's common stock (the "Exchange Ratio"). In addition, each share of Morgan
Stanley preferred stock was converted into one share of a corresponding series
of preferred stock of MSDWD. The Merger was treated as a tax-free exchange.
On March 24, 1998, MSDWD changed its corporate name to Morgan Stanley Dean
Witter & Co. (the "Company").
The Company
The condensed consolidated financial statements include the accounts of
Morgan Stanley Dean Witter & Co. and its U.S. and international subsidiaries,
including Morgan Stanley & Co. Incorporated ("MS&Co."), Morgan Stanley & Co.
International Limited ("MSIL"), Morgan Stanley Japan Limited ("MSJL"), Dean
Witter Reynolds Inc. ("DWR"), Dean Witter InterCapital Inc. and NOVUS Credit
Services Inc.
The Company, through its subsidiaries, provides a wide range of financial
and securities services on a global basis and provides credit and transaction
services nationally. Its securities and asset management businesses include
securities underwriting, distribution and trading; merger, acquisition,
restructuring, real estate, project finance and other corporate finance
advisory activities; asset management; private equity and other principal
investment activities; brokerage and research services; the trading of foreign
exchange and commodities as well as derivatives on a broad range of asset
categories, rates and indices; and global custody, securities clearance
services and securities lending. The Company's credit and transaction services
businesses include the operation of the NOVUS Network, a proprietary network
of merchant and cash access locations, and the issuance of the Discover(R)
Card and other proprietary general purpose credit cards. The Company's
services are provided to a large and diversified group of clients and
customers, including corporations, governments, financial institutions and
individuals.
Basis of Financial Information and Change in Fiscal Year End
The condensed consolidated financial statements give retroactive effect to
the Merger, which was accounted for as a pooling of interests. The pooling of
interests method of accounting requires the restatement of all periods
presented as if Dean Witter Discover and Morgan Stanley had always been
combined.
Prior to the Merger, Dean Witter Discover's year ended on December 31 and
Morgan Stanley's fiscal year ended on November 30. Subsequent to the Merger,
the Company adopted a fiscal year end of November 30. All information included
herein for the quarter ended February 28, 1997 reflects the change in fiscal
year end.
The condensed consolidated financial statements are prepared in accordance
with generally accepted accounting principles, which require management to
make estimates and assumptions regarding certain trading inventory valuations,
consumer loan loss levels, the potential outcome of litigation and other
matters that affect the financial statements and related disclosures.
Management believes that the estimates utilized in the preparation of the
condensed consolidated financial statements are prudent and reasonable. Actual
results could differ materially from these estimates.
Certain reclassifications have been made to prior year amounts to conform to
the current presentation. All material intercompany balances and transactions
have been eliminated.
4
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The condensed consolidated financial statements should be read in
conjunction with the Company's consolidated financial statements and notes
thereto included in the Company's Annual Report on Form 10-K (the "Form 10-K")
for the fiscal year ended November 30, 1997. The condensed consolidated
financial statements reflect all adjustments (consisting only of normal
recurring adjustments) which are, in the opinion of management, necessary for
the fair statement of the results for the interim period. The results of
operations for interim periods are not necessarily indicative of results for
the entire year.
Financial instruments, including derivatives, used in the Company's trading
activities are recorded at fair value, and unrealized gains and losses are
reflected in trading revenues. Interest revenue and expense arising from
financial instruments used in trading activities are reflected in the
condensed consolidated statements of income as interest revenue or expense.
The fair values of trading positions generally are based on listed market
prices. If listed market prices are not available or if liquidating the
Company's positions would reasonably be expected to impact market prices, fair
value is determined based on other relevant factors, including dealer price
quotations and price quotations for similar instruments traded in different
markets, including markets located in different geographic areas. Fair values
for certain derivative contracts are derived from pricing models which
consider current market and contractual prices for the underlying financial
instruments or commodities, as well as time value and yield curve or
volatility factors underlying the positions. Purchases and sales of financial
instruments are recorded in the accounts on trade date. Unrealized gains and
losses arising from the Company's dealings in over-the-counter ("OTC")
financial instruments, including derivative contracts related to financial
instruments and commodities, are presented in the accompanying condensed
consolidated statements of financial condition on a net-by-counterparty basis,
when appropriate.
Equity securities purchased in connection with private equity and other
principal investment activities are initially carried in the condensed
consolidated financial statements at their original costs. The carrying value
of such equity securities is adjusted when changes in the underlying fair
values are readily ascertainable, generally as evidenced by listed market
prices or transactions which directly affect the value of such equity
securities. Downward adjustments relating to such equity securities are made
in the event that the Company determines that the eventual realizable value is
less than the carrying value. The carrying value of investments made in
connection with principal real estate activities which do not involve equity
securities are adjusted periodically based on independent appraisals,
estimates prepared by the Company of discounted future cash flows of the
underlying real estate assets or other indicators of fair value.
Loans made in connection with private equity and investment banking
activities are carried at cost plus accrued interest less reserves, if deemed
necessary, for estimated losses.
The Company has entered into various contracts as hedges against specific
assets, liabilities or anticipated transactions. These contracts include
interest rate swaps, foreign exchange forwards, foreign currency swaps, and
cost of funds agreements. The Company uses interest rate and currency swaps to
manage the interest rate and currency exposure arising from certain borrowings
and to match the refinancing characteristics of consumer loans with the
borrowings that fund these loans. For contracts that are designated as hedges
of the Company's assets and liabilities, gains and losses are deferred and
recognized as adjustments to interest revenue or expense over the remaining
life of the underlying assets or liabilities. For contracts that are hedges of
asset securitizations, gains and losses are recognized as adjustments to
servicing fees. Gains and losses resulting from the termination of hedge
contracts prior to their stated maturity are recognized ratably over the
remaining life of the instrument being hedged. The Company also uses foreign
exchange forward contracts to manage the currency exposure relating to its net
monetary investment in non-U.S. dollar functional currency operations. The
gain or loss from revaluing these contracts is deferred and reported within
cumulative translation adjustments in shareholders' equity, net of tax
effects, with the related unrealized amounts due from or to counterparties
included in receivables from or payables to brokers, dealers and clearing
organizations.
5
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Earnings Per Share
As of December 1, 1997, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings per Share" ("SFAS No. 128").
SFAS No. 128 replaces the previous earnings per share ("EPS") categories of
primary and fully diluted with "basic EPS," which reflects no dilution from
common stock equivalents, and "diluted EPS," which reflects dilution from
common stock equivalents and other dilutive securities based on the average
price per share of the Company's common stock during the period. The EPS
amounts of prior periods have been restated in accordance with SFAS No. 128.
The adoption of SFAS No. 128 has not had a material effect on the Company's
EPS calculations.
The calculations of earnings per common share are based on the weighted
average number of common shares and share equivalents outstanding and give
effect to preferred stock dividend requirements. All per share and share
amounts reflect stock splits effected by Dean Witter Discover and Morgan
Stanley prior to the Merger, as well as the additional shares issued to Morgan
Stanley shareholders pursuant to the Exchange Ratio.
Accounting Pronouncements
As of January 1, 1998, the Company adopted SFAS No. 127, "Deferral of the
Effective Date of Certain Provisions of FASB Statement No. 125," which was
effective for transfers and pledges of certain financial assets and collateral
made after December 31, 1997. The adoption of SFAS No. 127 created additional
assets and liabilities on the Company's consolidated statement of financial
condition related to the recognition of securities provided and received as
collateral. At February 28, 1998, the impact of SFAS No. 127 on the Company's
condensed consolidated statement of financial position (excluding
reclassifications) was an increase to total assets and total liabilities of
$13,503 million.
In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 130, "Reporting Comprehensive Income" and SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." These statements, which
are effective for fiscal years beginning after December 15, 1997, establish
standards for the reporting and presentation of comprehensive income and the
disclosure requirements related to segments.
In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosures
about Pensions and Other Postretirement Benefits," which revises and
standardizes pension and other postretirement benefit plan disclosures that
are to be included in the employers' financial statements. SFAS No. 132 does
not change the measurement or recognition rules for pensions and other
postretirement benefit plans, and is effective for fiscal years beginning
after December 15, 1997.
2. CONSUMER LOANS
Activity in the allowance for consumer loan losses was as follows (dollars
in millions):
<TABLE>
<CAPTION>
THREE MONTHS
ENDED FEBRUARY 28,
--------------------
1998 1997
--------- ---------
<S> <C> <C>
Balance, beginning of period.............................. $ 884 $ 781
Provision for loan losses................................. 405 377
Less deductions
Charge-offs............................................. 446 402
Recoveries.............................................. (43) (40)
--------- ---------
Net charge-offs....................................... 403 362
--------- ---------
Other(1).................................................. 19 32
--------- ---------
Balance, end of period.................................... $ 905 $ 828
========= =========
</TABLE>
- --------
(1) Primarily reflects net transfers related to asset securitizations.
6
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Interest accrued on loans subsequently charged off, recorded as a reduction
of interest revenue, was $68 million in the quarter ended February 28, 1998
and $74 million in the quarter ended February 28, 1997.
The Company received proceeds from asset securitizations of $368 million in
the quarter ended February 28, 1998. The uncollected balances of consumer
loans sold through securitizations were $14,965 million at February 28, 1998
and $15,033 million at November 30, 1997.
3. LONG-TERM BORROWINGS
Long-term borrowings at February 28, 1998 scheduled to mature within one
year aggregated $7,885 million.
During the quarter ended February 28, 1998, the Company issued senior notes
aggregating $2,922 million, including non-U.S. dollar currency notes
aggregating $589 million, primarily pursuant to its public debt shelf
registration statements. The weighted average coupon interest rate of these
notes was 5.4% at February 28, 1998; the Company has entered into certain
transactions to obtain floating interest rates based primarily on short-term
LIBOR trading levels. Maturities in the aggregate of these notes by fiscal
year are as follows: 1999, $1,222 million; 2000, $976 million; 2001, $411
million; and thereafter, $313 million. In the quarter ended February 28, 1998,
$1,658 million of senior notes were repaid.
4. PREFERRED STOCK AND CAPITAL UNITS
Preferred stock is composed of the following issues:
<TABLE>
<CAPTION>
SHARES OUTSTANDING AT BALANCE AT
------------------------- -------------------------
FEBRUARY 28, NOVEMBER 30, FEBRUARY 28, NOVEMBER 30,
1998 1997 1998 1997
------------ ------------ ------------ ------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
ESOP Convertible Preferred
Stock, liquidation
preference $35.88........ 3,629,282 3,646,664 $130 $131
Series A Fixed/Adjustable
Rate Cumulative Preferred
Stock, stated value $200
......................... 1,725,000 1,725,000 345 345
7- 3/4% Cumulative
Preferred Stock, stated
value $200............... 1,000,000 1,000,000 200 200
7- 3/8% Cumulative
Preferred Stock, stated
value $200............... 1,000,000 1,000,000 200 200
---- ----
Total..................... $875 $876
==== ====
</TABLE>
Each issue of outstanding preferred stock ranks in parity with all other
outstanding preferred stock of the Company.
The Company has Capital Units outstanding which were issued by the Company
and Morgan Stanley Finance plc ("MS plc"), a U.K. subsidiary. A Capital Unit
consists of (a) a Subordinated Debenture of MS plc guaranteed by the Company
and having maturities from 2013 to 2017 and (b) a related Purchase Contract
issued by the Company, which may be accelerated by the Company beginning
approximately one year after the issuance of each Capital Unit, requiring the
holder to purchase one Depositary Share representing shares (or fractional
shares) of the Company's Cumulative Preferred Stock. The aggregate amount of
Capital Units outstanding was $999 million at February 28, 1998 and November
30, 1997.
7
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5. COMMON STOCK AND SHAREHOLDERS' EQUITY
MS&Co. and DWR are registered broker-dealers and registered futures
commission merchants and, accordingly, are subject to the minimum net capital
requirements of the Securities and Exchange Commission, the New York Stock
Exchange and the Commodity Futures Trading Commission. MS&Co. and DWR have
consistently operated in excess of these net capital requirements. MS&Co.'s
net capital totaled $2,491 million at February 28, 1998 which exceeded the
amount required by $2,026 million. DWR's net capital totaled $626 million at
February 28, 1998 which exceeded the amount required by $549 million. MSIL, a
London-based broker-dealer subsidiary, is subject to the capital requirements
of the Securities and Futures Authority, and MSJL, a Tokyo-based broker-
dealer, is subject to the capital requirements of the Japanese Ministry of
Finance. MSIL and MSJL have consistently operated in excess of their
respective regulatory capital requirements.
Under regulatory net capital requirements adopted by the Federal Deposit
Insurance Corporation ("FDIC") and other regulatory capital guidelines, FDIC
insured financial institutions must maintain (a) 3% to 5% of Tier 1 capital,
as defined, to total assets ("leverage ratio") and (b) 8% combined Tier 1 and
Tier 2 capital, as defined, to risk weighted assets ("risk-weighted capital
ratio"). At February 28, 1998, the leverage ratio and risk-weighted capital
ratio of each of the Company's FDIC-insured financial institutions exceeded
these and all other regulatory minimums.
Certain other U.S. and non-U.S. subsidiaries are subject to various
securities, commodities and banking regulations, and capital adequacy
requirements promulgated by the regulatory and exchange authorities of the
countries in which they operate. These subsidiaries have consistently operated
in excess of their local capital adequacy requirements.
6. EARNINGS PER SHARE
Earnings per share was calculated as follows (in millions, except for per
share data):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
FEBRUARY 28,
------------------
1998 1997
--------- ---------
<S> <C> <C>
BASIC EPS:
Net income............................................. $ 691 $ 571
Less: preferred stock dividend requirements............ (15) (19)
--------- ---------
Net income available to common shareholders............ $ 676 $ 552
========= =========
Weighted-average common shares outstanding............. 587 573
========= =========
Basic EPS.............................................. $ 1.15 $ 0.96
========= =========
DILUTED EPS:
Net income............................................. $ 691 $ 571
Less: preferred stock dividend requirements after
assumed conversion of ESOP preferred stock............ (13) (18)
--------- ---------
Net income available to common shareholders............ $ 678 $ 553
========= =========
Weighted-average common shares outstanding............. 587 573
Effect of dilutive securities:
Stock options........................................ 17 21
ESOP convertible preferred stock..................... 12 12
--------- ---------
Weighted-average common shares outstanding and common
stock equivalents..................................... 616 606
========= =========
Diluted EPS............................................ $ 1.10 $ 0.91
========= =========
</TABLE>
8
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
7. COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Company has been named as a defendant
in various lawsuits and has been involved in certain investigations and
proceedings. Some of these matters involve claims for substantial amounts.
Although the ultimate outcome of these matters cannot be ascertained at this
time, it is the opinion of management, after consultation with outside
counsel, that the resolution of such matters will not have a material adverse
effect on the consolidated financial condition of the Company, but may be
material to the Company's operating results for any particular period,
depending upon the level of the Company's net income for such period.
The Company had approximately $5.7 billion and $5.5 billion of letters of
credit outstanding at February 28, 1998 and at November 30, 1997 to satisfy
various collateral requirements.
8. DERIVATIVE CONTRACTS
In the normal course of business, the Company enters into a variety of
derivative contracts related to financial instruments and commodities. The
Company uses swap agreements in managing its interest rate exposure. The
Company also uses forward and option contracts, futures and swaps in its
trading activities; these financial instruments also are used to hedge the
U.S. dollar cost of certain foreign currency exposures. In addition, financial
futures and forward contracts are actively traded by the Company and are used
to hedge proprietary inventory. The Company also enters into delayed delivery,
when-issued, and warrant and option contracts involving securities. These
instruments generally represent future commitments to swap interest payment
streams, exchange currencies or purchase or sell other financial instruments
on specific terms at specified future dates. Many of these products have
maturities that do not extend beyond one year; swaps and options and warrants
on equities typically have longer maturities. For further discussion of these
matters, refer to "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Derivative Financial Investments" and Note 8 to the
consolidated financial statements for the fiscal year ended November 30, 1997,
included in the Form 10-K.
These derivative instruments involve varying degrees of off-balance sheet
market risk. Future changes in interest rates, foreign currency exchange rates
or the fair values of the financial instruments, commodities or indices
underlying these contracts ultimately may result in cash settlements exceeding
fair value amounts recognized in the condensed consolidated statements of
financial condition, which, as described in Note 1, are recorded at fair
value, representing the cost of replacing those instruments.
The Company's exposure to credit risk with respect to these derivative
instruments at any point in time is represented by the fair value of the
contracts reported as assets. These amounts are presented on a net-by-
counterparty basis (when appropriate), but are not reported net of collateral,
which the Company obtains with respect to certain of these transactions to
reduce its exposure to credit losses.
9
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The credit quality of the Company's trading-related derivatives at February
28, 1998 and November 30, 1997 is summarized in the tables below, showing the
fair value of the related assets by counterparty credit rating. The credit
ratings are determined by external rating agencies or by equivalent ratings
used by the Company's Credit Department:
<TABLE>
<CAPTION>
OTHER
COLLATERALIZED NON-
NON-INVESTMENT INVESTMENT
AAA AA A BBB GRADE GRADE TOTAL
------ ------ ------ ------ -------------- ---------- -------
AT FEBRUARY 28, 1998 (DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
Interest rate and
currency swaps and
options (including
caps, floors and swap
options) and other
fixed income securities
contracts.............. $ 958 $3,107 $2,626 $ 709 $ 56 $ 583 $ 8,039
Foreign exchange forward
contracts and options.. 829 1,928 822 157 -- 82 3,818
Mortgage-backed
securities forward
contracts, swaps and
options................ 118 9 18 1 -- 2 148
Equity securities
contracts (including
equity swaps, warrants
and options)........... 1,301 996 685 217 811 124 4,134
Commodity forwards,
options and swaps...... 102 386 481 585 5 253 1,812
------ ------ ------ ------ ---- ------ -------
Total.................. $3,308 $6,426 $4,632 $1,669 $872 $1,044 $17,951
====== ====== ====== ====== ==== ====== =======
Percent of total........ 18% 36% 26% 9% 5% 6% 100%
====== ====== ====== ====== ==== ====== =======
AT NOVEMBER 30, 1997
Interest rate and
currency swaps and
options (including
caps, floors and swap
options) and other
fixed income securities
contracts.............. $ 754 $2,761 $2,544 $ 436 $ 33 $ 568 $ 7,096
Foreign exchange forward
contracts and options.. 788 2,504 1,068 72 -- 176 4,608
Mortgage-backed
securities forward
contracts, swaps and
options................ 156 90 50 2 -- 10 308
Equity securities
contracts (including
equity swaps, warrants
and options)........... 1,141 917 567 233 780 152 3,790
Commodity forwards,
options and swaps...... 70 425 380 312 12 145 1,344
------ ------ ------ ------ ---- ------ -------
Total.................. $2,909 $6,697 $4,609 $1,055 $825 $1,051 $17,146
====== ====== ====== ====== ==== ====== =======
Percent of total........ 17% 39% 27% 6% 5% 6% 100%
====== ====== ====== ====== ==== ====== =======
</TABLE>
A substantial portion of the Company's securities and commodities
transactions are collateralized and are executed with and on behalf of
commercial banks and other institutional investors, including other brokers
and dealers. Positions taken and commitments made by the Company, including
positions taken and underwriting and financing commitments made in connection
with its private equity and other principal investment activities, often
involve substantial amounts and significant exposure to individual issuers and
businesses, including non-investment grade issuers. The Company seeks to limit
concentration risk created in its businesses through a variety of separate but
complementary financial, position and credit exposure reporting systems,
including the use of trading limits based in part upon the Company's review of
the financial condition and credit ratings of its counterparties.
See also "Risk Management" in the Form 10-K for discussions of the Company's
risk management policies and procedures for its securities businesses.
9. SUBSEQUENT EVENTS
On March 26, 1998, the Company announced that it is entering into agreements
to sell its Prime Option MasterCard credit card portfolio, which it operates
in conjunction with NationsBank. The sale is expected to close during the
quarter ending May 31, 1998, and is not expected to have a material effect on
the Company's consolidated financial condition or results of operations. The
Company also announced its decision to discontinue its BRAVO(R) credit card
brand. The Company plans to consolidate the BRAVO portfolio with its Private
Issue and Discover Card brands.
On April 2, 1998, the Company announced that it is exploring the potential
sale of its Global Custody and Correspondent Clearing businesses as part of a
strategic decision to focus on growing its core businesses--Securities and
Asset Management and Credit and Transaction Services.
10
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
To the Directors and Shareholders of
Morgan Stanley Dean Witter & Co.
We have reviewed the accompanying condensed consolidated statement of
financial condition of Morgan Stanley Dean Witter & Co. and subsidiaries
(formerly Morgan Stanley, Dean Witter, Discover & Co.) as of February 28,
1998, and the related condensed consolidated statements of income and cash
flows for the three month periods ended February 28, 1998 and 1997. These
condensed consolidated financial statements are the responsibility of the
management of Morgan Stanley Dean Witter & Co. We were furnished with the
report of other accountants on their review of the interim financial
information of Morgan Stanley Group Inc. and subsidiaries for the quarter
ended February 28, 1997, which statements reflect total revenues of $4,076
million for the three month period ended February 28, 1997.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review and the report of other accountants, we are not aware of
any material modifications that should be made to such condensed consolidated
financial statements for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated statement of financial condition of Morgan Stanley
Dean Witter & Co. and subsidiaries as of November 30, 1997, and the related
consolidated statements of income, cash flows and changes in shareholders'
equity for the year then ended (not presented herein), included in Morgan
Stanley Dean Witter & Co.'s Annual Report on Form 10-K for the fiscal year
ended November 30, 1997; and in our report dated January 23, 1998, we
expressed an unqualified opinion on those consolidated financial statements
based on our audit and the report of other auditors.
/s/ Deloitte & Touche LLP
New York, New York
April 13, 1998
11
<PAGE>
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
The Stockholders and
Board of Directors of
Morgan Stanley Group Inc.
We have reviewed the condensed consolidated statement of financial condition
of Morgan Stanley Group Inc. and subsidiaries (the "Company") as of February
28, 1997 and the related condensed consolidated statements of income and cash
flows for the three-month period ended February 28, 1997 (not presented
separately herein). These financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data, and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, which will
be performed for the full year with the objective of expressing an opinion
regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying condensed consolidated financial statements
referred to above for them to be in conformity with generally accepted
accounting principles.
/s/ Ernst & Young LLP
New York, New York
March 27, 1997
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
The Merger
On May 31, 1997, Morgan Stanley Group Inc. ("Morgan Stanley") was merged
with and into Dean Witter, Discover & Co. ("Dean Witter Discover") (the
"Merger"). At that time, Dean Witter Discover changed its corporate name to
Morgan Stanley, Dean Witter, Discover & Co. ("MSDWD"). In conjunction with the
Merger, each share of Morgan Stanley common stock then outstanding was
converted into 1.65 shares of MSDWD's common stock and each share of Morgan
Stanley preferred stock was converted into one share of a corresponding series
of preferred stock of MSDWD. The Merger was treated as a tax-free exchange.
On March 24, 1998, MSDWD changed its corporate name to Morgan Stanley Dean
Witter & Co. (the "Company").
Basis of Financial Information and Change in Fiscal Year End
The condensed consolidated financial statements give retroactive effect to
the Merger, which was accounted for as a pooling of interests. The pooling of
interests method of accounting requires the restatement of all periods
presented as if Dean Witter Discover and Morgan Stanley had always been
combined.
Prior to the Merger, Dean Witter Discover's year ended on December 31 and
Morgan Stanley's fiscal year ended on November 30. Subsequent to the Merger,
the Company adopted a fiscal year end of November 30. All information included
herein for the quarter ended February 28, 1997 reflects the change in fiscal
year end.
RESULTS OF OPERATIONS*
Certain Factors Affecting Results of Operations
The Company's results of operations may be materially affected by market
fluctuations and economic factors. In addition, results of operations in the
past have been and in the future may continue to be materially affected by
many factors of a global nature, including economic and market conditions; the
availability of capital; the level and volatility of interest rates; currency
values and other market indices; the availability of credit; inflation; and
legislative and regulatory developments. Such factors may also have an impact
on the Company's ability to achieve its strategic objectives, including
(without limitation) profitable global expansion.
The Company's Securities and Asset Management business, particularly its
involvement in primary and secondary markets for all types of financial
products, including derivatives, is subject to substantial positive and
negative fluctuations due to a variety of factors that cannot be predicted
with great certainty, including variations in the fair value of securities and
other financial products and the volatility and liquidity of trading markets.
Fluctuations also occur due to the level of market activity, which, among
other things, affects the flow of investment dollars into mutual funds, and
the size, number and timing of transactions or assignments (including
realization of returns from the Company's private equity investments). In the
Company's Credit and Transaction Services business, changes in economic
variables may substantially affect consumer loan growth and credit quality.
Such variables include the number of personal bankruptcy filings, the rate of
unemployment and the level of consumer debt as a percentage of income.
- --------
* This Management's Discussion and Analysis of Financial Condition and Results
of Operations contains forward-looking statements, as well as a discussion
of some of the risks and uncertainties involved in the Company's business
that could affect the matters referred to in such statements.
13
<PAGE>
The Company's results of operations also may be materially affected by
competitive factors. In addition to competition from firms traditionally
engaged in the securities business, there has been increased competition from
other sources, such as commercial banks, insurance companies, mutual fund
groups and other companies offering financial services both in the U.S. and
globally. As a result of recent and pending legislative and regulatory
initiatives in the U.S. to remove or relieve certain restrictions on
commercial banks, competition in some markets that have traditionally been
dominated by investment banks and retail securities firms has increased and
may continue to increase in the near future. In addition, recent and
continuing convergence and consolidation in the financial services industry
will lead to increased competition from larger diversified financial services
organizations.
Such competition, among other things, affects the Company's ability to
attract and retain highly skilled individuals. Competitive factors also affect
the Company's success in attracting and retaining clients and assets by its
ability to meet investors' saving and investment needs through consistency of
investment performance and accessibility to a broad array of financial
products and advice. In the credit services industry, competition centers on
merchant acceptance of credit cards, credit card account acquisition and
customer utilization of credit cards. Merchant acceptance is based on both
competitive transaction pricing and the volume of credit cards in circulation.
Credit card account acquisition and customer utilization are driven by the
offering of credit cards with competitive and appealing features such as no
annual fees, low introductory and attractive interest rates, and other
customized features targeting specific consumer groups and by having broad
merchant acceptance.
As a result of the above economic and competitive factors, net income and
revenues in any particular period may not be representative of full-year
results and may vary significantly from year to year and from quarter to
quarter. The Company intends to manage its business for the long term and help
mitigate the potential effects of market downturns by strengthening its
competitive position in the global financial services industry through
diversification of its revenue sources and enhancement of its global
franchise. The Company's ability and success in maintaining high levels of
profitable business activities, emphasizing fee-based assets that are designed
to generate a continuing stream of revenues, managing risks in both the
Securities and Asset Management and Credit and Transaction Services
businesses, evaluating credit product pricing and monitoring costs will
continue to affect its overall financial results. In addition, the
complementary trends in the financial services industry of consolidation and
globalization present, among other things, technological, risk management and
other infrastructure challenges that will require effective resource
allocation in order for the Company to remain competitive.
Economic and Market Conditions in the First Fiscal Quarter of 1998
The favorable economic and market conditions that characterized the global
financial markets in fiscal 1997 continued through much of the first fiscal
quarter of 1998. After three unprecedented years of share price gains, U.S.
financial markets continued to strengthen in an environment characterized by
solid economic expansion and continued heavy cash flows into mutual funds.
Expectations of continued merger and consolidation activity also contributed
to increasing equity share prices. Despite continued turmoil and uncertainty
relating to the economic situation in Asia, the U.S. economy continued to
exhibit signs of growth, and strong corporate earnings and high levels of
consumer confidence persisted. Nevertheless, the levels of inflation and
interest rates remained relatively low, and the Federal Reserve Board has not
altered the overnight lending rate since March 1997. While the overall
performance of U.S. financial markets continued to be favorable, such
performance was, at times, volatile, partly due to concerns of lower corporate
earnings resulting from the difficult economic situation in Asia.
Conditions in most European markets were also favorable during the quarter,
primarily due to strong corporate earnings and stable economic conditions.
Most major stock exchanges reached record levels as interest and inflation
rates in many European nations declined due to increasing certainty that the
first phase of the approaching European Economic and Monetary Union ("EMU")
would be implemented on schedule.
Market conditions in the Far East were dominated by the continuing economic
and financial difficulties existing in the region since the latter half of
fiscal 1997. Japan's rate of economic growth has continued to lag,
14
<PAGE>
and the future effect of its government's measures to stimulate the economy
remained uncertain. Market conditions were also unstable elsewhere in Asia, as
uncertainty surrounding Indonesia's compliance with fiscal requirements
established by the International Monetary Fund led to a further weakening of
investor confidence. In addition, the currencies of many nations in the region
declined to record lows during the quarter.
First Fiscal Quarter 1998 and 1997 Results of the Company
The Company's net income of $691 million in the quarter ended February 28,
1998 represented an increase of 21% from the comparable period of fiscal 1997.
Diluted earnings per common share were $1.10 in the quarter ended February 28,
1998 as compared to $0.91 in the quarter ended February 28, 1997. The
Company's annualized return on common equity was 20.1% for the quarter ended
February 28, 1998, as compared with 20.7% for the quarter ended February 28,
1997.
The increase in net income in the quarter ended February 28, 1998 from the
comparable prior year period was due to higher revenues from securities
activities, including investment banking, principal transactions and
commissions, as well as increased asset management, distribution and
administration fees. These increases were partially offset by higher non-
interest expenses coupled with lower earnings from the Company's Credit and
Transaction Services business, primarily due to higher credit card net charge-
offs.
On March 26, 1998, the Company announced that it is entering into agreements
to sell its Prime Option MasterCard credit card portfolio, which it operates
in conjunction with NationsBank. The sale is expected to close during the
quarter ending May 31, 1998, and is not expected to have a material effect on
the Company's consolidated financial condition or results of operations. The
Company also announced its decision to discontinue its BRAVO(R) credit card
brand. The Company plans to consolidate the BRAVO portfolio with its Private
Issue and Discover Card brands.
On April 2, 1998, the Company announced that it is exploring the potential
sale of its Global Custody and Correspondent Clearing businesses as part of a
strategic decision to focus on growing its core businesses--Securities and
Asset Management and Credit and Transaction Services.
The remainder of Results of Operations is presented on a business segment
basis. Substantially all of the operating revenues and operating expenses of
the Company can be directly attributable to its two business segments:
Securities and Asset Management and Credit and Transaction Services. Certain
reclassifications have been made to prior-period amounts to conform to the
current year's presentation.
15
<PAGE>
SECURITIES AND ASSET MANAGEMENT
STATEMENTS OF INCOME (DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED FEBRUARY 28,
-------------------
1998 1997
--------- ---------
(UNAUDITED)
<S> <C> <C>
Revenues:
Investment banking......................................... $ 800 $ 522
Principal transactions:
Trading................................................... 903 869
Investments............................................... 72 56
Commissions................................................ 539 489
Asset management, distribution and administration fees..... 676 587
Interest and dividends..................................... 3,150 2,602
Other...................................................... 53 29
--------- ---------
Total revenues........................................... 6,193 5,154
Interest expense........................................... 2,852 2,426
--------- ---------
Net revenues............................................. 3,341 2,728
--------- ---------
Non-interest expenses:
Compensation and benefits.................................. 1,646 1,355
Occupancy and equipment.................................... 122 113
Brokerage, clearing and exchange fees...................... 116 95
Information processing and communications.................. 147 142
Marketing and business development......................... 111 96
Professional services...................................... 105 75
Other...................................................... 121 126
--------- ---------
Total non-interest expenses.............................. 2,368 2,002
--------- ---------
Income before income taxes.................................. 973 726
Income tax expense.......................................... 381 281
--------- ---------
Net income............................................... $ 592 $ 445
========= =========
</TABLE>
Securities and Asset Management net revenues of $3,341 million in the
quarter ended February 28, 1998 represented an increase of 22% from the
quarter ended February 28, 1997. Securities and Asset Management net income of
$592 million in the quarter ended February 28, 1998 represented an increase of
33% from the quarter ended February 28, 1997. The increases reflected higher
levels of investment banking, asset management, distribution and
administration fees, principal transaction trading and investment revenues and
commissions, partially offset by higher incentive-based compensation and other
non-interest expenses.
Investment Banking
Investment banking revenues are derived from the underwriting of securities
offerings and fees from advisory services. Investment banking revenues in the
quarter ended February 28, 1998 increased 53% from the quarter ended February
28, 1997, primarily reflecting significantly higher revenues from merger and
acquisition transactions as well as higher revenues from both debt and equity
underwritings. Revenues from merger, acquisition and restructuring activities
increased to record levels, as the global market for such transactions
continued to be robust during the quarter. The high levels of transaction
activity reflected the continuing trend of consolidation and globalization
across many industry sectors, coupled with continued financial deregulation in
the U.S. and market liberalization in Europe. In the quarter ended February
28, 1998, merger and acquisition activity was diversified across many
industries, with the financial services, pharmaceuticals and technology
sectors contributing the greatest level of revenues. Advisory fees from real
estate transactions also increased
16
<PAGE>
during the quarter. A stable financing environment, favorable economic
conditions and a strong real estate market, including accelerated
consolidation activity among real estate investment trusts ("REITS") and high
investor demand for the securities of public real estate companies,
contributed to the increase. Fixed income underwriting revenues also
increased, primarily attributable to higher revenues from global high yield
debt issuances. The market for these securities benefited from strong investor
demand and from the favorable market and economic conditions that existed
during much of the quarter which enabled certain non-investment grade issuers
to obtain attractive financing rates. Equity financing revenues also
increased, primarily due to a higher volume of equity offerings as compared to
the prior year's quarter.
Principal Transactions
Principal transaction trading revenues, which include revenues from customer
purchases and sales of securities in which the Company acts as principal and
gains and losses on securities held for resale, including derivatives,
increased 4% in the quarter ended February 28, 1998 from the quarter ended
February 28, 1997. The increase was due to higher revenues from trading in
equities, foreign exchange and commodities, partially offset by lower fixed
income trading revenues.
Fixed income trading revenues declined in the quarter ended February 28,
1998 from the quarter ended February 28, 1997, primarily due to lower revenues
from trading in investment grade and securitized fixed income securities. The
market for investment grade fixed income securities was adversely affected by
the economic and market turmoil in Asia, particularly during the first months
of the quarter. These uncertain conditions prompted "a flight to quality" as
investor demand for less risky Treasury securities increased, resulting in a
widening of interest rate spreads for investment grade securities. Revenues
from trading securitized fixed income securities also decreased, as the
declining yields of U.S. Treasury securities during the quarter increased
prepayment risk and resulted in a widening of interest rate spreads. These
decreases were partially offset by higher revenues from trading fixed income
derivatives and global high yield securities.
Equity trading revenues in the quarter ended February 28, 1998 increased
over the comparable prior year period. Revenues from trading in equity cash
products increased, primarily due to increased customer volume and a higher
market share in European markets benefiting from the Company's increased sales
and research coverage beginning in mid-1997. The increased activity in Europe
was primarily attributable to the strong performance of many European equity
markets during the quarter, reflecting favorable market conditions, low
interest rates and strong corporate earnings. Equity cash trading revenues
also benefited from an increase in the Company's market share in Japan. Higher
revenues from equity derivative securities also contributed to the increase in
equity trading revenues.
Trading revenues from commodity products increased in the quarter ended
February 28, 1998, primarily driven by higher revenues from trading in crude
oil, refined energy products and precious and base metals. Revenues from
trading in crude oil and refined energy products were impacted by falling
prices during most of the quarter due to diminished demand for energy products
in Asia amid the economic crisis, declining tensions between the U.S. and Iraq
and growing output from certain oil producing regions, including the North
Sea. Revenues from trading in precious and base metals benefited from rising
silver prices and increased volatility in the gold market. These increases
were partially offset by lower revenues from trading in natural gas as
unseasonably warm weather in the Midwest and Northeast regions of the U.S.
caused a reduction in the demand for home heating fuel, leading to a decline
in prices.
Foreign exchange trading revenues also increased in the quarter ended
February 28, 1998, and represented the second highest level of quarterly
foreign exchange trading revenues achieved by the Company. The increase was
primarily attributable to high levels of customer trading volumes and
volatility in foreign exchange markets, particularly during the first two
months of the quarter. Such conditions were primarily the result of the
difficult economic and financial conditions existing in Asia, as diminished
investor confidence caused many currencies in this region to reach record
lows. Conditions in Asia were more stable during the latter part of the
quarter, as the success of South Korean banks to reschedule their
international debt payments reduced volatility in the region.
17
<PAGE>
In addition, the U.S. dollar continued to exhibit strength against other major
currencies during the quarter, primarily due to the overall strength of the
U.S. economy.
Principal transaction investment gains aggregating $72 million were
recognized in the quarter ended February 28, 1998 as compared to $56 million
in the comparable prior year quarter. Fiscal 1998's revenues were primarily
related to gains realized from the sale of the Company's remaining position in
Fort James Corporation. Net increases in the carrying values of certain
private equity investments and gains from certain venture capital investments
also contributed to the increase in principal transaction investment revenues.
Commissions
Commission revenues primarily arise from agency transactions in listed and
over-the-counter equity securities, and sales of mutual funds, futures,
insurance products and options. Commission revenues increased 10% in the
quarter ended February 28, 1998 from the quarter ended February 28, 1997. In
U.S. markets, the Company benefited from a high volume of customer securities
transactions. Revenues from markets in the Far East also benefited from strong
transaction volumes, coupled with an increase in the Company's market share
due to a shift in customer trading volume away from certain large Japanese
brokerage companies. In Europe, trading volumes continued to be high due to
the strong performance of many equity markets within that region.
Asset Management, Distribution and Administration Fees
Asset management, distribution and administration revenues include fees for
asset management services, including fund management fees which are received
for investment management, fees received for promoting and distributing mutual
funds ("12b-1 fees"), and other administrative fees and non-interest revenues
earned from correspondent clearing and custody services. Fund management fees
arise from investment management services the Company provides to registered
investment companies (the "Funds") pursuant to various contractual
arrangements. The Company receives management fees based upon each Fund's
average daily net assets. The Company receives 12b-1 fees for services it
provides in promoting and distributing certain open-ended Funds. These fees
are based on either the average daily Fund net asset balances or average daily
aggregate net Fund sales and are affected by changes in the overall level and
mix of assets under management and administration. The Company also receives
fees from investment management services provided to segregated customer
accounts pursuant to various contractual arrangements.
Asset management, distribution and administration revenues increased 15% in
the quarter ended February 28, 1998 from the quarter ended February 28, 1997,
reflecting strong fund performance and favorable market conditions which
continue to attract inflows of new business. Higher fund management and 12b-1
fees, as well as increased revenues from international equity and U.S. fixed
income products resulting from inflows of client assets and market
appreciation had a favorable impact on these revenues.
Customer assets under management or supervision increased to $356 billion at
February 28, 1998 from $290 billion at February 28, 1997. The increase in
assets under management or supervision reflected continued inflows of customer
assets and appreciation in the value of existing customer portfolios. Customer
assets under management or supervision included products offered primarily to
individual investors of $201 billion at February 28, 1998 and $168 billion at
February 28, 1997. Products offered primarily to institutional investors was
$155 billion at February 28, 1998 and $122 billion at February 28, 1997.
Customer assets under administration in the global custody business
increased to $402 billion at February 28, 1998 from $152 billion at February
28, 1997. Approximately $217 billion of this increase was attributable to the
Company's acquisition of the institutional global custody business of Barclays
Bank PLC ("Barclays") on April 3, 1997, and approximately $97 billion of these
assets remain subject to current clients of Barclays agreeing to become
clients of the Company. Appreciation in the value of customer portfolios and
additional assets placed
18
<PAGE>
under custody with the Company, including new customer accounts and additional
assets from existing customers, also contributed to the growth in assets under
administration.
Net Interest
Interest and dividend revenues and expense are a function of the level and
mix of total assets and liabilities, including financial instruments owned,
reverse repurchase and repurchase agreements and customer margin loans, and
the prevailing level, term structure and volatility of interest rates.
Interest and dividend revenues and expense should be viewed in the broader
context of principal trading and investment banking results. Decisions
relating to principal transactions in securities are based on an overall
review of aggregate revenues and costs associated with each transaction or
series of transactions. This review includes an assessment of the potential
gain or loss associated with a trade, the interest income or expense
associated with financing or hedging the Company's positions, and potential
underwriting, commission or other revenues associated with related primary or
secondary market sales. Net interest revenues increased 69% in the quarter
ended February 28, 1998 from the quarter ended February 28, 1997. The increase
was primarily attributable to higher levels of revenues from net interest
earning assets, including financial instruments owned and customer margin
receivable balances. Higher levels of securities lending transactions also had
a positive affect on net interest and dividend revenues. These increases were
partially offset by higher interest expense associated with a higher level of
interest bearing liabilities, including long-term debt.
Non-Interest Expenses
Total non-interest expenses increased 18% in the quarter ended February 28,
1998 from the quarter ended February 28, 1997. Within that category,
compensation and benefits expense increased 21%, principally reflecting
increased incentive compensation based on higher revenues and earnings.
Excluding compensation and benefits expense, non-interest expenses increased
12%. Occupancy and equipment expenses increased 8%, primarily due to increased
office space in Hong Kong and higher occupancy costs in London and certain
other office locations. Brokerage, clearing and exchange fees increased 22%,
primarily related to the acquisition of the institutional global custody
business of Barclays, as well as a higher level of securities trading volume
during the quarter. Information processing and communications expenses
increased 4%, primarily due to the impact of increased rates for certain data
services as well as other information systems costs. Marketing and business
development expenses increased 16%, reflecting increased travel and
entertainment costs associated with the continued high levels of activity in
the global financial markets as the Company continues to develop new business.
Professional services expenses increased 40%, primarily reflecting higher
consulting costs associated with information technology initiatives and the
Company's increased global business activities. Higher temporary staff and
employment fees also contributed to the increase.
19
<PAGE>
CREDIT AND TRANSACTION SERVICES
STATEMENTS OF INCOME (DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
FEBRUARY 28,
-------------
1998 1997
------ ------
(UNAUDITED)
<S> <C> <C>
Fees:
Merchant and cardmember........................................ $ 428 $ 436
Servicing...................................................... 171 200
Commissions...................................................... 8 1
Other............................................................ 2 2
------ ------
Total non-interest revenues.................................... 609 639
------ ------
Interest revenue................................................. 783 767
Interest expense................................................. 293 283
------ ------
Net interest income............................................ 490 484
Provision for consumer loan losses............................... 405 377
------ ------
Net credit income.............................................. 85 107
------ ------
Net revenues................................................... 694 746
------ ------
Compensation and benefits........................................ 142 135
Occupancy and equipment.......................................... 18 15
Brokerage, clearing and exchange fees............................ 3 --
Information processing and communications........................ 120 128
Marketing and business development............................... 183 192
Professional services............................................ 23 18
Other............................................................ 45 56
------ ------
Total non-interest expenses.................................... 534 544
------ ------
Income before income taxes....................................... 160 202
Provision for income taxes....................................... 61 76
------ ------
Net income..................................................... $ 99 $126
====== ======
</TABLE>
Credit and Transaction Services net income of $99 million in the quarter
ended February 28, 1998 represented a decrease of 21% from the quarter ended
February 28, 1997, as increased credit losses and a lower yield on general
purpose credit card loans were partially offset by a decrease in non-interest
expenses.
As a result of enhancements made to certain of the Company's accounting
systems in the fourth quarter of fiscal 1997, the Company began recording
charged off cardmember fees directly against the income statement line items
to which they were originally recorded (merchant and cardmember fees and
interest revenue). Prior to the enhancements, these fees were charged off
against interest revenue. While this change has no impact on net revenues, the
Company believes that the revised presentation better reflects the manner in
which charge-offs affect the Credit and Transaction Services statements of
income. However, since prior periods have not been restated to reflect this
change, the comparability of merchant and cardmember fees and interest
revenues between the quarter ended February 28, 1998 and the quarter ended
February 28, 1997 has been affected. Accordingly, the following sections will
also discuss the changes in these income statement categories excluding the
impact of this reclassification.
Non-Interest Revenues
Total non-interest revenues decreased 5% in the quarter ended February 28,
1998 from the quarter ended February 28, 1997. Excluding the effect of the
reclassification of charged off cardmember fees discussed above, non-interest
revenue would have remained level.
20
<PAGE>
Merchant and cardmember fees include revenues from fees charged to merchants
on credit card sales, late payment fees, overlimit fees, insurance fees, cash
advance fees, the administration of credit card programs and transaction
processing services. Merchant and cardmember fees decreased 2% in the quarter
ended February 28, 1998 from the comparable prior year period. Excluding the
effect of the reclassification of charged off cardmember fees discussed above,
merchant and cardmember fees increased 4% in the quarter ended February 28,
1998. Merchant and cardmember fees increased due to a higher level of general
purpose credit card transaction volume. Higher occurrences of overlimit and
late payment fees also contributed to the increase.
Servicing fees are revenues derived from consumer loans that have been sold
to investors through asset securitizations. Cash flows from the interest yield
and cardmember fees generated by securitized loans are used to pay investors
in these loans a predetermined fixed or floating rate of return on their
investment, to reimburse investors for losses of principal through charged off
loans and to pay the Company a fee for servicing the loans. Any excess cash
flows remaining are paid to the Company. The servicing fees and excess net
cash flows paid to the Company are reported as servicing fees in the condensed
consolidated statements of income. The sale of consumer loans through asset
securitizations therefore has the effect of converting portions of net credit
income and fee income to servicing fees.
The table below presents the components of servicing fees (dollars in
millions):
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
FEBRUARY 28,
--------------
1998 1997
------ ------
<S> <C> <C>
Merchant and cardmember fees.................................... $ 105 $ 112
Interest revenue................................................ 579 517
Interest expense................................................ (234) (203)
Provision for consumer loan losses.............................. (279) (226)
------ ------
Servicing fees.................................................. $ 171 $ 200
====== ======
</TABLE>
Servicing fees decreased 15% in the quarter ended February 28, 1998 from the
quarter ended February 28, 1997, as revenues associated with a higher level of
consumer loans were more than offset by an increase in the provision for
consumer loan losses resulting from a higher charge off rate.
Commission revenues arise from customer securities transactions associated
with Discover Brokerage Direct, Inc. ("DBD"), the Company's provider of
electronic brokerage services acquired in January 1997. The increase in
commission revenues in the quarter ended February 28, 1998 reflects a full
quarter's results for DBD, as well as a significantly higher level of customer
transaction volume.
Net Interest Income
Net interest income is equal to the difference between interest revenue
derived from Credit and Transaction Services consumer loans and short-term
investment assets and interest expense incurred to finance those assets.
Credit and Transaction Services assets, consisting primarily of consumer
loans, earn interest revenue at both fixed rates and market-indexed variable
rates. The Company incurs interest expense at fixed and floating rates.
Interest expense also includes the effects of interest rate contracts entered
into by the Company as part of its interest rate risk management program. This
program is designed to reduce the volatility of earnings resulting from
changes in interest rates and is accomplished primarily through matched
financing, which entails matching the repricing schedules of consumer loans
and related financing. Net interest income increased 1% in the quarter ended
February 28, 1998 from the quarter ended February 28, 1997. Excluding the
effect of the reclassification of charged off cardmember fees discussed above,
net interest income would have decreased 4% from the comparable prior year
period. The decrease was predominately due to higher net charge-offs, a lower
yield on general purpose credit card loans and an increase in the Company's
cost of funds, partially offset by a higher level of general purpose credit
card loans. The lower yield on general purpose credit card loans was primarily
due to a larger number of cardmembers taking advantage of lower promotional
rates.
21
<PAGE>
The following tables present analyses of Credit and Transaction Services
average balance sheets and interest rates for the quarters ended February 28,
1998 and 1997 and changes in net interest income during those periods:
AVERAGE BALANCE SHEET ANALYSIS (DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED FEBRUARY 28,
-------------------------------------------------
1998 1997
------------------------ ------------------------
AVERAGE AVERAGE
BALANCE RATE INTEREST BALANCE RATE INTEREST
------- ----- -------- ------- ----- --------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest earning assets:
General purpose credit card
loans....................... $20,087 13.92% $689 $19,345 14.13% $674
Other consumer loans......... 1,665 16.89 69 1,971 15.10 73
Investment securities........ 243 5.78 3 198 5.49 3
Other........................ 1,296 6.63 22 1,233 5.75 17
------- ---- ------- ----
Total interest earning
assets.................... 23,291 13.64 783 22,747 13.68 767
Allowance for loan losses.... (890) (850)
Non-interest earning assets.. 1,999 1,755
------- -------
Total assets............... $24,400 $23,652
======= =======
LIABILITIES & SHAREHOLDER'S
EQUITY
Interest bearing liabilities:
Interest bearing deposits
Savings..................... $ 855 4.64% $ 10 $ 1,040 4.60% $ 12
Brokered.................... 5,914 6.61 96 3,740 6.74 62
Other time.................. 2,357 6.10 35 2,168 6.04 32
------- ---- ------- ----
Total interest bearing
deposits.................. 9,126 6.30 141 6,948 6.20 106
Other borrowings............. 9,947 6.17 152 12,064 5.95 177
------- ---- ------- ----
Total interest bearing
liabilities............... 19,073 6.23 293 19,012 6.04 283
Shareholder's equity/other
liabilities................. 5,327 4,640
------- -------
Total liabilities &
shareholder's equity...... $24,400 $23,652
======= =======
Net interest income.......... $490 $484
==== ====
Net interest margin.......... 8.54% 8.63%
Interest rate spread......... 7.41% 7.64%
</TABLE>
22
<PAGE>
RATE/VOLUME ANALYSIS (DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
FEBRUARY 28, 1998 VS 1997
-----------------------------
INCREASE/(DECREASE)
DUE TO CHANGES IN
-----------------------------
VOLUME RATE TOTAL
--------- -------- --------
<S> <C> <C> <C>
INTEREST REVENUE
General purpose credit card loans............... $ 26 $(11) $ 15
Other consumer loans............................ (11) 7 (4)
Other........................................... 1 4 5
--------
Total interest revenue........................ 18 (2) 16
--------
INTEREST EXPENSE
Interest bearing deposits
Savings........................................ (2) -- (2)
Brokered....................................... 36 (2) 34
Other time..................................... 3 -- 3
--------
Total interest bearing deposits............... 33 2 35
Other borrowings................................ (31) 6 (25)
--------
Total interest expense........................ 1 9 10
--------
Net interest income............................. $ 17 $ (11) $ 6
======== ======== ========
</TABLE>
The supplemental table below provides average managed loan balance and rate
information which takes into account both owned and securitized loans:
SUPPLEMENTAL AVERAGE MANAGED LOAN BALANCE SHEET INFORMATION (DOLLARS IN
MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED FEBRUARY 28,
-----------------------------------------------------
1998 1997
-------------------------- --------------------------
AVG. BAL. RATE % INTEREST AVG. BAL. RATE % INTEREST
--------- ------ -------- --------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Consumer loans.......... $36,828 14.72% $1,337 $34,512 14.86% $1,265
General purpose credit
card loans............. 34,493 14.57 1,239 31,872 14.78 1,161
Total interest earning
assets................. 38,367 14.39 1,362 35,944 14.49 1,285
Total interest bearing
liabilities............ 34,149 6.26 527 32,209 6.13 486
Consumer loan interest
rate spread............ 8.46 8.73
Interest rate spread.... 8.13 8.37
Net interest margin..... 8.82 9.01
</TABLE>
Provision for Consumer Loan Losses
The provision for consumer loan losses is the amount necessary to establish
the allowance for loan losses at a level the Company believes is adequate to
absorb estimated losses in its consumer loan portfolio at the balance sheet
date. The Company's allowance for loan losses is regularly evaluated by
management for adequacy on a portfolio-by-portfolio basis and was $905 million
and $828 million at February 28, 1998 and 1997. The provision for consumer
loan losses, which is affected by net charge-offs, loan volume and changes in
the amount of consumer loans estimated to be uncollectable, increased 7% in
the quarter ended February 28, 1998 from the quarter ended February 28, 1997
due to an increase in net charge-offs. The increase in net charge-offs was due
to increases in the rate of charge-offs and, to a lesser extent, higher
average levels of consumer loans. Net charge-offs as a percentage of average
consumer loans outstanding increased to 7.51% in the quarter ended February
28, 1998 from 6.89% in the comparable period of 1997. The Company expects to
experience a higher net charge-
23
<PAGE>
off rate for full fiscal year 1998 as compared to fiscal 1997. In fiscal 1997,
the Company intensified steps to reduce the impact of increased net charge-
offs and continues to implement measures designed to improve the credit
quality of both new and existing credit card accounts. The Company's
expectations about future charge-off rates and credit quality are subject to
uncertainties that could cause actual results to differ materially from what
has been discussed above. Factors that influence the level and direction of
consumer loan delinquencies and charge-offs include changes in consumer
spending and payment behaviors, bankruptcy trends, the seasoning of the
Company's loan portfolio, interest rate movements and their impact on consumer
behavior, and the rate and magnitude of changes in the Company's consumer loan
portfolio, including the overall mix of accounts, products and loan balances
within the portfolio.
Consumer loans are considered delinquent when interest or principal payments
become 30 days past due. Consumer loans are charged off when they become 180
days past due, except in the case of bankruptcies and fraudulent transactions,
where loans are charged off earlier. Loan delinquencies and charge-offs are
primarily affected by changes in economic conditions and may vary throughout
the year due to seasonal consumer spending and payment behaviors.
From time to time, the Company has offered and may continue to offer
cardmembers with accounts in good standing the opportunity to skip the minimum
monthly payment, while continuing to accrue periodic finance charges, without
being considered to be past due ("skip-a-payment"). The comparison of
delinquency rates at any particular point in time may be affected depending on
the timing of the skip-a-payment program. The delinquency rates for consumer
loans 90-179 days past due at February 28, 1998 and 30-89 days past due at
November 30, 1997 were favorably impacted by a skip-a-payment offer made in
October 1997.
The following table presents delinquency and net charge-off rates with
supplemental managed loan information:
ASSET QUALITY (DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
FEBRUARY 28,
---------------------------------- NOVEMBER 30,
1998 1997 1997
---------------- ---------------- -----------------
OWNED MANAGED OWNED MANAGED OWNED MANAGED
------- ------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Consumer loans at
period-end............. $20,839 $35,804 $20,856 $33,986 $ 20,917 $35,950
Consumer loans
contractually past due
as a percentage of
period-end consumer
loans:
30 to 89 days.......... 4.36% 4.39% 4.41% 4.41% 3.96% 3.91%
90 to 179 days......... 3.00% 3.00% 3.13% 3.07% 3.11% 3.07%
Net charge-offs as a
percentage of average
consumer loans (year-
to-date)............... 7.51% 7.50% 6.89% 6.91% 6.78% 6.95%
</TABLE>
Non-Interest Expenses
Non-interest expenses decreased 2% in the quarter ended February 28, 1998
from the quarter ended February 28, 1997.
Compensation and benefits expense increased 5% in the quarter ended February
28, 1998 from the comparable period of 1997 due to an increase in the number
of employees, including those related to the Company's acquisition of DBD in
January 1997. Brokerage, clearing and exchange fees relate to the trading
activity associated with DBD. The increase in the quarter ended February 28,
1998 reflects a full quarter's results for DBD, coupled with significantly
higher customer transaction volume. Information processing and communications
expense decreased 6%, primarily due to lower transaction processing costs, an
adjustment resulting from the sale of the Company's indirect interest in one
of the Company's transaction processing vendors and favorable repricing of
certain data communication contracts. Marketing and business development
24
<PAGE>
expense decreased 5% as the result of lower advertising and promotional
expenses, partially offset by an increase in Cardmember rewards expense. Lower
advertising and promotional expense during the quarter was primarily
associated with the Company's plan to discontinue its BRAVO credit card brand.
Cardmember rewards expense includes the Cashback Bonus(R) award, pursuant to
which the Company annually pays Discover(R) Cardmembers and Private Issue
Cardmembers electing this feature a percentage of their purchase amounts.
Commencing March 1, 1998, the terms of the Private Issue Cashback Bonus were
amended by limiting the maximum bonus amount to $500 and by increasing the
amount of purchases required to receive this bonus amount. The Company
believes that its Cardmember rewards expense in future periods will not be
materially impacted by these changes. Professional services expenses increased
28%, primarily due to higher consulting costs. Other expenses decreased 20%
due to a continuing decrease in fraud losses and reductions in other general
business expenses.
LIQUIDITY AND CAPITAL RESOURCES
The Company's total assets increased from $302.3 billion at November 30,
1997 to $345.5 billion at February 28, 1998, reflecting growth in financial
instruments owned, resale agreements and securities borrowed, as well as
additional assets recognized due to the adoption of SFAS No. 127. A
substantial portion of the Company's total assets consists of highly liquid
marketable securities and short-term receivables arising principally from
securities transactions. The highly liquid nature of these assets provides the
Company with flexibility in financing and managing its business.
The Company's senior management establishes the overall funding and capital
policies of the Company, reviews the Company's performance relative to these
policies, monitors the availability of sources of financing, reviews the
foreign exchange risk of the Company and oversees the liquidity and interest
rate sensitivity of the Company's asset and liability position. The primary
goal of the Company's funding and liquidity activities is to ensure adequate
financing over a wide range of potential credit ratings and market
environments.
The Company views return on equity to be an important measure of its
performance, both in the context of the particular business environment in
which the Company is operating and its peer group's results. In this regard,
the Company actively manages its consolidated capital position based upon,
among other things, business opportunities, capital availability and rates of
return together with internal capital policies, regulatory requirements and
rating agency guidelines and therefore may, in the future, expand or contract
its capital base to address the changing needs of its businesses. The Company
returns internally generated equity capital which is in excess of the needs of
its businesses to its shareholders through common stock repurchases and
dividends.
The Company funds its balance sheet on a global basis. The Company's funding
for its Securities and Asset Management business is raised through diverse
sources. These include the Company's capital, including equity and long-term
debt; repurchase agreements; U.S., Canadian, Euro, French and Japanese
commercial paper; letters of credit; unsecured bond borrows; German
Schuldschein loans; securities lending; buy/sell agreements; municipal re-
investments; master notes; and committed and uncommitted lines of credit.
Repurchase transactions, securities lending and a portion of the Company's
bank borrowings are made on a collateralized basis and therefore provide a
more stable source of funding than short-term unsecured borrowings.
The funding sources utilized for the Company's Credit and Transaction
Services business include the Company's capital, including equity and long-
term debt; asset securitizations; commercial paper; deposits; asset-backed
commercial paper; Fed Funds; and short-term bank notes. The Company sells
consumer loans through asset securitizations using several transaction
structures. Riverwoods Funding Corporation ("RFC"), an entity included in the
condensed consolidated financial statements of the Company, issues asset-
backed commercial paper.
25
<PAGE>
The Company's bank subsidiaries solicit deposits from consumers, purchase
federal funds and issue short-term bank notes. Interest bearing deposits are
classified by type as savings, brokered and other time deposits. Savings
deposits consist primarily of money market deposits and certificate of deposit
accounts sold directly to cardmembers and savings deposits from individual
securities clients. Brokered deposits consist primarily of certificates of
deposits issued by the Company's bank subsidiaries. Other time deposits
include institutional certificates of deposits. The Company, through Greenwood
Trust Company, an indirect subsidiary of the Company, sells notes under a
short-term bank note program.
The Company maintains borrowing relationships with a broad range of banks,
financial institutions, counterparties and others from which it draws funds in
a variety of currencies. The volume of the Company's borrowings generally
fluctuates in response to changes in the amount of repurchase transactions
outstanding, the level of the Company's securities inventories and consumer
loans receivable, and overall market conditions. Availability and cost of
financing to the Company can vary depending upon market conditions, the volume
of certain trading activities, the Company's credit ratings and the overall
availability of credit.
The Company's reliance on external sources to finance a significant portion
of its day-to-day operations makes access to global sources of financing
important. The cost and availability of unsecured financing generally are
dependent on the Company's short-term and long-term debt ratings. In addition,
the Company's debt ratings have a significant impact on certain trading
revenues, particularly in those businesses where longer term counterparty
performance is critical, such as over-the-counter derivative transactions.
As of March 31, 1998, the Company's credit ratings were as follows:
<TABLE>
<CAPTION>
COMMERCIAL SENIOR
PAPER DEBT
----------- ------
<S> <C> <C>
Dominion Bond Rating Service.......................... R-1 (middle) n/a
Duff & Phelps......................................... D-1+ AA-
Fitch-IBCA Inc. ...................................... F1+ AA-
Japan Bond Research Institute......................... A-1+ AA-
Moody's Investors Service............................. P-1 A1
Standard & Poor's..................................... A-1 A+
Thomson BankWatch..................................... TBW-1 AA
</TABLE>
As the Company continues its global expansion and as revenues are
increasingly derived from various currencies, foreign currency management is a
key element of the Company's financial policies. The Company benefits from
operating in several different currencies because weakness in any particular
currency is often offset by strength in another currency. The Company closely
monitors its exposure to fluctuations in currencies and, where cost-justified,
adopts strategies to reduce the impact of these fluctuations on the Company's
financial performance. These strategies include engaging in various hedging
activities to manage income and cash flows denominated in foreign currencies
and using foreign currency borrowings, when appropriate, to finance
investments outside the U.S.
During the quarter ended February 28, 1998, the Company issued senior notes
aggregating $2,922 million, including non-U.S. dollar currency notes
aggregating $589 million, primarily pursuant to its public debt shelf
registration statements. These notes have maturities from 1998 to 2024 and a
weighted average coupon interest rate of 5.4% at February 28, 1998; the
Company has entered into certain transactions to obtain floating interest
rates based primarily on short-term LIBOR trading levels. At February 28,
1998, the aggregate outstanding principal amount of the Company's Senior
Indebtedness (as defined in the Company's public debt shelf registration
statements) was approximately $44.8 billion.
On February 12, 1998, the Company's Board of Directors authorized the
Company to purchase, subject to market conditions and certain other factors,
up to $3 billion of the Company's common stock. During the quarter ended
February 28, 1998 the Company purchased $27 million of its common stock.
Subsequent to February 28, 1998 and through March 31, 1998, the Company
purchased an additional $349 million of its common stock.
26
<PAGE>
On February 25, 1998, the Company's shelf registration statement for an
additional $8 billion of debt securities, warrants, preferred stock or
purchase contracts or any combination thereof in the form of units, became
effective.
On March 5, 1998, MSDW Capital Trust I, a Delaware statutory business trust
(the "Capital Trust"), all of the common securities of which are owned by the
Company, issued $400 million of 7.10% Capital Securities (the "Capital
Securities") that are guaranteed by the Company. The Capital Trust issued the
Capital Securities and invested the proceeds in 7.10% Junior Subordinated
Deferrable Interest Debentures due February 28, 2038 issued by the Company.
The Company maintains a senior revolving credit agreement with a group of
banks to support general liquidity needs, including the issuance of commercial
paper (the "MSDW Facility"). Under the terms of the MSDW Facility, the banks
are committed to provide up to $6.0 billion. The MSDW Facility contains
restrictive covenants which require, among other things, that the Company
maintain shareholders' equity of at least $8.3 billion at all times. The
Company believes that the covenant restrictions will not impair the Company's
ability to pay its current level of dividends. At February 28, 1998, no
borrowings were outstanding under the MSDW Facility.
The Company maintains a master collateral facility that enables Morgan
Stanley & Co. Incorporated ("MS&Co."), one of the Company's U.S. broker-dealer
subsidiaries, to pledge certain collateral to secure loan arrangements,
letters of credit and other financial accommodations (the "MS&Co. Facility").
As part of the MS&Co. Facility, MS&Co. also maintains a secured committed
credit agreement with a group of banks that are parties to the master
collateral facility under which such banks are committed to provide up to
$1.875 billion. At February 28, 1998, no borrowings were outstanding under the
MS&Co. Facility.
The Company also maintains a revolving committed financing facility that
enables Morgan Stanley & Co. International Limited ("MSIL"), the Company's
U.K. broker-dealer subsidiary, to secure committed funding from a syndicate of
banks by providing a broad range of collateral under repurchase agreements
(the "MSIL Facility"). Such banks are committed to provide up to an aggregate
of $1.85 billion available in 12 major currencies. At February 28, 1998, no
borrowings were outstanding under the MSIL Facility.
RFC also maintains a $2.55 billion senior bank credit facility which
supports the issuance of asset-backed commercial paper. RFC has never borrowed
from its senior bank credit facility.
The Company anticipates that it will utilize the MSDW Facility, the MS&Co.
Facility or the MSIL Facility for short-term funding from time to time.
At February 28, 1998, certain assets of the Company, such as real property,
equipment and leasehold improvements of $1.7 billion, and goodwill and other
intangible assets of $1.3 billion, were illiquid. In addition, certain equity
investments made in connection with the Company's private equity and other
principal investment activities, high-yield debt securities, emerging market
debt, and certain collateralized mortgage obligations and mortgage-related
loan products are not highly liquid. In connection with its private equity and
other principal investment activities, the Company has equity investments
(directly or indirectly through funds managed by the Company) in privately and
publicly held companies. At February 28, 1998, the aggregate carrying value of
the Company's equity investments in privately held companies (including direct
investments and partnership interests) was $135 million, and its aggregate
investment in publicly held companies was $321 million.
The Company acts as an underwriter of and as a market-maker in mortgage-
backed pass-through securities, collateralized mortgage obligations and
related instruments, and as a market-maker in commercial, residential
27
<PAGE>
and real estate loan products. In this capacity, the Company takes positions
in market segments where liquidity can vary greatly from time to time. The
carrying value of the portion of the Company's mortgage-related portfolio at
February 28, 1998 traded in markets that the Company believed were
experiencing lower levels of liquidity than traditional mortgage-backed pass-
through securities approximated $2,790 million.
In addition, at February 28, 1998, the aggregate value of high-yield debt
securities and emerging market loans and securitized instruments held in
inventory was $2,074 million (a substantial portion of which was subordinated
debt) with not more than 6%, 21% and 9% of all such securities, loans and
instruments attributable to any one issuer, industry or geographic region,
respectively. Non-investment grade securities generally involve greater risk
than investment grade securities due to the lower credit ratings of the
issuers, which typically have relatively high levels of indebtedness and are,
therefore, more sensitive to adverse economic conditions. In addition, the
market for non-investment grade securities and emerging market loans and
securitized instruments has been, and may in the future be, characterized by
periods of volatility and illiquidity. The Company has credit and other risk
policies and procedures to control total inventory positions and risk
concentrations for non-investment grade securities and emerging market loans
and securitized instruments.
The Company may, from time to time, also provide financing or financing
commitments to companies in connection with its investment banking and private
equity activities. The Company may provide extensions of credit to leveraged
companies in the form of senior or subordinated debt, as well as bridge
financing on a selective basis (which may be in connection with the Company's
commitment to the Morgan Stanley Bridge Fund, LLC). At February 28, 1998, the
Company had three commitments to provide an aggregate of $678 million and had
one loan in the amount of $342 million outstanding primarily in connection
with its securitized debt and high-yield underwriting activities. Subsequent
to February 28, 1998, the Company's aggregate commitments increased to $1,336
million, and the $342 million outstanding loan was repaid.
The Company also engages in senior lending activities, including
origination, syndication and trading of senior secured loans of non-investment
grade companies. Such companies are more sensitive to adverse economic
conditions than investment grade issuers, but the loans are generally made on
a secured basis and are senior to any non-investment grade securities of these
issuers that trade in the capital markets. At February 28, 1998, the aggregate
value of senior secured loans and positions held by the Company was $522
million, and aggregate senior secured loan commitments were $318 million.
Subsequent to February 28, 1998, the Company entered into three additional
senior secured loan positions having an aggregate value of $193 million.
At February 28, 1998, financial instruments owned by the Company included
derivative products (generally in the form of futures, forwards, swaps, caps,
collars, floors, swap options and similar instruments which derive their value
from underlying interest rates, foreign exchange rates or commodity or equity
instruments and indices) related to financial instruments and commodities with
an aggregate net replacement cost of $18.0 billion. The net replacement cost
of all derivative products in a gain position represents the Company's maximum
exposure to derivatives related credit risk. Derivative products may have both
on- and off-balance sheet risk implications, depending on the nature of the
contract. It should be noted, however, that in many cases derivatives serve to
reduce, rather than increase, the Company's exposure to losses from market,
credit and other risks. The risks associated with the Company's derivative
activities, including market and credit risks, are managed on an integrated
basis with associated cash instruments in a manner consistent with the
Company's overall risk management policies and procedures. The Company manages
its credit exposure to derivative products through various means, which
include reviewing counterparty financial soundness periodically; entering into
master netting agreements and collateral arrangements with counterparties in
appropriate circumstances; and limiting the duration of exposure.
Year 2000 and EMU
Many of the world's computer systems currently record years in a two-digit
format. Such computer systems will be unable to properly interpret dates
beyond the year 1999, which could lead to business disruptions in the U.S. and
internationally (the "Year 2000" issue).
28
<PAGE>
The Company continues to review its computer systems and programs in order
to prepare for Year 2000 compliance. Based upon current information, the
Company believes that its Year 2000 expenditures for fiscal 1998 and through
the project's completion will be approximately $125 million. Costs incurred
relating to this project are being expensed by the Company during the period
in which they are incurred. The Company's expectations about future costs
associated with the Year 2000 issue are subject to uncertainties that could
cause actual results to differ materially from what has been discussed above
(see "Management's Discussion and Analysis of Financial Condition and Results
of Operations" included in the Company's Annual Report on Form 10-K for the
fiscal year ended November 30, 1997.)
Modifications to the Company's computer systems and programs are also being
made in order to prepare for the upcoming EMU. The EMU, which will ultimately
result in the replacement of certain European currencies with the "Euro," will
primarily impact the Company's Securities and Asset Management business. Costs
associated with the modifications necessary to prepare for the EMU are also
being expensed by the Company during the period in which they are incurred.
29
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The following developments have occurred with respect to certain matters
previously reported in the Company's Annual Report on Form 10-K for the fiscal
year ended November 30, 1997 (the "Form 10-K").
In re Sumitomo Copper Litigation. On March 13, 1998, plaintiffs filed a
motion for a class certification. Also on March 13, 1998, another purported
class action complaint, captioned Khazzam, et al. v. Sumitomo Corporation, et
al., was filed in the United States District Court for the Southern District
of New York. This action is substantially similar to the class action
described in the Form 10-K, asserting the same claims against the same
defendants (excluding the Winchester defendants) and seeking the same relief.
The complaint asserts a manipulation claim under the Commodity Exchange Act
against all of the defendants and a RICO claim against certain of the
defendants other than MS&Co. In addition, on April 3, 1998, a first amended
class action complaint, captioned Polansky, et al. v. Sumitomo Corporation of
America, et al., was filed in the United States District Court for the
Southern District of New York. This action is substantially similar to the
class action described in the Form 10-K, asserting the same claims against the
same defendants (excluding the Winchester defendants) and seeking the same
relief. The plaintiff class purportedly consists of all persons who purchased
put options or sold call options on copper futures contracts on the Comex
Division of the New York Mercantile Exchange between May 9, 1994 and June 15,
1996.
County of Orange and Moorlach v. Morgan Stanley & Co., Inc. The hearing on
the motion to dismiss all of the ultra vires claims has been continued to June
1, 1998.
Global Opportunity Fund Litigation. On March 11, 1998, The Growth Fund,
which was a sub fund of The Global Opportunity Fund (the "Fund"), and 14
investors in The Growth Fund (12 of whom are also plaintiffs in the Luxembourg
litigation against Morgan Stanley Bank Luxembourg, S.A. ("MSBL")) brought an
action against Morgan Stanley International & Co. Limited ("MSIL") in the
Supreme Court of the State of New York, County of New York. The complaint
asserts purported claims for fraud, aiding and abetting fraud, negligent
misrepresentation and violation of a duty of good faith and fair dealing and
seeks compensatory damages of approximately $7.25 million, punitive damages,
interest and costs, expenses and attorneys' fees. Plaintiffs assert that MSIL
induced them to enter into margin loans for the purpose of investing in
another sub fund of the Fund at a time when MSIL allegedly knew that MSBL was
not complying with its purported duty to monitor the Fund and the Fund's
manager was fraudulently inflating the value of certain of its assets, which
resulted in the investors' reliance on false net asset values in making and
continuing their investments in the Fund.
ITEM 5. OTHER INFORMATION.
Revised Earnings Per Share Amounts in Accordance with FASB Statement 128.
In February 1997, the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 128, "Earnings per Share" ("EPS"), effective for
periods ending after December 15, 1997, with restatement required for all
prior periods. SFAS No. 128 replaces the previous EPS categories of primary
and fully diluted with "basic EPS," which reflects no dilution from common
stock equivalents, and "diluted EPS," which reflects dilution from common
stock equivalents and other dilutive securities based on the average price per
share of the Company's common stock during the period. Therefore, the Company
is filing herewith as Exhibit 99 restated selected financial data for the last
five fiscal years, restated consolidated statements of income data for the
last three years, restated quarterly results data (unaudited) for the last two
fiscal years, and the computation of basic and diluted earnings per share for
the last three fiscal years ("Statement 128 Data").
30
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(A) EXHIBITS
An exhibit index has been filed as part of this Report on Page E-1.
(B) REPORTS ON FORM 8-K
Form 8-K dated December 8, 1997 reporting Item 7 only.
Form 8-K dated January 7, 1998 reporting Item 5 and Item 7.
Form 8-K dated February 12, 1998 reporting Item 5 and Item 7.
31
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
Morgan Stanley Dean Witter & Co.
(REGISTRANT)
/s/ Eileen K. Murray
By: _________________________________
Eileen K. Murray, Controller and
Principal Accounting Officer
Date: April 13, 1998
32
<PAGE>
EXHIBIT INDEX
MORGAN STANLEY DEAN WITTER & CO.
QUARTER ENDED FEBRUARY 28, 1998
<TABLE>
<CAPTION>
DESCRIPTION
-----------
<C> <S>
3.1 Amended and Restated Certificate of Incorporation (incorporated by
reference to Exhibit 3.1 to the Company's Current Report on Form 8-K
dated May 31, 1997 and filed June 2, 1997).
3.2 Certificate of Amendment to Amended and Restated Certificate of
Incorporation.
3.3 Amended and Restated By-laws.
4.1 Junior Subordinated Indenture dated as of March 1, 1998 between the
Company and The Bank of New York, as Trustee.
4.2 Certificate of the Company's Junior Subordinated Deferrable Interest
Debenture.
4.3 Amended and Restated Trust Agreement of MSDWD Capital Trust I, dated as
of March 12, 1998, among the Company, as Depositor, The Bank of New York,
as Property Trustee, The Bank of New York (Delaware), as Delaware
Trustee, and the Administrators named thereon.
4.4 Capital Securities Guarantee Agreement dated as of March 12, 1998 between
the Company, as Guarantor, and The Bank of New York, as Guarantee
Trustee.
4.5 Certificate of 7.10% Capital Securities (liquidation amount $25.00 per
Capital Security) of MSDW Capital Trust I.
11 Computation of earnings per share.
12 Computation of ratio of earnings to fixed charges.
15.1 Letter of awareness from Deloitte & Touche LLP, dated April 13, 1998,
concerning unaudited interim financial information.
15.2 Letter of awareness from Ernst & Young LLP, dated April 13, 1998,
concerning unaudited interim financial information.
27 Financial Data Schedule.
99 Statement 128 Data.
</TABLE>
33
<PAGE>
EXHIBIT 3.2
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 03:00 PM 03/24/1998
981113145 - 0923632
CERTIFICATE OF AMENDMENT
TO
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Pursuant to Section 242 of the
General Corporation Law of
the State of Delaware
Morgan Stanley, Dean Witter, Discover & Co. (the "Corporation"), a
corporation organized and existing under and by virtue of the General
Corporation Law of the State of Delaware, does hereby certify that:
FIRST: The Board of Directors of the Corporation, by unanimous
written consent pursuant to Section 141 of the General Corporation Law of the
State of Delaware, duly adopted resolutions setting forth a proposed amendment
to the Amended and Restated Certificate of Incorporation of the Corporation,
declaring said amendment to be advisable and authorizing the officers of the
Corporation to submit such amendment to the stockholders of the Corporation for
approval at the Corporation's 1998 annual meeting of stockholders. The
resolution setting forth the proposed amendment is as follows:
RESOLVED, that the Board of Directors declares it advisable that
Article I of the Corporation's Amended and Restated Certificate of Incorporation
be amended to read in its entirety as follows:
ARTICLE I
NAME
----
The name of the corporation (which is hereinafter referred to as the
"Corporation") is:
Morgan Stanley Dean Witter & Co.
SECOND: Thereafter, pursuant to resolution of its Board of Directors,
the 1998 annual meeting of stockholders of the Corporation was duly called and
held, upon notice in accordance with Section 222 of the General Corporation Law
of the State of Delaware, at which meeting the necessary number of shares as
required by the Corporation's Amended and Restated Certificate of Incorporation
were voted in favor of the amendment.
THIRD: Said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
<PAGE>
FOURTH: This Certificate of Amendment shall not become effective until,
and shall become effective at, 5:00 p.m. on March 24, 1998.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by Ronald T. Carman, its Assistant Secretary, this 24th day of March,
1998.
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
BY: /s/ Ronald T. Carman
---------------------------------------
Ronald T. Carman, Assistant Secretary
<PAGE>
EXHIBIT 3.3
AS AMENDED MARCH 24, 1998
AMENDED AND RESTATED
BYLAWS
OF
MORGAN STANLEY DEAN WITTER & CO.
(HEREINAFTER CALLED THE "CORPORATION")
ARTICLE 1
OFFICES AND RECORDS
SECTION 1.01. Delaware Office. The principal office of the Corporation in
the State of Delaware shall be located in the City of Wilmington, County of New
Castle.
SECTION 1.02. Other Offices. The Corporation may have such other offices,
either within or without the State of Delaware, as the Board of Directors may
designate or as the business of the Corporation may from time to time require.
ARTICLE 2
STOCKHOLDERS
SECTION 2.01. Annual Meeting. The annual meeting of the stockholders of
the Corporation shall be held at such date, place and time as may be fixed by
resolution of the Board of Directors.
SECTION 2.02. Special Meeting. Subject to the rights of the holders of
any series of preferred stock of the Corporation (the "Preferred Stock") or any
other series or class of stock as set forth in the Amended and Restated
Certificate of Incorporation, special meetings of the stockholders may be called
at any time only by the Secretary at the direction of the Board of Directors
pursuant to a resolution adopted by the Board of Directors.
SECTION 2.03. Place of Meeting. The Board of Directors may designate the
place of meeting for any meeting of the stockholders. If no designation is made
by the Board of Directors, the place of meeting shall be the principal office of
the Corporation, which will be 1585 Broadway, New York, New York.
SECTION 2.04. Notice of Meeting. Written or printed notice, stating the
place, day and hour of the meeting and, in the case of special meetings, the
purpose or purposes for which such special meeting is called, shall be prepared
and delivered by the Corporation not less than ten days nor more than sixty days
before the date of the meeting, either personally, or by mail, to each
stockholder of record entitled to vote at
<PAGE>
such meeting. Such further notice shall be given as may be required by law. Only
such business shall be conducted at a special meeting of stockholders as shall
have been brought before the meeting pursuant to the Corporation's notice of
meeting. Any previously scheduled meeting of the stockholders may be postponed,
and (unless the Amended and Restated Certificate of Incorporation otherwise
provides) any special meeting of the stockholders may be canceled, by resolution
of the Board of Directors upon public notice given prior to the time previously
scheduled for such meeting of stockholders.
SECTION 2.05. Quorum and Adjournment. Except as otherwise provided by law
or by the Amended and Restated Certificate of Incorporation, the holders of a
majority of the voting power of the outstanding shares of the Corporation
entitled to vote generally in the election of directors (the "Voting Stock"),
represented in person or by proxy, shall constitute a quorum at a meeting of
stockholders, except that when specified business is to be voted on by a class
or series voting as a class, the holders of a majority of the voting power of
the shares of such class or series shall constitute a quorum for the transaction
of such business. The Chairman of the Board or the holders of a majority of the
voting power of the shares of Voting Stock so represented may adjourn the
meeting from time to time, whether or not there is such a quorum (or, in the
case of specified business to be voted on by a class or series, the Chairman of
the Board or the holders of a majority of the voting power of the shares of such
class or series so represented may adjourn the meeting with respect to such
specified business). No notice of the time and place of adjourned meetings need
be given except as required by law. The stockholders present at a duly
organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less than a
quorum.
SECTION 2.06. Proxies. At all meetings of stockholders, a stockholder may
vote by proxy as may be permitted by law; provided, that no proxy shall be voted
after three years from its date, unless the proxy provides for a longer period.
Any proxy to be used at a meeting of stockholders must be filed with the
Secretary of the Corporation or his representative at or before the time of the
meeting.
SECTION 2.07. Notice of Stockholder Business and Nominations.
(a) Annual Meetings of Stockholders.
(i) Nominations of persons for election to the Board of Directors of the
Corporation and the proposal of business to be considered by the stockholders
may be made at an annual meeting of stockholders (A) pursuant to the
Corporation's notice of meeting delivered pursuant to Section 2.04 of these
Amended and Restated Bylaws, (B) by or at the direction of the Board of
Directors or (C) by any stockholder of the Corporation who is entitled to vote
at the meeting, who complied with the notice procedures set forth in clauses
(ii) and (iii) of this Section 2.07(a) and who was a stockholder of record at
the time such notice is delivered to the Secretary of the Corporation.
2
<PAGE>
(ii) For nominations or other business to be properly brought before an
annual meeting by a stockholder pursuant to clause (C) of paragraph (a) (i) of
this Bylaw, the stockholder must have given timely notice thereof in writing to
the Secretary of the Corporation and, in the case of business other than
nominations, such other business must otherwise be a proper matter for
stockholder action. To be timely, a stockholder's notice shall be delivered to
the Secretary at the principal executive offices of the Corporation not less
than ninety days nor more than one hundred and twenty days prior to the first
anniversary of the preceding year's annual meeting; provided however, that with
respect to the annual meeting to be held in 1998, the anniversary date shall be
deemed to be April 2, 1998; provided further, that in the event that the date of
the annual meeting is advanced by more than thirty days, or delayed by more than
ninety days, from such anniversary date, notice by the stockholder to be timely
must be so delivered not earlier than the one hundred and twentieth day prior to
such annual meeting and not later than the close of business on the later of the
ninetieth day prior to such annual meeting or the tenth day following the day on
which public announcement of the date of such meeting is first made. In no
event shall the public announcement of an adjournment or postponement of an
annual meeting commence a new time period for the giving of a stockholder's
notice as described in this Section 2.07(a). Such stockholder's notice shall set
forth (A) as to each person whom the stockholder proposes to nominate for
election or reelection as a director all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
directors in an election contest, or is other-wise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and Rule 14a-11 thereunder, including such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected; (B) as to any other business that the stockholder proposes
to bring before the meeting, a brief description of the business desired to be
brought before the meeting, the reasons for conducting such business at the
meeting and any material interest in such business of such stockholder and the
beneficial owner, if any, on whose behalf the proposal is made; and (C) as to
the stockholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made (1) the name and address of such
stockholder, as they appear on the Corporation's books, and of such beneficial
owner and (2) the class and number of shares of the Corporation which are owned
beneficially and of record by such stockholder and such beneficial owner.
(iii) Notwithstanding anything in the second sentence of clause (ii) of
this Section 2.07(a) to the contrary, in the event that the number of directors
to be elected to the Board of Directors of the Corporation is increased and
there is no public announcement naming all of the nominees for director or
specifying the size of the increased Board of Directors made by the Corporation
at least one hundred days prior to the first anniversary of the preceding year's
annual meeting, a stockholder's notice required by this Bylaw shall also be
considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the Secretary at the
principal executive offices of the Corporation not later than the close of
business on the tenth day following the day on which such public announcement is
first made by the Corporation.
3
<PAGE>
(b) Special Meetings of Stockholders.
Only such business shall be conducted at a special meeting of stockholders
as shall have been brought before the meeting pursuant to the Corporation's
notice of meeting pursuant to Section 2.04 of these Amended and Restated Bylaws.
Nominations of persons for election to the Board of Directors may be made at a
special meeting of stockholders at which directors are to be elected pursuant to
the Corporation's notice of meeting (i) by or at the direction of the Board of
Directors or (ii) by any stockholder of the Corporation who is entitled to vote
at the meeting, who complies with the notice procedures set forth in this Bylaw
and who is a stockholder of record at the time such notice is delivered to the
Secretary of the Corporation. In the event the Corporation calls a special
meeting of stockholders for the purpose of electing one or more directors to the
Board of Directors, any such stockholder may nominate such number of persons for
election to such position(s) as are specified in the Corporation's Notice of
Meeting, if the stockholder's notice as required by clause (ii) of Section
2.07(a) of these Amended and Restated Bylaws shall be delivered to the Secretary
at the principal executive offices of the Corporation not earlier than the one
hundred and twentieth day prior to such special meeting and not later than the
close of business on the later of the ninetieth day prior to such special
meeting or the tenth day following the day on which public announcement is first
made of the date of the special meeting and of the nominees proposed by the
Board of Directors to be elected at such meeting. In no event shall the public
announcement of an adjournment or postponement of a special meeting commence a
new time period for the giving of a stockholder's notice as described above.
(c) General
(i) Only persons who are nominated in accordance with the procedures set
forth in this Bylaw shall be eligible to be elected as directors at a meeting of
stockholders and only such business shall be conducted at a meeting of
stockholders as shall have been brought before the meeting in accordance with
the procedures set forth in this Bylaw. Except as otherwise provided by law,
the Amended and Restated Certificate of Incorporation or these Amended and
Restated Bylaws, the Chairman of the Board shall have the power and duty to
determine whether a nomination or any business proposed to be brought before the
meeting was made in accordance with the procedures set forth in this Bylaw and,
if any proposed nomination or business is not in compliance with this Bylaw, to
declare that such defective proposal or nomination shall be disregarded.
(ii) For purposes of this Bylaw, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the Exchange Act.
4
<PAGE>
(iii) Notwithstanding the foregoing provisions of this Bylaw, a stockholder
shall also comply with all applicable requirements of the Exchange Act and the
rules and regulations thereunder with respect to the matters set forth in this
Bylaw. Nothing in this Bylaw shall be deemed to affect any rights of
stockholders to request inclusion of proposals in the Corporation's proxy
statement pursuant to Rule 14a-8 under the Exchange Act.
SECTION 2.08. Procedure For Election of Directors; Voting. The election
of directors submitted to stockholders at any meeting shall be decided by a
plurality of the votes cast thereon, except as otherwise set forth in the
Amended and Restated Certificate of Incorporation with respect to the right of
the holders of any series of Preferred Stock or any other series or class of
stock to elect additional directors under specified circumstances. Except as
otherwise provided by law, the Amended and Restated Certificate of Incorporation
or these Amended and Restated Bylaws, all matters other than the election of
directors submitted to the stockholders at any meeting shall be decided by the
affirmative vote of a majority of the voting power of the shares present in
person or represented by proxy at the meeting and entitled to vote thereon, and
where a separate vote by class is required, a majority of the voting power of
the shares of that class present in person or represented by proxy at the
meeting and entitled to vote thereon.
The vote on any matter, including the election of directors, shall be by
written ballot. Each ballot shall be signed by the stockholder voting, or by
such stockholder's proxy, and shall state the number of shares voted.
SECTION 2.09. Inspectors of Elections; Opening and Closing the Polls.
(a) The Board of Directors by resolution shall appoint one or more
inspectors, which inspector or inspectors may not be directors, officers or
employees of the Corporation, to act at the meeting and make a written report
thereof. One or more persons may be designated as alternate inspectors to
replace any inspector who fails to act. If no inspector or alternate has been
appointed to act, or if all inspectors or alternates who have been appointed are
unable to act, at a meeting of stockholders, the Chairman of the Board shall
appoint one or more inspectors to act at the meeting. Each inspector, before
discharging his or her duties, shall take and sign an oath faithfully to execute
the duties of inspector with strict impartiality and according to the best of
his or her ability. The inspectors shall have the duties prescribed by the
General Corporation Law of the State of Delaware.
(b) The Chairman of the Board shall fix and announce at the meeting the
date and time of the opening and the closing of the polls for each matter upon
which the stockholders will vote at the meeting.
5
<PAGE>
ARTICLE 3
BOARD OF DIRECTORS
SECTION 3.01. General Powers. The business and affairs of the Corporation
shall be managed by or under the direction of its Board of Directors. In
addition to the powers and authorities by these Amended and Restated Bylaws
expressly conferred upon them, the Board of Directors may exercise all such
powers of the Corporation and do all such lawful acts and things as are not by
law or by the Amended and Restated Certificate of Incorporation or by these
Amended and Restated Bylaws required to be exercised or done by the
stockholders.
SECTION 3.02. Number, Tenure and Qualifications. Subject to Section 3.12
of these Amended and Restated Bylaws and to the rights of the holders of any
series of Preferred Stock, or any other series or class of stock as set forth in
the Amended and Restated Certificate of Incorporation, to elect directors under
specified circumstances, the number of directors shall be fixed from time to
time exclusively pursuant to a resolution adopted by the Board of Directors, but
shall consist of not less than three nor more than fourteen directors. However,
no decrease in the number of directors constituting the Board of Directors shall
shorten the term of any incumbent director. The directors, other than those who
may be elected by the holders of any series of Preferred Stock, or any other
series or class of stock as set forth in the Amended and Restated Certificate of
Incorporation, shall be divided into such classes and hold office for such terms
as set forth in, and may be removed only in accordance with, the Amended and
Restated Certificate of Incorporation.
Each director shall be required to become a stockholder of the Corporation
within 60 days after the date such director is first elected to the Board of
Directors.
SECTION 3.03. Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this Bylaw immediately after,
and at the same place as, each annual meeting of stockholders. The Board of
Directors may, by resolution, provide the time and place for the holding of
additional regular meetings without other notice than such resolution. Unless
otherwise determined by the Board of Directors, the Secretary of the Corporation
shall act as secretary at all regular meetings of the Board of Directors and in
the Secretary's absence a temporary secretary shall be appointed by the chairman
of the meeting.
SECTION 3.04. Special Meetings. Special meetings of the Board of
Directors shall be called at the request of the Chairman of the Board and the
President, acting together, or a majority of the Board of Directors. The person
or persons authorized to call special meetings of the Board of Directors may fix
the place and time of the meetings. Unless otherwise determined by the Board of
Directors, the Secretary of the Corporation shall act as secretary at all
special meetings of the Board of Directors and in the Secretary's absence a
temporary secretary shall be appointed by the chairman of the meeting.
6
<PAGE>
SECTION 3.05. Notice. Notice of any special meeting shall be mailed to
each director at his business or residence not later than three days before the
day on which such meeting is to be held or shall be sent to either of such
places by telegraph or facsimile or other electronic transmission, or be
communicated to each director personally or by telephone, not later than the day
before such day of meeting. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the Board of Directors need be
specified in the notice of such meeting, except for amendments to these Amended
and Restated Bylaws as provided pursuant to Section 8.01 hereof. A meeting may
be held at any time without notice if all the directors are present (except as
otherwise provided by law) or if those present waive notice of the meeting in
accordance with Section 6.04 hereof, either before or after such meeting.
SECTION 3.06. Action Without Meeting. Any action required or permitted to
be taken at any meeting of the Board of Directors or any committee thereof may
be taken without a meeting if a written consent thereto is signed by all members
of the Board or of such committee, as the case may be, and such written consent
is filed with the records of the proceedings of the Board or such committee.
SECTION 3.07. Conference Telephone Meetings. Members of the Board of
Directors, or any committee thereof, may participate in a meeting of the Board
of Directors or such committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at such meeting.
SECTION 3.08. Quorum. At all meetings of the Board of Directors, a
majority of the entire Board of Directors (as defined in Section 3.09(a)) shall
constitute a quorum for the transaction of business. At all meetings of the
committees of the Board of Directors, the presence of 50% or more of the total
number of members (assuming no vacancies) shall constitute a quorum. The act of
the directors or committee members present at any meeting at which there is a
quorum shall be the act of the Board of Directors or such committee, as the case
may be, except as otherwise provided in the Delaware General Corporation Law,
the Amended and Restated Certificate of Incorporation or these Amended and
Restated Bylaws. If a quorum shall not be present at any meeting of the Board
of Directors or any committee, a majority of the directors or members, as the
case may be, present thereat may adjourn the meeting from time to time without
further notice other than announcement at the meeting. If permitted by
applicable law, the directors or members, as the case may be, present at a duly
authorized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough directors to leave less than a quorum.
SECTION 3.09. Committees. (a) The Corporation shall have four standing
committees: the executive committee, the nominating and directors committee,
the audit committee and the compensation committee. The executive committee
shall have those
7
<PAGE>
powers and authority as are delegated to it from time to time pursuant to a
resolution passed by a three-quarters vote of the total number of directors
specified in the resolution pursuant to Section 3.02 of these Amended and
Restated Bylaws which the Corporation would have if there were no vacancies (the
"entire Board of Directors").
(b) The nominating and directors committee shall have the following powers
and authority: (i) evaluating and recommending director candidates to the Board
of Directors, (ii) assessing Board of Directors performance not less frequently
than every three years, (iii) recommending director compensation and benefits
philosophy for the Corporation, (iv) reviewing individual director performance
as issues arise, (v) periodically reviewing the Corporation's corporate
governance profile, and (vi) such additional powers and authority as the Board
of Directors may from time to time determine. None of the members of the
nominating and directors committee shall be a member of the executive committee
or an officer or full-time employee of the Corporation or of any subsidiary or
affiliate of the Corporation.
(c) The audit committee shall have the following powers and authority:
(i) to recommend to the Board of Directors the appointment of independent public
accountants to audit the financial statements of the Corporation and to perform
such other duties from time to time as the audit committee may prescribe, (ii)
to receive the reports and comments of the Corporation's internal auditors and
of the independent public accountants, including reports on the adequacy of
internal controls, and to take such action with respect thereto as may seem
appropriate, (iii) to review the accounting principles employed in financial
reporting and (iv) to exercise such additional powers and authority as the Board
of Directors may from time to time determine. None of the members of the audit
committee shall be a member of the executive committee or an officer or full-
time employee of the Corporation or of any subsidiary or affiliate of the
Corporation.
(d) The compensation committee shall have the following powers and
authority: (i) determining and fixing the compensation for all senior officers
of the Corporation and those of its Subsidiaries (as defined in Section 6.07(f))
that the compensation committee shall from time to time consider appropriate, as
well as all employees of the Corporation and its Subsidiaries compensated at a
rate in excess of such amount per annum as may be fixed or determined from time
to time by the Board of Directors, (ii) performing the duties of the committees
of the Board of Directors provided for in any present or future stock option,
incentive compensation or employee benefit plan of the Corporation or, if the
compensation committee shall so determine, any such plan of any Subsidiary,
(iii) reviewing the operations of and policies pertaining to any present or
future stock option, incentive compensation or employee benefit plan of the
Corporation or any Subsidiary that the compensation committee shall from time to
time consider appropriate, and (iv) such additional powers and authority as the
Board of Directors may from time to time determine. None of the members of the
compensation committee shall be a member of the executive committee or an
officer or full-time employee of the Corporation or of any subsidiary or
affiliate of the Corporation.
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(e) In addition, the Board of Directors may, by resolution passed by a
three-quarters vote of the entire Board of Directors, designate one or more
additional committees, with each such committee consisting of one or more
directors of the Corporation and having such powers and authority as the Board
of Directors shall designate by such resolutions.
(f) Any modification to the powers and authority of any committee shall
require the adoption of a resolution by a three-quarters vote of the entire
Board of Directors.
(g) All acts done by any committee within the scope of its powers and
authority pursuant to these Amended and Restated Bylaws and the resolutions
adopted by the Board of Directors in accordance with the terms hereof shall be
deemed to be, and may be certified as being, done or conferred under authority
of the Board of Directors. The Secretary or any Assistant Secretary is
empowered to certify that any resolution duly adopted by any such committee is
binding upon the Corporation and to execute and deliver such certifications from
time to time as may be necessary or proper to the conduct of the business of the
Corporation.
(h) Regular meetings of committees shall be held at such times as may be
determined by resolution of the Board of Directors or the committee in question
and no notice shall be required for any regular meeting other than such
resolution. A special meeting of any committee shall be called by resolution of
the Board of Directors, or by the Secretary or an Assistant Secretary upon the
request of the chairman or a majority of the members of any committee. Notice
of special meetings shall be given to each member of the committee in the same
manner as that provided for in Section 3.05 of these Amended and Restated
Bylaws.
SECTION 3.10. Committee Members. (a) Each member of any committee of the
Board of Directors shall hold office until such member's successor is elected
and has qualified, unless such member sooner dies, resigns or is removed. The
number of directors which shall constitute any committee shall be determined by
resolution adopted by a three-quarters vote of the entire Board of Directors.
(b) The Board of Directors may remove a director from a committee or
change the chairmanship of a committee only by resolution adopted by a three-
quarters vote of the entire Board of Directors.
(c) The Board of Directors may designate one or more directors as
alternate members of any committee to fill any vacancy on a committee and to
fill a vacant chairmanship of a committee, occurring as a result of a member or
chairman leaving the committee, whether through death, resignation, removal or
otherwise; provided, that any such designation may only be amended by a three-
quarters vote of the entire Board of Directors.
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SECTION 3.11. Committee Secretary. The Board of Directors may elect a
secretary of any such committee. If the Board of Directors does not elect such
a secretary, the committee shall do so. The secretary of any committee need not
be a member of the committee, but shall be selected from a member of the staff
of the office of the Secretary of the Corporation, unless otherwise provided by
the Board of Directors or the committee, as applicable.
SECTION 3.12. Certain Modifications. Except as otherwise provided in the
Amended and Restated Certificate of Incorporation, any action by the Board of
Directors to change the number of directors comprising the Board or comprising
any class of directors to other than an even number of directors shall require a
three-quarters vote of the entire Board of Directors.
SECTION 3.13. Compensation. The directors may be paid their expenses, if
any, of attendance at each meeting of the Board of Directors and may be paid
compensation as director or chairman of any committee and for attendance at
each meeting of the Board of Directors. Members of special or standing
committees may be allowed like compensation and payment of expenses for
attending committee meetings.
ARTICLE 4
OFFICERS
SECTION 4.01. General. The officers of the Corporation shall be elected
by the Board of Directors and shall consist of: a Chairman of the Board and
Chief Executive Officer; a President and Chief Operating Officer; a Chief
Financial Officer; a Chief Strategic and Administrative Officer; a Chief Legal
Officer; one or more Senior Executive Vice Presidents; one or more Executive
Vice Presidents; one or more Senior Vice Presidents; one or more First Vice
Presidents; one or more Vice Presidents; a Secretary; one or more Assistant
Secretaries; a Treasurer; one or more Assistant Treasurers; a Controller; and
such other officers as in the judgment of the Board of Directors may be
necessary or desirable. All officers chosen by the Board of Directors shall
have such powers and duties as generally pertain to their respective offices,
subject to the specific provisions of this Article 4. Such officers shall also
have powers and duties as from time to time may be conferred by the Board of
Directors or any committee thereof. Any number of offices may be held by the
same person, unless otherwise prohibited by law, the Amended and Restated
Certificate of Incorporation or these Amended and Restated Bylaws. The officers
of the Corporation need not be stockholders or directors of the Corporation.
SECTION 4.02. Election and Term of Office. Subject to Section 4.08 of
these Amended and Restated Bylaws, the elected officers of the Corporation shall
be elected annually by the Board of Directors at the regular meeting of the
Board of Directors held after each annual meeting of the stockholders. If the
election of officers shall not be held at such meeting, such election shall be
held as soon thereafter as convenient. Subject to
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Section 4.08 of these Amended and Restated Bylaws, each officer shall hold
office until his successor shall have been duly elected and shall have qualified
or until his death or until he shall resign or be removed.
SECTION 4.03. Chairman of the Board and Chief Executive Officer. The
Chairman of the Board shall be a member of the Board of Directors and shall be
an officer of the Corporation. The Chairman of the Board shall be the Chief
Executive Officer of the Corporation and shall supervise, coordinate and manage
the Corporation's business and activities and supervise, coordinate and manage
its operating expenses and capital allocation, shall have general authority to
exercise all the powers necessary for the Chief Executive Officer of the
Corporation and shall perform such other duties and have such other powers as
may be prescribed by the Board of Directors or these Amended and Restated
Bylaws, all in accordance with basic policies as established by and subject to
the oversight of the Board of Directors. The Chairman of the Board, if present,
shall preside at all meetings of the Board of Directors.
SECTION 4.04. President and Chief Operating Officer. The President and
Chief Operating Officer shall be a member of the Board of Directors and an
officer of the Corporation. The President and Chief Operating Officer shall
supervise, coordinate and manage the Corporation's business and activities and
supervise, coordinate and manage its operating expenses and capital allocation,
shall have general authority to exercise all the powers necessary for the
President and Chief Operating Officer of the Corporation and shall perform such
other duties and have such other powers as may be prescribed by the Board of
Directors or these Amended and Restated Bylaws, all in accordance with basic
policies as established by and subject to the oversight of the Board of
Directors and the Chairman and Chief Executive Officer. In the absence or
disability of the Chairman of the Board and Chief Executive Officer, the duties
of the Chairman of the Board shall be performed and the Chairman of the Board's
authority may be exercised by the President and Chief Operating Officer, and in
the event the President and Chief Operating Officer is absent or disabled, such
duties shall be performed and such authority may be exercised by a director
designated for this purpose by the Board of Directors.
SECTION 4.05. Chief Financial Officer. The Chief Financial Officer shall
have responsibility for the financial affairs of the Corporation and shall
exercise supervisory responsibility for the performance of the duties of the
Treasurer and the Controller. The Chief Financial Officer shall perform such
other duties and have such other powers as may be prescribed by the Board of
Directors or these Amended and Restated Bylaws, all in accordance with basic
policies as established by and subject to the oversight of the Board of
Directors, the Chairman and Chief Executive Officer and the President and Chief
Operating Officer.
SECTION 4.06. Chief Strategic and Administrative Officer. The Chief
Strategic and Administrative Officer shall have the responsibility for the
business strategy and strategic planning for the Corporation and shall have the
responsibility for making recommendations regarding the capital allocation of
the Corporation. The Chief Strategic
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and Administrative Officer shall perform such other duties and have such other
powers as may be prescribed by the Board of Directors or these Amended and
Restated Bylaws, all in accordance with basic policies as established by and
subject to the oversight of the Board of Directors, the Chairman and Chief
Executive Officer and the President and Chief Operating Officer.
SECTION 4.07. Chief Legal Officer. The Chief Legal Officer shall have
responsibility for the legal affairs of the Corporation and for the performance
of the duties of the Secretary. The Chief Legal Officer shall perform such
other duties and have such other powers as may be prescribed by the Board of
Directors or these Amended and Restated Bylaws, all in accordance with basic
policies as established by and subject to the oversight of the Board of
Directors, the Chairman and Chief Executive Officer and the President and Chief
Operating Officer.
SECTION 4.08. Certain Actions. Notwithstanding anything to the contrary
contained in these Amended and Restated Bylaws, the removal of the current
Chairman and Chief Executive Officer or the current President and Chief
Operating Officer as of May 31, 1997, or any modification to either of their
respective roles, duties or authority shall require a three-quarters vote of the
entire Board of Directors.
SECTION 4.09. Vacancies. A newly created office and a vacancy in any
office because of death, resignation, or removal may be filled by the Board of
Directors for the unexpired portion of the terms at any meeting of the Board of
Directors.
ARTICLE 5
STOCK CERTIFICATES AND TRANSFERS
SECTION 5.01. Stock Certificates and Transfers. (a) The interest of each
stockholder of the Corporation shall be evidenced by certificates for shares of
stock in such form as the appropriate officers of the Corporation may from time
to time prescribe; provided that the Board of Directors may provide by
resolution or resolutions that all or some of all classes or series of the stock
of the Corporation shall be represented by uncertificated shares.
Notwithstanding the adoption of such a resolution by the Board of Directors,
every holder of stock represented by certificates and upon request every holder
of uncertificated shares shall be entitled to have a certificate signed by, or
in the name of the Corporation by the Chairman of the Board of Directors, or the
President or any other authorized officer and by the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary of the Corporation
representing the number of shares registered in certificate form. Except as
otherwise expressly provided by law, the rights and obligations of the holders
of uncertificated stock and the rights and obligations of the holders of
certificates representing stock of the same class and series shall be identical.
(b) The certificates of stock shall be signed, countersigned and
registered in such manner as the Board of Directors may by resolution prescribe,
which resolution may
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permit all or any of the signatures on such certificates to be in facsimile. In
case any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate has ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the Corporation with the same effect as if he were such officer, transfer
agent or registrar at the date of issue.
(c) The shares of the stock of the Corporation represented by certificates
shall be transferred on the books of the Corporation by the holder thereof in
person or by his attorney, upon surrender for cancelation of certificates for
the same number of shares, with an assignment and power of transfer endorsed
thereon or attached thereto, duly executed, with such proof of the authenticity
of the signature as the Corporation or its agents may reasonably require. Upon
receipt of proper transfer instructions from the registered owner of
uncertificated shares such uncertificated shares shall be canceled and issuance
of new equivalent uncertificated shares or certificated shares shall be made to
the person entitled thereto and the transaction shall be recorded upon the books
of the Corporation. Within a reasonable time after the issuance or transfer of
uncertificated stock, the Corporation shall send to the registered owner thereof
a written notice containing the information required to be set forth or stated
on certificates pursuant to the Delaware General Corporation Law or, unless
otherwise provided by the Delaware General Corporation Law, a statement that the
Corporation will furnish without charge to each stockholder who so requests the
powers, designations, preferences and relative participating, optional or other
special rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
SECTION 5.02. Lost, Stolen or Destroyed Certificates. No certificate for
shares or uncertificated shares of stock in the Corporation shall be issued in
place of any certificate alleged to have been lost, destroyed or stolen, except
on production of such evidence of such loss, destruction or theft and on
delivery to the Corporation of a bond of indemnity in such amount, upon such
terms and secured by such surety, as the Board of Directors or its designee may
in its or his discretion require.
ARTICLE 6
MISCELLANEOUS PROVISIONS
SECTION 6.01. Fiscal Year. The fiscal year of the Corporation shall be as
specified by the Board of Directors.
SECTION 6.02. Dividends. The Board of Directors may from time to time
declare, and the Corporation may pay, dividends on its outstanding shares in the
manner and upon the terms and conditions provided by law and its Amended and
Restated Certificate of Incorporation.
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SECTION 6.03. Seal. The corporate seal shall have thereon the name of the
Corporation and shall be in such form as may be approved from time to time by
the Board of Directors.
SECTION 6.04. Waiver of Notice. Whenever any notice is required to be
given to any stockholder or director of the Corporation under the provisions of
the General Corporation Law of the State of Delaware, a waiver thereof in
writing, signed by the person or persons entitled to such notice, whether before
or after the time stated therein, shall be deemed equivalent to the giving of
such notice. Neither the business to be transacted at, nor the purpose of, any
annual or special meeting of the stockholders or any meeting of the Board of
Directors or committee thereof need be specified in any waiver of notice of such
meeting.
SECTION 6.05. Audits. The accounts, books and records of the Corporation
shall be audited upon the conclusion of each fiscal year by an independent
certified public accountant selected by the audit committee, and it shall be the
duty of the audit committee to cause such audit to be made annually.
SECTION 6.06. Resignations. Any director or any officer, whether elected
or appointed, may resign at any time upon notice of such resignation to the
Corporation.
SECTION 6.07. Indemnification and Insurance.
(a) Each person who was or is made a party or is threatened to be made a
party to or is involved in any manner in any threatened, pending or completed
action, suit, or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that he or she
or a person of whom he or she is the legal representative is or was a director
or officer of the Corporation or a director or elected officer of a Subsidiary,
shall be indemnified and held harmless by the Corporation to the fullest extent
permitted from time to time by the General Corporation Law of the State of
Delaware as the same exists or may hereafter be amended (but, if permitted by
applicable law, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights than
said law permitted the Corporation to provide prior to such amendment) or any
other applicable laws as presently or hereafter in effect, and such
indemnification shall continue as to a person who has ceased to be a director or
officer and shall inure to the benefit of his or her heirs, executors and
administrators; provided however, that the Corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) was
authorized by the Board of Directors or is a proceeding to enforce such person's
claim to indemnification pursuant to the rights granted by this Bylaw. The
Corporation shall pay the expenses incurred by such person in defending any such
proceeding in advance of its final disposition upon receipt (unless the
Corporation upon authorization of the Board of Directors waives such requirement
to the extent permitted by applicable law) of an undertaking by or on behalf of
such person to repay such amount if it shall ultimately be
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determined that such person is not entitled to be indemnified by the Corporation
as authorized in this Bylaw or otherwise.
(b) The indemnification and the advancement of expenses incurred in
defending a proceeding prior to its final disposition provided by, or granted
pursuant to this Bylaw shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, provision of the Amended
and Restated Certificate of Incorporation, other provision of these Amended and
Restated Bylaws, agreement, vote of stockholders or Disinterested Directors or
otherwise. No repeal, modification or amendment of, or adoption of any
provision inconsistent with, this Section 6.07, nor to the fullest extent
permitted by applicable law, any modification of law, shall adversely affect any
right or protection of any person granted pursuant hereto existing at, or with
respect to any events that occurred prior to, the time of such repeal,
amendment, adoption or modification.
(c) The Corporation may maintain insurance, at its expense, to protect
itself and any person who is or was a director, officer, partner, member,
employee or agent of the Corporation or a Subsidiary or of another corporation,
partnership, limited liability company, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the Corporation would
have the power to indemnify such person against such expense, liability or loss
under the General Corporation Law of the State of Delaware.
(d) The Corporation may, to the extent authorized from time to time by the
Board of Directors, grant rights to indemnification, and rights to be paid by
the Corporation the expenses incurred in defending any proceeding in advance of
its final disposition, to any person who is or was an employee or agent (other
than a director or officer) of the Corporation or a Subsidiary and to any person
who is or was serving at the request of the Corporation or a Subsidiary as a
director, officer, partner, member, employee or agent of another corporation,
partnership, limited liability company, joint venture, trust or other
enterprise, including service with respect to employee benefit plans maintained
or sponsored by the Corporation or a Subsidiary, to the fullest extent of the
provisions of this Bylaw with respect to the indemnification and advancement of
expenses of directors and officers of the Corporation.
(e) If any provision or provisions of this Bylaw shall be held to be
invalid, illegal or unenforceable for any reason whatsoever: (1) the validity,
the legality and enforceability of the remaining provisions of this Bylaw
(including, without limitation, each portion of any paragraph or clause of this
Bylaw containing any such provision held to be invalid, illegal or
unenforceable, that is not itself held to be invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby; and (2) to the fullest
extent possible, the provisions of this Bylaw (including, without limitation,
each such portion of any paragraph of this Bylaw containing any such provision
held to be invalid, illegal or unenforceable) shall be construed so as to give
effect to the intent manifested by the provision held invalid, illegal or
unenforceable.
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(f) For purposes of these Amended and Restated Bylaws:
(1) "Disinterested Director" means a director of the Corporation who is
not and was not a party to the proceeding or matter in respect of which
indemnification is sought by the claimant.
(2) "Subsidiary" means a corporation, a majority of the capital stock of
which is owned directly or indirectly by the Corporation, other than directors'
qualifying shares.
(g) Any notice, request, or other communication required or permitted to
be given to the Corporation under this Bylaw shall be in writing and either
delivered in person or sent by telecopy, telex, telegram, overnight mail or
courier service, or certified or registered mail, postage prepaid, return
receipt requested, to the Secretary of the Corporation and shall be effective
only upon receipt by the Secretary.
ARTICLE 7
CONTRACTS, PROXIES, ETC.
SECTION 7.01. Contracts. Except as otherwise required by law, the Amended
and Restated Certificate of Incorporation or these Amended and Restated Bylaws,
any contracts or other instruments may be executed and delivered in the name and
on the behalf of the Corporation by such officer or officers of the Corporation
as the Board of Directors may from time to time direct. Such authority may be
general or confined to specific instances as the Board may determine. Subject
to the control and direction of the Board of Directors, the Chairman of the
Board, the President, the Chief Financial Officer, the Chief Strategic and
Administrative Officer, the Chief Legal Officer and the Treasurer may enter
into, execute, deliver and amend bonds, promissory notes, contracts, agreements,
deeds, leases, guarantees, loans, commitments, obligations, liabilities and
other instruments to be made or executed for or on behalf of the Corporation.
Subject to any restrictions imposed by the Board of Directors, such officers of
the Corporation may delegate such powers to others under his or her
jurisdiction, it being understood, however, that any such delegation of power
shall not relieve such officer of responsibility with respect to the exercise of
such delegated power.
SECTION 7.02. Proxies. Unless otherwise provided by resolution adopted by
the Board of Directors, the Chairman of the Board or the President may from time
to time appoint an attorney or attorneys or agent or agents of the Corporation,
in the name and behalf of the Corporation, to cast the votes which the
Corporation may be entitled to cast as the holder of stock or other securities
in any other corporation or entity, any of whose stock or other securities may
be held by the Corporation, at meetings of the holders of the stock or other
securities of such other corporation or entity, or to consent in writing, in the
name of the Corporation as such holder, to any action by such other corporation
or entity, and may instruct the person or persons so appointed as to the manner
of casting such vote or giving such consent, and may execute or cause to be
executed in the name
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and on behalf of the Corporation and under its corporate seal or otherwise, all
such written proxies or other instruments as he may deem necessary or proper in
the premises.
ARTICLE 8
AMENDMENTS
SECTION 8.01. Amendments. These Amended and Restated Bylaws may be
altered, amended or repealed, in whole or in part, or new Amended and Restated
Bylaws may be adopted by the stockholders or by the Board of Directors at any
meeting thereof; provided however, that notice of such alteration, amendment,
repeal or adoption of new Amended and Restated Bylaws is contained in the notice
of such meeting of stockholders or in the notice of such meeting of the Board of
Directors and, in the latter case, such notice is given not less than twenty-
four hours prior to the meeting. Unless a higher percentage is required by the
Amended and Restated Certificate of Incorporation as to any matter which is the
subject of these Amended and Restated Bylaws, all such amendments must be
approved by either the holders of eighty percent (80%) of the Voting Stock or by
a majority of the Board of Directors; provided further, notwithstanding the
foregoing, the Board of Directors may alter, amend or repeal, or adopt new
Amended and Restated Bylaws in conflict with, (i) any provision of these Amended
and Restated Bylaws which requires a three-quarters vote of the entire Board of
Directors for action to be taken thereunder, (ii) subsection (c) of Section 3.10
of these Amended and Restated Bylaws and (iii) this proviso to this Section 8.01
of these Amended and Restated Bylaws only by a resolution adopted by a three-
quarters vote of the entire board of Directors until December 31, 2000; provided
further, that, notwithstanding the foregoing, the Board of Directors may alter,
amend or repeal, or adopt new Amended and Restated Bylaws in conflict with, (i)
Section 4.08 of these Amended and Restated Bylaws and (ii) this further proviso
to this Section 8.01 of these Amended and Restated Bylaws only by a resolution
adopted by a three-quarters vote of the entire Board of Directors.
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EXHIBIT 4.1
==================================================================
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
AND
THE BANK OF NEW YORK, Trustee
Junior Subordinated Indenture
Dated as of March 1, 1998,
-----------------------
==================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE 1
DEFINITIONS
SECTION 1.01. Certain Terms Defined....................................... 1
ARTICLE 2
SECURITIES
SECTION 2.01. Forms Generally............................................. 10
SECTION 2.02. Form of Trustee's Certificate of Authentication............. 10
SECTION 2.03. Amount Unlimited; Issuable in Series........................ 11
SECTION 2.04. Authentication and Delivery of Securities................... 14
SECTION 2.05. Execution of Securities..................................... 17
SECTION 2.06. Certificate of Authentication............................... 18
SECTION 2.07. Denomination and Date of Securities; Payments of
Interest.................................................... 18
SECTION 2.08. Registration, Transfer and Exchange......................... 19
SECTION 2.09. Mutilated, Defaced, Destroyed, Lost and Stolen
Securities.................................................. 23
SECTION 2.10. Cancellation of Securities; Destruction Thereof............. 24
SECTION 2.11. Temporary Securities........................................ 24
ARTICLE 3
COVENANTS OF THE ISSUER
SECTION 3.01. Payment of Principal and Interest........................... 25
SECTION 3.02. Offices for Payments, etc................................... 26
SECTION 3.03. Appointment to Fill a Vacancy in Office of Trustee.......... 27
SECTION 3.04. Paying Agents............................................... 27
SECTION 3.05. Written Statement to Trustee................................ 28
SECTION 3.06. Luxembourg Publications..................................... 28
ARTICLE 4
SECURITYHOLDERS LISTS AND REPORTS BY THE ISSUER AND THE TRUSTEE
SECTION 4.01. Issuer to Furnish Trustee Information as to Names
and Addresses of Securityholders............................ 29
SECTION 4.02. Preservation and Disclosure of Securityholders
Lists....................................................... 29
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SECTION 4.03. Reports by the Issuer....................................... 29
SECTION 4.04. Reports by the Trustee...................................... 29
ARTICLE 5
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS IN THE EVENT OF DEFAULT
SECTION 5.01. Event of Default Defined; Acceleration of
Maturity; Waiver of Default................................. 30
SECTION 5.02. Collection of Indebtedness by Trustee; Trustee
May Prove Debt.............................................. 34
SECTION 5.03. Applications of Proceeds.................................... 37
SECTION 5.04. Suits for Enforcement....................................... 38
SECTION 5.05. Restoration of Rights on Abandonment of
Proceedings................................................. 38
SECTION 5.06. Limitations on Suits by Securityholder...................... 38
SECTION 5.07. Unconditional Right of Securityholders to Institute
Certain Suits............................................... 39
SECTION 5.08. Powers and Remedies Cumulative; Delay or
Omission Not Waiver of Default; Restoration of
Rights and Remedies......................................... 39
SECTION 5.09. Control by Holders of Securities............................ 40
SECTION 5.10. Waiver of Past Defaults..................................... 41
SECTION 5.11. Trustee to Give Notice of Default, But May
Withhold in Certain Circumstances........................... 41
SECTION 5.12. Right of Court to Require Filing of Undertaking to
Pay Costs................................................... 42
ARTICLE 6
CONCERNING THE TRUSTEE
SECTION 6.01. Duties and Responsibilities of the Trustee; During
Default; Prior to Default................................... 42
SECTION 6.02. Certain Rights of the Trustee............................... 44
SECTION 6.03. Trustee Not Responsible for Recitals, Disposition
of Securities or Application of Proceeds Thereof............ 45
SECTION 6.04. Trustee and Agents May Hold Securities or
Coupons; Collections, etc................................... 45
SECTION 6.05. Moneys Held by Trustee...................................... 46
SECTION 6.06. Compensation and Indemnification of Trustee and
Its Prior Claim............................................. 46
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SECTION 6.07. Right of Trustee to Rely on Officer's Certificate, etc...... 46
SECTION 6.08. Indentures Not Creating Potential Conflicting
Interests for the Trustee................................... 47
SECTION 6.09. Persons Eligible for Appointment as Trustee................. 47
SECTION 6.10. Resignation and Removal; Appointment of
Successor Trustee
SECTION 6.11. Acceptance of Appointment by Successor Trustee.............. 49
SECTION 6.12. Merger, Conversion, Consolidation or Succession
to Business of Trustee...................................... 51
SECTION 6.13. Preferential Collection of Claims Against the
Issuer...................................................... 51
SECTION 6.14. Appointment of Authenticating Agent......................... 51
ARTICLE 7
CONCERNING THE SECURITYHOLDERS
SECTION 7.01. Evidence of Action Taken by Securityholders................. 52
SECTION 7.02. Proof of Execution of Instruments and of Holding
of Securities............................................... 53
SECTION 7.03. Holders to Be Treated as Owners............................. 54
SECTION 7.04. Securities Owned by Issuer Deemed Not
Outstanding................................................. 55
SECTION 7.05. Right of Revocation of Action Taken......................... 55
ARTICLE 8
SUPPLEMENTAL INDENTURES
SECTION 8.01. Supplemental Indentures Without Consent of
Securityholders............................................. 56
SECTION 8.02. Supplemental Indentures With Consent of
Securityholders............................................. 57
SECTION 8.03. Effect of Supplemental Indenture............................ 59
SECTION 8.04. Documents to Be Given to Trustee............................ 60
SECTION 8.05. Notation on Securities in Respect of Supplemental
Indentures.................................................. 60
SECTION 8.06. Subordination Unimpaired.................................... 60
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ARTICLE 9
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 9.01. Covenant Not to Merge, Consolidate, Sell or
Convey Property Except Under Certain Conditions............. 60
SECTION 9.02. Successor Corporation Substituted........................... 61
SECTION 9.03. Opinion of Counsel Delivered to Trustee..................... 62
ARTICLE 10
SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS
SECTION 10.01. Satisfaction and Discharge of Indenture.................... 62
SECTION 10.02. Application by Trustee of Funds Deposited for
Payment of Securities...................................... 68
SECTION 10.03. Repayment of Moneys Held by Paying Agent................... 68
SECTION 10.04. Return of Moneys Held by Trustee and Paying
Agent Unclaimed for Two Years.............................. 68
SECTION 10.05. Indemnity for U.S. Government Obligations.................. 69
ARTICLE 11
MISCELLANEOUS PROVISIONS
SECTION 11.01. Incorporators, Stockholders, Officers and
Directors of Issuer Exempt from Individual
Liability.................................................. 69
SECTION 11.02. Provisions of Indenture for the Sole Benefit of
Parties and Holders of Securities and Coupons.............. 69
SECTION 11.03. Successors and Assigns of Issuer Bound by
Indenture.................................................. 69
SECTION 11.04. Notices and Demands on Issuer, Trustee and
Holders of Securities and Coupons.......................... 70
SECTION 11.05. Officer's Certificates and Opinions of Counsel;
Statements to Be Contained Therein......................... 70
SECTION 11.06. Payments Due on Saturdays, Sundays and
Holidays................................................... 72
SECTION 11.07. Conflict of Any Provision of Indenture with Trust
Indenture Act of 1939...................................... 72
SECTION 11.08. New York Law to Govern..................................... 72
SECTION 11.09. Counterparts............................................... 72
SECTION 11.10. Effect of Headings......................................... 72
SECTION 11.11. Securities in a Foreign Currency........................... 72
iv
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SECTION 11.12. Judgment Currency.......................................... 73
ARTICLE 12
REDEMPTION OF SECURITIES AND SINKING FUNDS
SECTION 12.01. Applicability of Article................................... 74
SECTION 12.02. Notice of Redemption; Partial Redemptions.................. 74
SECTION 12.03. Payment of Securities Called for Redemption................ 76
SECTION 12.04. Exclusion of Certain Securities from Eligibility
for Selection for Redemption............................... 77
SECTION 12.05. Mandatory and Optional Sinking Funds....................... 77
ARTICLE 13
SUBORDINATION
SECTION 13.01. Securities and Coupons Subordinated to Senior
Indebtedness............................................... 80
SECTION 13.02. Disputes with Holders of Certain Senior
Indebtedness............................................... 82
SECTION 13.03. Subrogation................................................ 82
SECTION 13.04. Obligation of Issuer Unconditional......................... 82
SECTION 13.05. Payments on Securities and Coupons Permitted............... 83
SECTION 13.06. Effectuation of Subordination by Trustee................... 83
SECTION 13.07. Knowledge of Trustee....................................... 83
SECTION 13.08. Trustee May Hold Senior Indebtedness....................... 84
SECTION 13.09. Rights of Holders of Senior Indebtedness Not
Impaired................................................... 84
SECTION 13.10. Article Applicable to Paying Agents........................ 84
SECTION 13.11. Trustee; Compensation Not Prejudiced....................... 84
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THIS INDENTURE, dated as of March 1, 1998 between MORGAN STANLEY, DEAN
WITTER, DISCOVER & CO., a Delaware corporation (the "ISSUER"), and THE BANK OF
NEW YORK, as trustee (the "TRUSTEE"),
W I T N E S S E T H :
WHEREAS, the Issuer has duly authorized the issue from time to time of its
junior subordinated unsecured debentures, notes or other evidences of
indebtedness to be issued in one or more series (the "SECURITIES") up to such
principal amount or amounts as may from time to time be authorized in accordance
with the terms of this Indenture;
WHEREAS, the Issuer has duly authorized the execution and delivery of this
Indenture to provide, among other things, for the authentication, delivery and
administration of the Securities; and
WHEREAS, all things necessary to make this Indenture a valid indenture and
agreement according to its terms have been done;
NOW, THEREFORE:
In consideration of the premises and the purchases of the Securities by the
holders thereof, the Issuer and the Trustee mutually covenant and agree for the
equal and proportionate benefit of the respective holders from time to time of
the Securities and of the coupons, if any, appertaining thereto as follows:
ARTICLE 1
DEFINITIONS
Section 1.01. Certain Terms Defined. The following terms (except as
otherwise expressly provided or unless the context otherwise clearly requires)
for all purposes of this Indenture and of any indenture supplemental hereto
shall have the respective meanings specified in this Section. All other terms
used in this Indenture that are defined in the Trust Indenture Act of 1939 or
the definitions of which in the Securities Act of 1933 are referred to in the
Trust Indenture Act of 1939, including terms defined therein by reference to the
Securities Act of 1933 (except as herein otherwise expressly provided or unless
the context otherwise requires), shall have the meanings assigned to such terms
in said Trust Indenture Act and in said Securities Act as in force at the date
of this Indenture. All
<PAGE>
accounting terms used herein and not expressly defined shall have the meanings
assigned to such terms in accordance with generally accepted accounting
principles, and the term "generally accepted accounting principles" means such
accounting principles as are generally accepted at the time of any computation.
The words "herein", "hereof" and "hereunder" and other words of similar import
refer to this Indenture as a whole and not to any particular Article, Section or
other subdivision. The terms defined in this Article have the meanings assigned
to them in this Article and include the plural as well as the singular.
"ADDITIONAL INTEREST" means compounded interest arising on any deferred
interest payments, as defined in any series of Securities.
"ADDITIONAL SUMS" has the meaning specified in Section 2.03(r) of this
Indenture.
"AFFILIATE" has the same meaning as given to that term in Rule 405 of
the Securities Act of 1933 or any successor rule thereunder.
"AUTHENTICATING AGENT" shall have the meaning set forth in Section 6.14.
"AUTHORIZED NEWSPAPER" means a newspaper (which, in the case of The City
of New York, will, if practicable, be The Wall Street Journal (Eastern Edition),
in the case of the United Kingdom, will, if practicable, be the Financial Times
(London Edition) and, in the case of Luxembourg, will, if practicable, be the
Luxemburger Wort) published in an official language of the country of
publication customarily published at least once a day for at least five days in
each calendar week and of general circulation in The City of New York, the
United Kingdom or in Luxembourg, as applicable. If it shall be impractical in
the opinion of the Trustee to make any publication of any notice required hereby
in an Authorized Newspaper, any publication or other notice in lieu thereof
which is made or given with the approval of the Trustee shall constitute a
sufficient publication of such notice.
"BOARD OF DIRECTORS" means either the Board of Directors of the Issuer
or any committee of such Board duly authorized to act on its behalf.
"BOARD RESOLUTION" means a copy of one or more resolutions, certified by
the secretary or an assistant secretary of the Issuer to have been duly adopted
or consented to by the Board of Directors and to be in full force and effect,
and delivered to the Trustee.
"BUSINESS DAY" means, with respect to any Security of a series unless
otherwise specified pursuant to Section 2.03, a day other than a Saturday or
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Sunday that in the city (or in any of the cities, if more than one) in which
amounts are payable, as specified in the form of such Security, is not a day on
which banking institutions are authorized or required by law or executive order
to remain closed.
"CAPITAL SECURITIES" means, with respect to an MSDW Capital Trust, the
undivided beneficial interests in the assets of such trust that rank pari passu
with the Common Securities issued by such trust; provided, that upon the
occurrence of an Event of Default with respect to the Securities held by such
trust, the rights of holders of such Common Securities to payment in respect of
distributions and payments upon liquidation, redemption and otherwise are
subordinated to the rights of holders of such Capital Securities.
"CAPITAL SECURITIES GUARANTEE" means, with respect to an MSDW Capital
Trust, any Guarantee that the Guarantor enters into with The Bank of New York or
any other Person that operates directly or indirectly for the benefit of holders
of the Capital Securities of such trust.
"COMMISSION" means the Securities and Exchange Commission, as from time
to time constituted, created under the Securities Exchange Act of 1934, or if at
any time after the execution and delivery of this Indenture such Commission is
not existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties on such date.
"COMMON SECURITIES" means, with respect to an MSDW Capital Trust, the
undivided beneficial interests in the assets of such trust that rank pari passu
with the Capital Securities issued by such trust; provided, that upon the
occurrence of an Event of Default with respect to the Securities held by such
trust, the rights of holders of such Common Securities to payment in respect to
distributions and payments upon liquidation, redemption and otherwise are
subordinated to the rights of holders of such Capital Securities.
"COMMON SECURITIES GUARANTEE" means, with respect to an MSDW Capital
Trust, any Guarantee that the Guarantor enters into with any Person that
operates directly or indirectly for the benefit of holders of the Common
Securities of such trust.
"COMPOSITE RATE" means, at any time, the rate of interest, per annum,
compounded semiannually, equal to the sum of the rates of interest borne by the
Securities of each series (as specified on the face of the Securities of each
series, provided, that, in the case of the Securities with variable rates of
interest, the interest rate to be used in calculating the Composite Rate shall
be the interest rate applicable to such Securities at the beginning of the year
in which the Composite
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<PAGE>
Rate is being determined and, provided, further, that, in the case of Securities
which do not bear interest, the interest rate to be used in calculating the
Composite Rate shall be a rate equal to the yield to maturity on such
Securities, calculated at the time of issuance of such Securities) multiplied,
in the case of each series of Securities, by the percentage of the aggregate
principal amount of the Securities of all series Outstanding represented by the
Outstanding Securities of such series. For the purposes of this calculation, the
aggregate principal amounts of Outstanding Securities that are denominated in a
foreign currency, shall be calculated in the manner set forth in Section 11.11.
"CORPORATE TRUST OFFICE" means the office of the Trustee at which the
corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date as of which this
Indenture is dated, located in New York, New York.
"COUPON" means any interest coupon appertaining to a Security.
"COVENANT DEFEASANCE" shall have the meaning set forth in Section
10.01(c).
"DEPOSITARY" means, with respect to the Securities of any series
issuable or issued in the form of one or more Registered Global Securities, the
Person designated as Depositary by the Issuer pursuant to Section 2.03 until a
successor Depositary shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "Depositary" shall mean or include
each Person who is then a Depositary hereunder, and if at any time there is more
than one such Person, "Depositary" as used with respect to the Securities of any
such series shall mean the Depositary with respect to the Registered Global
Securities of that series.
"DIRECT ACTION" means a legal proceeding instituted by a holder of the
Capital Securities of an MSDW Capital Trust directly against the Issuer for the
enforcement of payment to such holder of any amounts payable in respect of the
Securities held by such trust having a principal amount equal to the aggregate
liquidation amount of the Capital Securities held by such holder, if an Event of
Default has occurred and is continuing and such Event of Default is attributable
to the failure of the Issuer to pay any amounts payable in respect of such
Securities on the date such amounts are otherwise payable (in accordance with
the terms hereof and thereof).
"DOLLAR" means the coin or currency of the United States of America as
at the time of payment is legal tender for the payment of public and private
debts.
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"ECU" means the European Currency Unit as defined and revised from time
to time by the Council of European Communities.
"EURO" means the currency of participating member states of the European
Union that adopt a single currency in accordance with the Treaty on European
Unity signed February 7, 1992.
"EVENT OF DEFAULT" means any event or condition specified as such in
Section 5.01.
"FOREIGN CURRENCY" means the ECU, euro or any successor or similar
currency or any currency issued by the government of a country other than the
United States.
"GUARANTOR" means the Issuer in its capacity as guarantor under any
Trust Securities Guarantee.
"HOLDER", "HOLDER OF SECURITIES", "SECURITYHOLDER" or other similar
terms mean (a) in the case of any Registered Security, the person in whose name
such Security is registered in the security register kept by the Issuer for that
purpose in accordance with the terms hereof, and (b) in the case of any
Unregistered Security, the bearer of such Security, or any Coupon appertaining
thereto, as the case may be.
"INDEBTEDNESS" shall have the meaning set forth in Section 5.01.
"INDENTURE" means this instrument as originally executed and delivered
or, if amended or supplemented as herein provided, as so amended or supplemented
or both, and shall include the forms and terms of particular series of
Securities established as contemplated hereunder.
"INTEREST" means, when used with respect to non-interest bearing
Securities, interest payable after maturity.
"ISSUER" means (except as otherwise provided in Article 6) Morgan
Stanley, Dean Witter, Discover & Co., a Delaware corporation and, subject to
Article , its successors and assigns.
"ISSUER ORDER" means a written statement, request or order of the Issuer
signed in its name by one of the following: the Chairman of the Board, the
President, the Chief Financial Officer, the Chief Strategic and Administrative
5
<PAGE>
Officer, the Chief Legal Officer, the Treasurer, any Assistant Treasurer or any
other person authorized by the Board of Directors to execute any such written
statement, request or order.
"JUDGMENT CURRENCY" shall have the meaning set forth in Section 11.12.
"MSDW CAPITAL TRUST" means an MSDW Capital Trust, a Delaware statutory
business trust, or any permitted successor thereto, or any substantially similar
Delaware statutory business trust sponsored by the Issuer.
"OFFICER'S CERTIFICATE" means a certificate signed by any one of the
following: the Chairman of the Board, the President, the Chief Financial
Officer, the Chief Strategic and Administrative Officer, the Chief Legal
Officer, the Treasurer, any Assistant Treasurer or any other person authorized
by the Board of Directors to execute any such certificate and delivered to the
Trustee. Each such certificate shall comply with Section 314 of the Trust
Indenture Act of 1939 and include the statements provided for in Section 11.05.
"OPINION OF COUNSEL" means an opinion in writing signed by the Chief
Legal Officer of the Issuer, or by such other legal counsel who may be an
employee of or counsel to the Issuer. Each such opinion shall comply with
Section 314 of the Trust Indenture Act of 1939 and include the statements
provided for in Section 11.05.
"ORIGINAL ISSUE DATE" of any Security (or portion thereof) means the
earlier of (a) the date of such Security or (b) the date of any Security (or
portion thereof) for which such Security was issued (directly or indirectly) on
registration of transfer, exchange or substitution.
"ORIGINAL ISSUE DISCOUNT SECURITY" means any Security that provides for
an amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the maturity thereof pursuant to Section 5.01.
"OUTSTANDING" (except as otherwise provided in Section 7.04), when used
with reference to Securities, shall, subject to the provisions of Section 7.04,
mean, as of any particular time, all Securities authenticated and delivered by
the Trustee under this Indenture, except
(a) Securities theretofore cancelled by the Trustee or delivered to the
Trustee for cancellation;
(b) Securities, or portions thereof, for the payment or redemption of which
moneys or U.S. Government Obligations (as provided for in Section 10.01)
6
<PAGE>
in the necessary amount shall have been deposited in trust with the Trustee or
with any paying agent (other than the Issuer) or shall have been set aside,
segregated and held in trust by the Issuer for the Holders of such Securities
(if the Issuer shall act as its own paying agent), provided that if such
Securities, or portions thereof, are to be redeemed prior to the maturity
thereof, notice of such redemption shall have been given as herein provided, or
provision satisfactory to the Trustee shall have been made for giving such
notice; and
(c) Securities which shall have been paid or in substitution for which
other Securities shall have been authenticated and delivered pursuant to the
terms of Section 2.09 (except with respect to any such Security as to which
proof satisfactory to the Trustee is presented that such Security is held by a
person in whose hands such Security is a legal, valid and binding obligation of
the Issuer).
In determining whether the Holders of the requisite principal amount of
Outstanding Securities of any or all series have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, the principal
amount of an Original Issue Discount Security that shall be deemed to be
Outstanding for such purposes shall be the amount of the principal thereof that
would be due and payable as of the date of such determination upon a declaration
of acceleration of the maturity thereof pursuant to Section 5.01.
"PERIODIC OFFERING" means an offering of Securities of a series from
time to time, the specific terms of which Securities, including, without
limitation, the rate or rates of interest, if any, thereon, the stated maturity
or maturities thereof and the redemption provisions, if any, with respect
thereto, are to be determined by the Issuer or its agents upon the issuance of
such Securities.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"PRINCIPAL" whenever used with reference to the Securities or any
Security or any portion thereof, shall be deemed to include "and premium, if
any".
"RECORD DATE" shall have the meaning set forth in Section 2.07.
"REGISTERED GLOBAL SECURITY", means a Security evidencing all or a part
of a series of Registered Securities, issued to the Depositary for such series
in accordance with Section 2.04, and bearing the legend prescribed in
Section 2.04.
"REGISTERED SECURITY" means any Security registered on the Security
register of the Issuer.
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"REQUIRED CURRENCY" shall have the meaning set forth in Section 11.12.
"RESPONSIBLE OFFICER" when used with respect to the Trustee means the
chairman of the Board of Directors, any vice chairman of the board of directors,
the chairman of the trust committee, the chairman of the executive committee,
any vice chairman of the executive committee, the president, any vice president,
(whether or not designated by numbers or words added before or after the title
"vice president") the cashier, the secretary, the treasurer, any trust officer,
any assistant trust officer, any assistant vice president, any assistant
cashier, any assistant secretary, any assistant treasurer, or any other officer
or assistant officer of the Trustee customarily performing functions similar to
those performed by the persons who at the time shall be such officers,
respectively, or to whom any corporate trust matter is referred because of his
knowledge of and familiarity with the particular subject.
"SECURITY" or "SECURITIES" (except as otherwise provided in
Section 6.08) has the meaning stated in the first recital of this Indenture, or,
as the case may be, Securities that have been authenticated and delivered under
this Indenture.
"SENIOR INDENTURE" means a Senior Indenture between Morgan Stanley (as
predecessor to the Issuer) and The Chase Manhattan Bank (formerly known as
Chemical Bank), as trustee, dated as of April 15, 1989, as supplemented by a
First Supplemental Senior Indenture dated as of May 15, 1991 and a Second
Supplemental Senior Indenture dated as of April 15, 1996 and by a Third
Supplemental Senior Indenture between the Issuer and The Chase Manhattan Bank,
as trustee, dated as of June 1, 1997, as the same may be amended from time to
time.
"SENIOR INDEBTEDNESS" means obligations with respect to securities
issued under the Senior Indenture or the Senior Subordinated Indenture and any
other obligations (other than non-recourse obligations, the Securities or any
other obligations specifically designated as being subordinate in right of
payment to Senior Indebtedness) of, or guaranteed or assumed by, the Issuer for
borrowed money or evidenced by bonds, debentures, notes or other similar
instruments, and amendments, renewals, extensions, modifications and refundings
of any such indebtedness or obligation.
"SENIOR SUBORDINATED INDENTURE" means a Subordinated Indenture between
Morgan Stanley (as predecessor to the Issuer) and The First National Bank of
Chicago, as trustee, dated as of April 15, 1989, as supplemented by a First
Supplemental Subordinated Indenture dated as of May 15, 1991 and a Second
Supplemental Subordinated Indenture dated as of April 15, 1996 and by a Third
Supplemental Subordinated Indenture between the Issuer and The First
8
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National Bank of Chicago, as trustee, dated as of June 1, 1997, as the same may
be amended from time to time.
"TRUST AGREEMENT" means, with respect to an MSDW Capital Trust, the
Amended and Restated Trust Agreement of such trust.
"TRUST INDENTURE ACT OF 1939" (except as otherwise provided in Sections
8.01 and 8.02) means the Trust Indenture Act of 1939 as in force at the date
as of which this Indenture was originally executed.
"TRUSTEE" means the Person identified as "TRUSTEE" in the first
paragraph hereof and, subject to the provisions of Article 6, shall also include
any successor trustee. "TRUSTEE" shall also mean or include each Person who is
then a trustee hereunder and if at any time there is more than one such Person,
"TRUSTEE" as used with respect to the Securities of any series shall mean the
trustee with respect to the Securities of such series.
"TRUST SECURITIES" means, with respect to an MSDW Capital Trust, the
Common Securities and the Capital Securities issued by such trust.
"TRUST SECURITIES GUARANTEE" means, with respect to an MSDW Capital
Trust, the Common Securities Guarantee and the Capital Securities Guarantee
covering the Common Securities and the Capital Securities, respectively, of such
trust.
"UNREGISTERED SECURITY" means any Security other than a Registered
Security.
"U.S. GOVERNMENT OBLIGATIONS" shall have the meaning set forth in
Section 10.01(a).
"YIELD TO MATURITY" means the yield to maturity on a series of
securities, calculated at the time of issuance of such series, or, if
applicable, at the most recent redetermination of interest on such series, and
calculated in accordance with accepted financial practice.
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ARTICLE 2
SECURITIES
Section 2.01. Forms Generally. The Securities of each series and the
Coupons, if any, to be attached thereto shall be substantially in such form (not
inconsistent with this Indenture) as shall be established by or pursuant to one
or more Board Resolutions (as set forth in a Board Resolution or, to the extent
established pursuant to rather than set forth in a Board Resolution, an
Officer's Certificate detailing such establishment) or in one or more indentures
supplemental hereto, in each case with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture and may have imprinted or otherwise reproduced thereon such legend or
legends or endorsements, not inconsistent with the provisions of this Indenture,
as may be required to comply with any law or with any rules or regulations
pursuant thereto, or with any rules of any securities exchange or to conform to
general usage, all as may be determined by the officers executing such
Securities and Coupons, if any, as evidenced by their execution of such
Securities and Coupons.
The definitive Securities and Coupons, if any, shall be printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the officers executing such Securities and
Coupons, if any, as evidenced by their execution of such Securities and Coupons,
if any.
Section 2.02. Form of Trustee's Certificate of Authentication. The
Trustee's certificate of authentication on all Securities shall be in
substantially the following form:
"This is one of the Securities referred to in the
within-mentioned Junior Subordinated Indenture.
------------------------------
as Trustee
Dated: By:
------------------------ ---------------------------
Authorized Signatory
If at any time there shall be an Authenticating Agent appointed with
respect to any series of Securities, then the Trustee's Certificate of
Authentication to be borne by the Securities of each such series shall be
substantially as follows:
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"This is one of the Securities referred to in the
within-mentioned Junior Subordinated Indenture.
------------------------------
as Authenticating Agent
Dated: By:
---------------------------- ---------------------------
Authorized Officer
Section 2.03. Amount Unlimited; Issuable in Series. The aggregate principal
amount of Securities which may be authenticated and delivered under this
Indenture is unlimited.
The Securities may be issued in one or more series and the Securities of
each such series shall rank equally and pari passu with the Securities of each
other series, but all Securities issued hereunder shall be subordinate and
junior in right of payment, to the extent and in the manner set forth in
Article 13, to all Senior Indebtedness of the Issuer. There shall be
established in or pursuant to one or more Board Resolutions (and, to the extent
established pursuant to rather than set forth in a Board Resolution, in an
Officer's Certificate detailing such establishment) or established in one or
more indentures supplemental hereto, prior to the initial issuance of Securities
of any series,
(a) the designation of the Securities of the series, which shall
distinguish the Securities of the series from the Securities of all other
series;
(b) any limit upon the aggregate principal amount of the Securities of the
series that may be authenticated and delivered under this Indenture (except for
Securities authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Securities of the series pursuant to Sections
2.08, 2.09, 2.11, 8.05 or 12.03);
(c) if other than Dollars, the coin or currency in which the Securities of
that series are denominated (including, but not limited to, any Foreign
Currency);
(d) the date or dates on which the principal of the Securities of the
series is payable and any provisions for the advancement of any such date;
(e) the rate or rates at which the Securities of the series shall bear
interest, if any, the rate or rates and extent to which Additional Interest, if
any, shall be payable in respect of any Securities of such series, the date or
dates from which such interest shall accrue, on which such interest shall be
payable and (in the case of Registered Securities) on which a record shall be
taken for the
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determination of Holders to whom interest is payable and/or the method by which
such rate or rates or date or dates shall be determined;
(f) the place or places where the principal of and any interest on
Securities of the series shall be payable (if other than as provided in Section
3.02), the place or places where the Securities of the series may be presented
for registration of transfer or exchange and the place or places where notices
and demands to or upon the Issuer in respect of the Securities of the series may
be made;
(g) any provisions relating to the deferral of interest payments on the
Securities of the series at the option of the Issuer or otherwise;
(h) the right, if any, of the Issuer to redeem Securities of the series, in
whole or in part, at its option and the period or periods within which, the
price or prices at which and any terms and conditions upon which Securities of
the series may be so redeemed, pursuant to any sinking fund or otherwise;
(i) the obligation, if any, of the Issuer to redeem, purchase or repay
Securities of the series pursuant to any mandatory redemption, sinking fund or
analogous provisions or at the option of a Holder thereof and the price or
prices at which, the period or periods within which and any terms and conditions
upon which Securities of the series shall be redeemed, purchased or repaid, in
whole or in part, pursuant to such obligation;
(j) any securities exchange or quotation system on which the Securities of
the series may be listed or quoted, as applicable;
(k) if other than denominations of $25 and any integral multiple thereof,
the denominations in which Securities of the series shall be issuable;
(l) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the maturity thereof;
(m) if other than the coin or currency in which the Securities of that
series are denominated, the coin or currency in which payment of the principal
of or interest on the Securities of such series shall be payable;
(n) if the Securities of a series may be converted into or exchanged for
stock or other securities of the Issuer or other entities, the terms upon which
such series may be converted or exchanged, any specific terms relating to the
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adjustment thereof and the period during which such Securities may be so
converted or exchanged;
(o) if the principal of or interest on the Securities of such series are to
be payable, at the election of the Issuer or a Holder thereof, in a coin or
currency other than that in which the Securities are denominated, the period or
periods within which, and the terms and conditions upon which, such election may
be made;
(p) if the amount of payments of principal of and interest on the
Securities of the series may be determined with reference to an index based on a
coin or currency other than that in which the Securities of the series are
denominated, the manner in which such amounts shall be determined;
(q) whether the Securities of the series will be issuable as Registered
Securities (and if so, whether such Securities will be issuable as Registered
Global Securities) or Unregistered Securities (with or without Coupons), or any
combination of the foregoing, any restrictions applicable to the offer, sale or
delivery of Unregistered Securities or the payment of interest thereon and, if
other than as provided in Section 2.08, the terms upon which Unregistered
Securities of any series may be exchanged for Registered Securities of such
series and vice versa;
(r) whether and under what circumstances the Issuer will pay any additional
amounts ("ADDITIONAL SUMS") on the Securities of the series held by a person who
is not a U.S. person or held in an MSDW Capital Trust in respect of any tax,
assessment or governmental charge withheld or deducted and, if so, whether the
Issuer will have the option to redeem such Securities rather than pay such
Additional Sums;
(s) if the Securities of such series are to be issuable in definitive form
(whether upon original issue or upon exchange of a temporary Security of such
series) only upon receipt of certain certificates or other documents or
satisfaction of other conditions, the form and terms of such certificates,
documents or conditions;
(t) any trustees, depositaries, authenticating or paying agents, transfer
agents or registrars or any other agents with respect to the Securities of such
series;
(u) any additions, modifications or deletions in the Events of Default or
covenants of the Issuer set forth herein with respect to the Securities of such
series; and
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(v) any other terms of the series (which terms shall not be inconsistent
with the provisions of this Indenture).
All Securities of any one series and Coupons, if any, appertaining thereto,
shall be substantially identical, except in the case of Registered Securities as
to denomination and except as may otherwise be provided by or pursuant to the
Board Resolution or Officer's Certificate referred to above or as set forth in
any such indenture supplemental hereto. All Securities of any one series need
not be issued at the same time and may be issued from time to time, consistent
with the terms of this Indenture, if so provided by or pursuant to such Board
Resolution, such Officer's Certificate or in any such indenture supplemental
hereto.
Section 2.04. Authentication and Delivery of Securities. The Issuer may
deliver Securities of any series having attached thereto appropriate Coupons, if
any, executed by the Issuer to the Trustee for authentication together with the
applicable documents referred to below in this Section, and the Trustee shall
thereupon manually authenticate and deliver such Securities to or upon the order
of the Issuer (contained in the Issuer Order referred to below in this Section)
or pursuant to such procedures acceptable to the Trustee and to such recipients
as may be specified from time to time by an Issuer Order. The maturity date,
original issue date, interest rate and any other terms of the Securities of such
series and Coupons, if any, appertaining thereto shall be determined by or
pursuant to such Issuer Order and procedures. If provided for in such
procedures, such Issuer Order may authorize authentication and delivery pursuant
to oral instructions from the Issuer or its duly authorized agent, which
instructions shall be promptly confirmed in writing. In authenticating such
Securities and accepting the additional responsibilities under this Indenture in
relation to such Securities, the Trustee shall be entitled to receive (in the
case of subparagraphs (b), (c) and (d) below only at or before the time of the
first request of the Issuer to the Trustee to authenticate Securities of such
series) and (subject to Section 6.01) shall be fully protected in relying upon,
unless and until such documents have been superceded or revoked:
(a) an Issuer Order requesting such authentication and setting forth
delivery instructions if the Securities and Coupons, if any, are not to be
delivered to the Issuer, provided that, with respect to Securities of a series
subject to a Periodic Offering, (i) such Issuer Order may be delivered by the
Issuer to the Trustee prior to the delivery to the Trustee of such Securities
for authentication and delivery, (ii) the Trustee shall authenticate and deliver
Securities of such series for original issue from time to time, in an aggregate
principal amount not exceeding the aggregate principal amount established for
such series, pursuant to an Issuer Order or pursuant to procedures acceptable to
the Trustee as may be
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specified from time to time by an Issuer Order, (iii) the maturity date or
dates, original issue date or dates, interest rate or rates and any other terms
of Securities of such series shall be determined by an Issuer Order or pursuant
to such procedures and (iv) if provided for in such procedures, such Issuer
Order may authorize authentication and delivery pursuant to oral or electronic
instructions from the Issuer or its duly authorized agent or agents, which oral
instructions shall be promptly confirmed in writing;
(b) any Board Resolution, Officer's Certificate and/or executed
supplemental indenture referred to in Sections 2.01 and 2.03 by or pursuant to
which the forms and terms of the Securities and Coupons, if any, were
established;
(c) an Officer's Certificate setting forth the form or forms and terms of
the Securities and Coupons, if any, stating that the form or forms and terms of
the Securities and Coupons, if any, have been established pursuant to Sections
2.01 and 2.03 and comply with this Indenture, and covering such other matters
as the Trustee may reasonably request; and
(d) at the option of the Issuer, either an Opinion of Counsel, or a letter
addressed to the Trustee permitting it to rely on an Opinion of Counsel,
substantially to the effect that:
(i) the forms of the Securities and Coupons, if any, have been
duly authorized and established in conformity with the provisions of this
Indenture;
(ii) in the case of an underwritten offering, the terms of the
Securities have been duly authorized and established in conformity with the
provisions of this Indenture, and, in the case of an offering that is not
underwritten, certain terms of the Securities have been established
pursuant to a Board Resolution, an Officer's Certificate or a supplemental
indenture in accordance with this Indenture, and when such other terms as
are to be established pursuant to procedures set forth in an Issuer Order
shall have been established, all such terms will have been duly authorized
by the Issuer and will have been established in conformity with the
provisions of this Indenture;
(iii) when the Securities and Coupons, if any, have been
executed by the Issuer and authenticated by the Trustee in accordance with
the provisions of this Indenture and delivered to and duly paid for by the
purchasers thereof, they will have been duly issued under this Indenture
and will be valid and legally binding obligations of the Issuer,
enforceable
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in accordance with their respective terms, and will be entitled to the
benefits of this Indenture; and
(iv) the execution and delivery by the Issuer of, and the
performance by the Issuer of its obligations under, the Securities and
Coupons, if any, will not contravene any provision of applicable law or the
certificate of incorporation or by-laws of the Issuer or any agreement or
other instrument binding upon the Issuer or any of its subsidiaries that is
material to the Issuer and its subsidiaries, considered as one enterprise,
or, to the best of such counsel's knowledge, any judgment, order or decree
of any governmental body, agency or court having jurisdiction over the
Issuer or any subsidiary, and no consent, approval or authorization of any
governmental body or agency is required for the performance by the Issuer
of its obligations under the Securities and Coupons, if any, except such as
are specified and have been obtained and such as may be required by the
securities or blue sky laws of the various states in connection with the
offer and sale of the Securities and Coupons, if any.
In rendering such opinions, such counsel may qualify any opinions as
to enforceability by stating that such enforceability may be limited by
bankruptcy, insolvency, reorganization, liquidation, moratorium and other
similar laws affecting the rights and remedies of creditors and is subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). Such counsel may rely, as to
all matters governed by the laws of jurisdictions other than the State of New
York and the federal law of the United States, upon opinions of other counsel
(copies of which shall be delivered to the Trustee), who shall be counsel
reasonably satisfactory to the Trustee, in which case the opinion shall state
that such counsel believes he and the Trustee are entitled so to rely. Such
counsel may also state that, insofar as such opinion involves factual matters,
he has relied, to the extent he deems proper, upon certificates of officers of
the Issuer and its subsidiaries and certificates of public officials.
The Trustee shall have the right to decline to authenticate and
deliver any Securities under this Section if the Trustee, being advised by
counsel, determines that such action may not lawfully be taken by the Issuer or
if the Trustee in good faith by its board of directors or board of trustees,
executive committee, or a trust committee of directors or trustees or
Responsible Officers shall determine that such action would expose the Trustee
to personal liability to existing Holders or would affect the Trustee's own
rights, duties or immunities under the Securities, this Indenture or otherwise.
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If the Issuer shall establish pursuant to Section 2.03 that the
Securities of a series are to be issued in the form of one or more Registered
Global Securities, then the Issuer shall execute and the Trustee shall, in
accordance with this Section and the Issuer Order with respect to such series,
authenticate and deliver one or more Registered Global Securities that (i) shall
represent and shall be denominated in an amount equal to the aggregate principal
amount of all of the Securities of such series issued and not yet cancelled,
(ii) shall be registered in the name of the Depositary for such Registered
Global Security or Securities or the nominee of such Depositary, (iii) shall be
delivered by the Trustee to such Depositary or pursuant to such Depositary's
instructions and (iv) shall bear a legend substantially to the following effect:
"Unless and until it is exchanged in whole or in part for Securities in
definitive registered form, this Security may not be transferred except as a
whole by the Depositary to the nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a nominee of such
successor Depositary."
Each Depositary designated pursuant to Section 2.03 must, at the time
of its designation and at all times while it serves as Depositary, be a clearing
agency registered under the Securities Exchange Act of 1934 and any other
applicable statute or regulation.
Section 2.05. Execution of Securities. The Securities and, if
applicable, each Coupon appertaining thereto shall be signed on behalf of the
Issuer by one of the following: the Chairman of the Board, the President, the
Chief Financial Officer, the Chief Strategic and Administrative Officer, the
Chief Legal Officer, the Treasurer, any Assistant Treasurer or any other person
authorized by the Board of Directors to execute Securities or, if applicable,
Coupons, which Securities or Coupons may, but need not, be attested. Such
signatures may be the manual or facsimile signatures of the present or any
future such officers. Minor errors or defects in any such reproduction of any
such signature shall not affect the validity or enforceability of any Security
that has been duly authenticated and delivered by the Trustee.
In case any officer of the Issuer who shall have signed any of the
Securities or Coupons, if any, shall cease to be such officer before the
Security or Coupon so signed (or the Security to which the Coupon so signed
appertains) shall be authenticated and delivered by the Trustee or disposed of
by the Issuer, such Security or Coupon nevertheless may be authenticated and
delivered or disposed of as though the person who signed such Security or Coupon
had not ceased to be such officer of the Issuer; and any Security or Coupon may
be signed on behalf of the Issuer by such persons as, at the actual date of the
execution of such Security or Coupon, shall be the proper officers of the
Issuer, although at the
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date of the execution and delivery of this Indenture any such person was not
such an officer.
SECTION 2.06. Certificate of Authentication. Only such Securities as
shall bear thereon a certificate of authentication substantially in the form
hereinbefore recited, executed by the Trustee by the manual signature of one of
its authorized officers, shall be entitled to the benefits of this Indenture or
be valid or obligatory for any purpose. No Coupon shall be entitled to the
benefits of this Indenture or shall be valid and obligatory for any purpose
until the certificate of authentication on the Security to which such Coupon
appertains shall have been duly executed by the Trustee. The execution of such
certificate by the Trustee upon any Security executed by the Issuer shall be
conclusive evidence that the Security so authenticated has been duly
authenticated and delivered hereunder and that the Holder is entitled to the
benefits of this Indenture.
SECTION 2.07. Denomination and Date of Securities; Payments of
Interest. The Securities of each series shall be issuable as Registered
Securities or Unregistered Securities in denominations established as
contemplated by Section 2.03 or, with respect to the Registered Securities of
any series, if not so established, in denominations of $1,000 and any integral
multiple thereof. If denominations of Unregistered Securities of any series are
not so established, such Securities shall be issuable in denominations of $1,000
and $5,000. The Securities of each series shall be numbered, lettered or
otherwise distinguished in such manner or in accordance with such plan as the
officers of the Issuer executing the same may determine with the approval of the
Trustee, as evidenced by the execution and authentication thereof.
Each Registered Security shall be dated the date of its
authentication. Each Unregistered Security shall be dated as provided in the
resolution or resolutions of the Board of Directors of the Issuer referred to in
Section 2.03. The Securities of each series shall bear interest, if any, from
the date, and such interest shall be payable on the dates, established as
contemplated by Section 2.03.
The person in whose name any Registered Security of any series is
registered at the close of business on any record date applicable to a
particular series with respect to any interest payment date for such series
shall be entitled to receive the interest, if any, payable on such interest
payment date notwithstanding any transfer or exchange of such Registered
Security subsequent to the record date and prior to such interest payment date,
except if and to the extent the Issuer shall default in the payment of the
interest due on such interest payment date for such series, in which case such
defaulted interest shall be paid to the persons in whose names Outstanding
Registered Securities for such series are registered at the close of business on
a subsequent record date (which shall be not less than five
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Business Days prior to the date of payment of such defaulted interest)
established by notice given by mail by or on behalf of the Issuer to the Holders
of Registered Securities not less than 15 days preceding such subsequent record
date. The term "RECORD DATE" as used with respect to any interest payment date
(except a date for payment of defaulted interest) for the Securities of any
series shall mean the date specified as such in the terms of the Registered
Securities of such series established as contemplated by Section 2.03, or, if no
such date is so established, if such interest payment date is the first day of a
calendar month, the fifteenth day of the next preceding calendar month or, if
such interest payment date is the fifteenth day of a calendar month, the first
day of such calendar month, whether or not such record date is a Business Day.
SECTION 2.08. Registration, Transfer and Exchange. The Issuer will
keep at each office or agency to be maintained for the purpose as provided in
Section 3.02 for each series of Securities a register or registers in which,
subject to such reasonable regulations as it may prescribe, it will provide for
the registration of Registered Securities of such series and the registration of
transfer of Registered Securities of such series. Such register shall be in
written form in the English language or in any other form capable of being
converted into such form within a reasonable time. At all reasonable times such
register or registers shall be open for inspection by the Trustee.
Upon due presentation for registration of transfer of any Registered
Security of any series at any such office or agency to be maintained for the
purpose as provided in Section 3.02, the Issuer shall execute and the Trustee
shall authenticate and deliver in the name of the transferee or transferees a
new Registered Security or Registered Securities of the same series, maturity
date, interest rate and original issue date in authorized denominations for a
like aggregate principal amount.
Unregistered Securities (except for any temporary global
Unregistered Securities) and Coupons (except for Coupons attached to any
temporary global Unregistered Securities) shall be transferable by delivery.
At the option of the Holder thereof, Registered Securities of any
series (other than a Registered Global Security, except as set forth below) may
be exchanged for a Registered Security or Registered Securities of such series
having authorized denominations and an equal aggregate principal amount, upon
surrender of such Registered Securities to be exchanged at the agency of the
Issuer that shall be maintained for such purpose in accordance with Section 3.02
and upon payment, if the Issuer shall so require, of the charges hereinafter
provided. If the Securities of any series are issued in both registered and
unregistered form, except as otherwise specified pursuant to Section 2.03, at
the
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option of the Holder thereof, Unregistered Securities of any series may be
exchanged for Registered Securities of such series having authorized
denominations and an equal aggregate principal amount, upon surrender of such
Unregistered Securities to be exchanged at the agency of the Issuer that shall
be maintained for such purpose in accordance with Section 3.02, with, in the
case of Unregistered Securities that have Coupons attached, all unmatured
Coupons and all matured Coupons in default thereto appertaining, and upon
payment, if the Issuer shall so require, of the charges hereinafter provided. At
the option of the Holder thereof, if Unregistered Securities of any series,
maturity date, interest rate and original issue date are issued in more than one
authorized denomination, except as otherwise specified pursuant to Section 2.03,
such Unregistered Securities may be exchanged for Unregistered Securities of
such series having authorized denominations and an equal aggregate principal
amount, upon surrender of such Unregistered Securities to be exchanged at the
agency of the Issuer that shall be maintained for such purpose in accordance
with Section 3.02 or as specified pursuant to Section 2.03, with, in the case of
Unregistered Securities that have Coupons attached, all unmatured Coupons and
all matured Coupons in default thereto appertaining, and upon payment, if the
Issuer shall so require, of the charges hereinafter provided. Unless otherwise
specified pursuant to Section 2.03, Registered Securities of any series may not
be exchanged for Unregistered Securities of such series. Whenever any Securities
are so surrendered for exchange, the Issuer shall execute, and the Trustee shall
authenticate and deliver, the Securities which the Holder making the exchange is
entitled to receive. All Securities and Coupons surrendered upon any exchange or
transfer provided for in this Indenture shall be promptly cancelled and disposed
of by the Trustee and the Trustee will deliver a certificate of disposition
thereof to the Issuer.
All Registered Securities presented for registration of transfer,
exchange, redemption or payment shall (if so required by the Issuer or the
Trustee) be duly endorsed by, or be accompanied by a written instrument or
instruments of transfer in form satisfactory to the Issuer and the Trustee duly
executed by the Holder or his attorney duly authorized in writing.
The Issuer may require payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection with any exchange
or registration of transfer of Securities. No service charge shall be made for
any such transaction.
The Issuer shall not be required to exchange or register a transfer
of (a) any Securities of any series for a period of 15 days next preceding the
first mailing of notice of redemption of Securities of such series to be
redeemed or (b) any Securities selected, called or being called for redemption,
in whole or in part,
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except, in the case of any Security to be redeemed in part, the portion thereof
not so to be redeemed.
Notwithstanding any other provision of this Section 2.08, unless and
until it is exchanged in whole or in part for Securities in definitive
registered form, a Registered Global Security representing all or a portion of
the Securities of a series may not be transferred except as a whole by the
Depositary for such series to a nominee of such Depositary or by a nominee of
such Depositary to such Depositary or another nominee of such Depositary or by
such Depositary or any such nominee to a successor Depositary for such series or
a nominee of such successor Depositary.
If at any time the Depositary for any Registered Securities of a
series represented by one or more Registered Global Securities notifies the
Issuer that it is unwilling or unable to continue as Depositary for such
Registered Securities or if at any time the Depositary for such Registered
Securities shall no longer be eligible under Section 2.04, the Issuer shall
appoint a successor Depositary eligible under Section 2.04 with respect to such
Registered Securities. If a successor Depositary eligible under Section 2.04 for
such Registered Securities is not appointed by the Issuer within 90 days after
the Issuer receives such notice or becomes aware of such ineligibility, the
Issuer's election pursuant to Section 2.03 that such Registered Securities be
represented by one or more Registered Global Securities shall no longer be
effective and the Issuer will execute, and the Trustee, upon receipt of an
Officer's Certificate for the authentication and delivery of definitive
Securities of such series, will authenticate and deliver, Securities of such
series in definitive registered form without coupons, in any authorized
denominations, in an aggregate principal amount equal to the principal amount of
the Registered Global Security or Securities representing such Registered
Securities in exchange for such Registered Global Security or Securities.
The Issuer may at any time and in its sole discretion determine that
the Registered Securities of any series issued in the form of one or more
Registered Global Securities shall no longer be represented by a Registered
Global Security or Securities. In such event the Issuer will execute, and the
Trustee, upon receipt of an Officer's Certificate for the authentication and
delivery of definitive Securities of such series, will authenticate and deliver,
Securities of such series in definitive registered form without coupons, in any
authorized denominations, in an aggregate principal amount equal to the
principal amount of the Registered Global Security or Securities representing
such Registered Securities, in exchange for such Registered Global Security or
Securities.
If specified by the Issuer pursuant to Section 2.03 with respect to
Securities represented by a Registered Global Security, the Depositary for such
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Registered Global Security may surrender such Registered Global Security in
exchange in whole or in part for Securities of the same series in definitive
registered form on such terms as are acceptable to the Issuer and such
Depositary. Thereupon, the Issuer shall execute, and the Trustee shall
authenticate and deliver, without service charge,
(a) to the Person specified by such Depositary a new Registered
Security or Securities of the same series, of any authorized denominations as
requested by such Person, in an aggregate principal amount equal to and in
exchange for such Person's beneficial interest in the Registered Global
Security; and
(b) to such Depositary a new Registered Global Security in a
denomination equal to the difference, if any, between the principal amount of
the surrendered Registered Global Security and the aggregate principal amount of
Registered Securities authenticated and delivered pursuant to clause (a) above.
Upon the exchange of a Registered Global Security for Securities in
definitive registered form without coupons, in authorized denominations, such
Registered Global Security shall be cancelled by the Trustee or an agent of the
Issuer or the Trustee. Securities in definitive registered form without coupons
issued in exchange for a Registered Global Security pursuant to this Section
2.08 shall be registered in such names and in such authorized denominations as
the Depositary for such Registered Global Security, pursuant to instructions
from its direct or indirect participants or otherwise, shall instruct the
Trustee or an agent of the Issuer or the Trustee. The Trustee or such agent
shall deliver such Securities to or as directed by the Persons in whose names
such Securities are so registered.
All Securities issued upon any transfer or exchange of Securities
shall be valid obligations of the Issuer, evidencing the same debt, and entitled
to the same benefits under this Indenture, as the Securities surrendered upon
such transfer or exchange.
Notwithstanding anything herein or in the terms of any series of
Securities to the contrary, none of the Issuer, the Trustee or any agent of the
Issuer or the Trustee (any of which, other than the Issuer, shall rely on an
Officer's Certificate and an Opinion of Counsel) shall be required to exchange
any Unregistered Security for a Registered Security if such exchange would
result in adverse Federal income tax consequences to the Issuer (such as, for
example, the inability of the Issuer to deduct from its income, as computed for
Federal income tax purposes, the interest payable on the Unregistered
Securities) under then applicable United States Federal income tax laws.
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SECTION 2.09. Mutilated, Defaced, Destroyed, Lost and Stolen
Securities. In case any temporary or definitive Security or any Coupon
appertaining to any Security shall become mutilated, defaced or be destroyed,
lost or stolen, the Issuer in its discretion may execute, and upon the written
request of any officer of the Issuer, the Trustee shall authenticate and deliver
a new Security of the same series, maturity date, interest rate and original
issue date, bearing a number or other distinguishing symbol not
contemporaneously outstanding, in exchange and substitution for the mutilated or
defaced Security, or in lieu of and in substitution for the Security so
destroyed, lost or stolen with Coupons corresponding to the Coupons appertaining
to the Securities so mutilated, defaced, destroyed, lost or stolen, or in
exchange or substitution for the Security to which such mutilated, defaced,
destroyed, lost or stolen Coupon appertained, with Coupons appertaining thereto
corresponding to the Coupons so mutilated, defaced, destroyed, lost or stolen.
In every case the applicant for a substitute Security or Coupon shall furnish to
the Issuer and to the Trustee and any agent of the Issuer or the Trustee such
security or indemnity as may be required by them to indemnify and defend and to
save each of them harmless and, in every case of destruction, loss or theft,
evidence to their satisfaction of the destruction, loss or theft of such
Security or Coupon and of the ownership thereof and in the case of mutilation or
defacement shall surrender the Security and related Coupons to the Trustee or
such agent.
Upon the issuance of any substitute Security or Coupon, the Issuer
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee or its agent) connected
therewith. In case any Security or Coupon which has matured or is about to
mature or has been called for redemption in full shall become mutilated or
defaced or be destroyed, lost or stolen, the Issuer may instead of issuing a
substitute Security, pay or authorize the payment of the same or the relevant
Coupon (without surrender thereof except in the case of a mutilated or defaced
Security or Coupon), if the applicant for such payment shall furnish to the
Issuer and to the Trustee and any agent of the Issuer or the Trustee such
security or indemnity as any of them may require to save each of them harmless,
and, in every case of destruction, loss or theft, the applicant shall also
furnish to the Issuer and the Trustee and any agent of the Issuer or the Trustee
evidence to their satisfaction of the destruction, loss or theft of such
Security or Coupon and of the ownership thereof.
Every substitute Security or Coupon of any series issued pursuant to
the provisions of this Section by virtue of the fact that any such Security or
Coupon is destroyed, lost or stolen shall constitute an additional contractual
obligation of the Issuer, whether or not the destroyed, lost or stolen Security
or Coupon shall be at any time enforceable by anyone and shall be entitled to
all the benefits of (but shall be subject to all the limitations of rights set
forth in) this Indenture equally
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and proportionately with any and all other Securities or Coupons of such series
duly authenticated and delivered hereunder. All Securities and Coupons shall be
held and owned upon the express condition that, to the extent permitted by law,
the foregoing provisions are exclusive with respect to the replacement or
payment of mutilated, defaced or destroyed, lost or stolen Securities and
Coupons and shall preclude any and all other rights or remedies notwithstanding
any law or statute existing or hereafter enacted to the contrary with respect to
the replacement or payment of negotiable instruments or other securities without
their surrender.
SECTION 2.10. Cancellation of Securities; Destruction Thereof. All
Securities and Coupons surrendered for payment, redemption, registration of
transfer or exchange, or for credit against any payment in respect of a sinking
or analogous fund, if surrendered to the Issuer or any agent of the Issuer or
the Trustee or any agent of the Trustee, shall be delivered to the Trustee or
its agent for cancellation or, if surrendered to the Trustee, shall be cancelled
by it; and no Securities or Coupons shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Indenture. The Trustee or
its agent shall return such cancelled Securities and Coupons held by it to the
Issuer. If the Issuer or its agent shall acquire any of the Securities or
Coupons, such acquisition shall not operate as a redemption or satisfaction of
the indebtedness represented by such Securities or Coupons unless and until the
same are delivered to the Trustee or its agent for cancellation.
SECTION 2.11. Temporary Securities. Pending the preparation of
definitive Securities for any series, the Issuer may execute and the Trustee
shall authenticate and deliver temporary Securities for such series (printed,
lithographed, typewritten or otherwise reproduced, in each case in form
satisfactory to the Trustee). Temporary Securities of any series shall be
issuable as Registered Securities without coupons, or as Unregistered Securities
with or without coupons attached thereto, of any authorized denomination, and
substantially in the form of the definitive Securities of such series but with
such omissions, insertions and variations as may be appropriate for temporary
Securities, all as may be determined by the Issuer with the concurrence of the
Trustee as evidenced by the execution and authentication thereof. Temporary
Securities may contain such references to any provisions of this Indenture as
may be appropriate. Every temporary Security shall be executed by the Issuer and
be authenticated by the Trustee upon the same conditions and in substantially
the same manner, and with like effect, as the definitive Securities. Without
unreasonable delay the Issuer shall execute and shall furnish definitive
Securities of such series and thereupon temporary Registered Securities of such
series may be surrendered in exchange therefor without charge at each office or
agency to be maintained by the Issuer for that purpose pursuant to Section 3.02
and, in the case of Unregistered Securities, at any agency maintained by the
Issuer for such
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purpose as specified pursuant to Section 2.03, and the Trustee shall
authenticate and deliver in exchange for such temporary Securities of such
series an equal aggregate principal amount of definitive Securities of the same
series having authorized denominations and, in the case of Unregistered
Securities, having attached thereto any appropriate Coupons. Until so exchanged,
the temporary Securities of any series shall be entitled to the same benefits
under this Indenture as definitive Securities of such series, unless otherwise
established pursuant to Section 2.03. The provisions of this Section are subject
to any restrictions or limitations on the issue and delivery of temporary
Unregistered Securities of any series that may be established pursuant to
Section 2.03 (including any provision that Unregistered Securities of such
series initially be issued in the form of a single global Unregistered Security
to be delivered to a depositary or agency located outside the United States and
the procedures pursuant to which definitive or global Unregistered Securities of
such series would be issued in exchange for such temporary global Unregistered
Security).
ARTICLE 3
COVENANTS OF THE ISSUER
SECTION 3.01. Payment of Principal and Interest. The Issuer
covenants and agrees for the benefit of each series of Securities that it will
duly and punctually pay or cause to be paid the principal of, and interest on,
each of the Securities of such series (together with any additional amounts
payable pursuant to the terms of such Securities) at the place or places, at the
respective times and in the manner provided in such Securities and in the
Coupons, if any, appertaining thereto and in this Indenture. The interest on
Securities with Coupons attached (together with any additional amounts payable
pursuant to the terms of such Securities) shall be payable only upon
presentation and surrender of the several Coupons for such interest installments
as are evidenced thereby as they severally mature. If any temporary Unregistered
Security provides that interest thereon may be paid while such Security is in
temporary form, the interest on any such temporary Unregistered Security
(together with any additional amounts payable pursuant to the terms of such
Security) shall be paid, as to the installments of interest evidenced by Coupons
attached thereto, if any, only upon presentation and surrender thereof, and, as
to the other installments of interest, if any, only upon presentation of such
Securities for notation thereon of the payment of such interest, in each case
subject to any restrictions that may be established pursuant to Section 2.03.
The interest on Registered Securities (together with any additional amounts
payable pursuant to the terms of such Securities) shall be payable only to or
upon the written order of the Holders thereof and, at the option
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of the Issuer, may be paid by wire transfer or by mailing checks for such
interest payable to or upon the written order of such Holders at their last
addresses as they appear on the registry books of the Issuer; provided, however,
that, if the Securities of such series are held by an MSDW Capital Trust or a
trustee of such trust and a holder of a Capital Security of such trust brings a
successful Direct Action with respect to any interest payable on such
Securities, such interest will be payable directly to such holder. In such
event, the Issuer will have the right to set-off such payment to such holder
against its obligation to pay interest on such Securities to such MSDW Capital
Trust.
SECTION 3.02. Offices for Payments, etc. So long as any Registered
Securities are authorized for issuance pursuant to this Indenture or are
outstanding hereunder, the Issuer will maintain in the Borough of Manhattan, The
City of New York, an office or agency where the Registered Securities of each
series may be presented for payment, where the Securities of each series may be
presented for exchange as is provided in this Indenture and, if applicable,
pursuant to Section 2.03 and where the Registered Securities of each series may
be presented for registration of transfer as in this Indenture provided.
The Issuer will maintain one or more offices or agencies in a city
or cities located outside the United States (including any city in which such an
agency is required to be maintained under the rules of any stock exchange on
which the Securities of such series are listed) where the Unregistered
Securities, if any, of each series and Coupons, if any, appertaining thereto may
be presented for payment. No payment on any Unregistered Security or Coupon will
be made upon presentation of such Unregistered Security or Coupon at an agency
of the Issuer within the United States nor will any payment be made by transfer
to an account in, or by mail to an address in, the United States unless pursuant
to applicable United States laws and regulations then in effect such payment can
be made without adverse tax consequences to the Issuer. Notwithstanding the
foregoing, payments in Dollars of Unregistered Securities of any series and
Coupons appertaining thereto which are payable in Dollars may be made at an
agency of the Issuer maintained in the Borough of Manhattan, The City of New
York if such payment in Dollars at each agency maintained by the Issuer outside
the United States for payment on such Unregistered Securities is illegal or
effectively precluded by exchange controls or other similar restrictions.
The Issuer will maintain in the Borough of Manhattan, The City of
New York, an office or agency where notices and demands to or upon the Issuer in
respect of the Securities of any series, the Coupons appertaining thereto or
this Indenture may be served.
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The Issuer will give to the Trustee written notice of the location
of each such office or agency and of any change of location thereof. In case the
Issuer shall fail to maintain any agency required by this Section to be located
in the Borough of Manhattan, The City of New York, or shall fail to give such
notice of the location or of any change in the location of any of the above
agencies, presentations and demands may be made and notices may be served at the
Corporate Trust Office of the Trustee.
The Issuer may from time to time designate one or more additional
offices or agencies where the Securities of a series and any Coupons
appertaining thereto may be presented for payment, where the Securities of that
series may be presented for exchange as provided in this Indenture and pursuant
to Section 2.03 and where the Registered Securities of that series may be
presented for registration of transfer as in this Indenture provided, and the
Issuer may from time to time rescind any such designation, as the Issuer may
deem desirable or expedient; provided, however, that no such designation or
rescission shall in any manner relieve the Issuer of its obligation to maintain
the agencies provided for in this Section. The Issuer will give to the Trustee
prompt written notice of any such designation or rescission thereof.
SECTION 3.03. Appointment to Fill a Vacancy in Office of Trustee.
The Issuer, whenever necessary to avoid or fill a vacancy in the office of
Trustee, will appoint, in the manner provided in Section 6.10, a Trustee, so
that there shall at all times be a Trustee with respect to each series of
Securities hereunder.
SECTION 3.04. Paying Agents. Whenever the Issuer shall appoint a
paying agent other than the Trustee with respect to the Securities of any
series, it will cause such paying agent to execute and deliver to the Trustee an
instrument in which such agent shall agree with the Trustee, subject to the
provisions of this Section,
(a) that it will hold all sums received by it as such agent for
the payment of the principal of or interest on the Securities of such series
(whether such sums have been paid to it by the Issuer or by any other obligor on
the Securities of such series) in trust for the benefit of the Holders of the
Securities of such series, or Coupons appertaining thereto, if any, or of the
Trustee,
(b) that it will give the Trustee notice of any failure by the
Issuer (or by any other obligor on the Securities of such series) to make any
payment of the principal of or interest on the Securities of such series when
the same shall be due and payable, and
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(c) that it will pay any such sums so held in trust by it to the
Trustee upon the Trustee's written request at any time during the continuance of
the failure referred to in clause (b) above.
The Issuer will, on or prior to each due date of the principal of or
interest on the Securities of such series, deposit with the paying agent a sum
sufficient to pay such principal or interest so becoming due, and (unless such
paying agent is the Trustee) the Issuer will promptly notify the Trustee of any
failure to take such action.
If the Issuer shall act as its own paying agent with respect to the
Securities of any series, it will, on or before each due date of the principal
of or interest on the Securities of such series, set aside, segregate and hold
in trust for the benefit of the Holders of the Securities of such series or the
Coupons appertaining thereto a sum sufficient to pay such principal or interest
so becoming due. The Issuer will promptly notify the Trustee of any failure to
take such action.
Anything in this Section to the contrary notwithstanding, but
subject to Section 10.01 and to the terms of any series of Securities, the
Issuer may at any time, for the purpose of obtaining a satisfaction and
discharge with respect to one or more or all series of Securities hereunder, or
for any other reason, pay or cause to be paid to the Trustee all sums held in
trust for any such series by the Issuer or any paying agent hereunder, as
required by this Section, such sums to be held by the Trustee upon the trusts
herein contained.
Anything in this Section to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section is subject to the
provisions of Sections 10.03 and 11.04.
SECTION 3.05. Written Statement to Trustee. The Issuer will furnish
to the Trustee on or before March 31 in each year (beginning with March 31,
1999) a brief certificate (which need not comply with Section 11.05) from the
principal executive, financial or accounting officer of the Issuer stating that
in the course of the performance by the signer of his duties as an officer of
the Issuer he would normally have knowledge of any default or non-compliance by
the Issuer in the performance of any covenants or conditions contained in this
Indenture, stating whether or not he has knowledge of any such default or
non-compliance and, if so, specifying each such default or non-compliance of
which the signer has knowledge and the nature thereof.
SECTION 3.06. Luxembourg Publications. In the event of the publication
of any notice pursuant to Sections 5.11, 6.08, 6.10(a), 6.11, 8.02, 10.04, 12.02
or 12.05, the party making such publication in the Borough of Manhattan, The
City
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of New York and London shall also, to the extent that notice is required to be
given to Holders of Securities of any series by applicable Luxembourg law or
stock exchange regulation, as evidenced by an Officer's Certificate delivered to
such party, make a similar publication in Luxembourg.
ARTICLE 4
SECURITYHOLDERS LISTS AND REPORTS BY THE ISSUER AND THE TRUSTEE
SECTION 4.01. Issuer to Furnish Trustee Information as to Names and
Addresses of Securityholders. If and so long as the Trustee shall not be the
Security registrar for the Securities of any series, the Issuer and any other
obligor on the Securities will furnish or cause to be furnished to the Trustee a
list in such form as the Trustee may reasonably require of the names and
addresses of the Holders of the Registered Securities of such series pursuant to
Section 312 of the Trust Indenture Act of 1939 (a) semi-annually not more than
15 days after each record date for the payment of interest on such Registered
Securities, as hereinabove specified, as of such record date and on dates to be
determined pursuant to Section 2.03 for non-interest bearing Registered
Securities in each year, and (b) at such other times as the Trustee may request
in writing, within thirty days after receipt by the Issuer of any such request
as of a date not more than 15 days prior to the time such information is
furnished.
SECTION 4.02. Preservation and Disclosure of Securityholders Lists.
[This Section intentionally left blank.]
SECTION 4.03. Reports by the Issuer. The Issuer covenants to file
with the Trustee, within 15 days after the Issuer is required to file the same
with the Commission, copies of the annual reports and of the information,
documents, and other reports that the Issuer may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934 or pursuant to Section 314 of the Trust Indenture Act of 1939.
SECTION 4.04. Reports by the Trustee. Any Trustee's report required
under Section 313(a) of the Trust Indenture Act of 1939 shall be transmitted on
or before May 15 in each year beginning May 15, 1998, as provided in Section
313(c) of the Trust Indenture Act of 1939, so long as any Securities are
Outstanding hereunder, and shall be dated as of a date convenient to the Trustee
no more than 60 days prior thereto.
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ARTICLE 5
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS IN THE EVENT OF DEFAULT
SECTION 5.01. Event of Default Defined; Acceleration of Maturity;
Waiver of Default. "EVENT OF DEFAULT" with respect to Securities of any series
wherever used herein, means each one of the following events which shall have
occurred and be continuing (whatever the reason for such Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) default in the payment of any instalment of interest upon any
of the Securities of such series as and when the same shall become due and
payable, and continuance of such default for a period of 30 days; provided,
however, that a valid extension of an interest payment period by the Issuer in
accordance with the terms of Securities of a series issued hereunder shall not
constitute a default in the payment of interest for this purpose; or
(b) default in the payment of all or any part of the principal on
any of the Securities of such series as and when the same shall become due and
payable either at maturity, upon any redemption, by declaration or otherwise; or
(c) failure on the part of the Issuer duly to observe or perform
any other of the covenants or agreements on the part of the Issuer in the
Securities of such series (other than a covenant or warranty in respect of the
Securities of such series a default in the performance or breach of which is
elsewhere in this Section specifically dealt with) or in this Indenture and
continued for a period of 60 days after the date on which written notice
specifying such failure, stating that such notice is a "NOTICE OF DEFAULT"
hereunder and demanding that the Issuer remedy the same, shall have been given
by registered or certified mail, return receipt requested, to the Issuer by the
Trustee, or to the Issuer and the Trustee by the Holders of at least 25% in
aggregate principal amount of the Outstanding Securities of all series affected
thereby and, if the Securities of such series are held by an MSDW Capital Trust
or a trustee of such trust and should the Trustee or such Holders of the
Outstanding Securities fail to give such notice, the holders of at least 25% in
aggregate liquidation amount of the outstanding Capital Securities of such trust
shall have the right to give such notice; or
(d) a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of the Issuer in an involuntary case under
any applicable
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bankruptcy, insolvency or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) of the Issuer or for any substantial part of its property
or ordering the winding up or liquidation of its affairs, and such decree or
order shall remain unstayed and in effect for a period of 60 consecutive days;
or
(e) the Issuer shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or consent to the entry of an order for relief in an involuntary case
under any such law, or consent to the appointment or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of the Issuer or for any substantial part of its property, or make any
general assignment for the benefit of creditors; or
(f) failure by the Issuer to make any payment at maturity,
including any applicable grace period, in respect of indebtedness, which term as
used herein means obligations (other than the Securities of such series or
non-recourse obligations) of, or guaranteed or assumed by, the Issuer for
borrowed money or evidenced by bonds, debentures, notes or other similar
instruments ("INDEBTEDNESS") in an amount in excess of $10,000,000 or the
equivalent thereof in any other currency or composite currency and such failure
shall have continued for a period of thirty days after written notice thereof
shall have been given by registered or certified mail, return receipt requested,
to the Issuer by the Trustee, or to the Issuer and the Trustee by the Holders of
not less than 25% in aggregate principal amount of the Outstanding Securities
(treated as one class) and, if the Securities of such series are held by an MSDW
Capital Trust or a trustee of such trust and should the Trustee or such Holders
of the Outstanding Securities fail to give such notice, the holders of at least
25% in aggregate liquidation amount of the outstanding Capital Securities of
such trust shall have the right to give such notice; or
(g) a default with respect to any Indebtedness, which default
results in the acceleration of Indebtedness in an amount in excess of
$10,000,000 or the equivalent thereof in any other currency or composite
currency without such Indebtedness having been discharged or such acceleration
having been cured, waived, rescinded or annulled for a period of thirty days
after written notice thereof shall have been given by registered or certified
mail, return receipt requested, to the Issuer by the Trustee, or to the Issuer
and the Trustee by the Holders of not less than 25% in aggregate principal
amount of the Outstanding Securities (treated as one class) and, if the
Securities of such series are held by an MSDW Capital Trust or a trustee of such
trust and should the Trustee or such Holders of the Outstanding Securities fail
to give such notice, the holders of at
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least 25% in aggregate liquidation amount of the outstanding Capital Securities
of such trust shall have such right; or
(h) any other Event of Default provided in the supplemental
indenture under which such series of Securities is issued or in the form of
Security for such series;
provided that if any such failure, default or acceleration referred to in
clauses (f) or (g) above shall cease or be cured, waived, rescinded or annulled,
then the Event of Default hereunder by reason thereof shall be deemed likewise
to have been thereupon cured.
If an Event of Default described in clauses (a), (b), (c) or (h) (if
the Event of Default under clause (c) or (h), as the case may be, is with
respect to less than all series of Securities then Outstanding) occurs and is
continuing, then, and in each and every such case, except for any series of
Securities the principal of which shall have already become due and payable,
either the Trustee or the Holders of not less than 25% in aggregate principal
amount of the Securities of each such affected series then Outstanding hereunder
(voting as a single class) or, if the Securities of such series are held by an
MSDW Capital Trust or a trustee of such trust and should the Trustee or such
Holders of the Outstanding Securities fail to make the declaration referred to
below, the holders of at least 25% in aggregate liquidation amount of the
outstanding Capital Securities of such trust (voting as a separate class), by
notice in writing to the Issuer (and to the Trustee if given by Securityholders
or the holders of Capital Securities), may declare the entire principal (or, if
the Securities of any such affected series are Original Issue Discount
Securities, such portion of the principal amount as may be specified in the
terms of such series) of all Securities of all such affected series or of such
series held by an MSDW Capital Trust, as the case may be, and the interest
accrued thereon, if any, to be due and payable immediately, and upon any such
declaration, the same shall become immediately due and payable. If an Event of
Default described in clause (c) or (h) (if the Event of Default under clause (c)
or (h), as the case may be, is with respect to all series of Securities then
Outstanding), (d), (e), (f) or (g) occurs and is continuing, then and in each
and every such case, unless the principal of all the Securities shall have
already become due and payable, either the Trustee or the Holders of not less
than 25% in aggregate principal amount of all the Securities then Outstanding
hereunder (treated as one class), or, if the Securities of any such series are
held by an MSDW Capital Trust or a trustee of such trust and should the Trustee
or such Holders of the Outstanding Securities fail to make the declaration
referred to below, the Holders of at least 25% in aggregate liquidation amount
of the outstanding Capital Securities of such trust (treated as a separate
class), by notice in writing to the Issuer (and to the Trustee if given by
Securityholders or the
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holders of Capital Securities), may declare the entire principal (or, if any
Securities are Original Issue Discount Securities, such portion of the principal
as may be specified in the terms thereof) of all the Securities then Outstanding
or of such series held by an MSDW Capital Trust, as the case may be, and
interest accrued thereon, if any, to be due and payable immediately, and upon
any such declaration the same shall become immediately due and payable.
The foregoing provisions, however, are subject to the condition that
if, at any time after the principal (or, if the Securities are Original Issue
Discount Securities, such portion of the principal as may be specified in the
terms thereof) of the Securities of any series (or of all the Securities, as the
case may be) shall have been so declared due and payable, and before any
judgment or decree for the payment of the moneys due shall have been obtained or
entered as hereinafter provided, the Issuer shall pay or shall deposit with the
Trustee a sum sufficient to pay all matured instalments of interest upon all the
Securities of each such series (or of all the Securities, as the case may be)
and the principal of any and all Securities of each such series (or of all the
Securities, as the case may be) which shall have become due otherwise than by
acceleration (with interest upon such principal and, to the extent that payment
of such interest is enforceable under applicable law, on overdue instalments of
interest, at the same rate as the rate of interest or Yield to Maturity (in the
case of Original Issue Discount Securities) specified in the Securities of such
series (or at the respective rates of interest or Yields to Maturity of all the
Securities, as the case may be) to the date of such payment or deposit) and such
amount as shall be sufficient to cover reasonable compensation to the Trustee
and each predecessor Trustee, its agents, attorneys and counsel, and all other
expenses and liabilities incurred, and all advances made, by the Trustee and
each predecessor Trustee except as a result of negligence or bad faith, and if
any and all Events of Default under the Indenture, other than the non-payment of
the principal of Securities which shall have become due by acceleration, shall
have been cured, waived or otherwise remedied as provided herein -- then and in
every such case the Holders of a majority in aggregate principal amount of all
the Securities of each such series or of all the Securities then Outstanding, in
each case voting as a single class (except that each such series of Securities
held by an MSDW Capital Trust shall vote as a separate class), by written notice
to the Issuer and to the Trustee, may waive all defaults with respect to each
such series (or with respect to all the Securities, as the case may be) and
rescind and annul such declaration and its consequences, but no such waiver or
rescission and annulment shall extend to or shall affect any subsequent default
or shall impair any right consequent thereon; provided however, that if the
Securities of such series are held by an MSDW Capital Trust or a trustee of such
trust, (i) such waiver or rescission and annulment shall not be effective until
the holders of a majority in aggregate liquidation amount of the Capital
Securities of such trust shall have consented to such waiver or rescission and
annulment and
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(ii) should the Holders of the Securities of such series fail to waive such
defaults and rescind and annul such declaration and its consequences, the
holders of a majority in aggregate liquidation amount of the Capital Securities
of such trust shall have such right.
If the Securities of a series are held by an MSDW Capital Trust or a
trustee of such trust and an Event of Default has occurred and is continuing and
such Event of Default is attributable to the failure of the Issuer to pay any
amounts payable in respect of such Securities on the date such amounts are
otherwise payable, a holder of Capital Securities of such trust may institute a
Direct Action. If the Issuer makes any payment to a holder of such Capital
Securities as a result of a Direct Action, the Issuer will have the right to
set-off any such payment against its obligation to make any corresponding
payment to such MSDW Capital Trust on such Securities.
For all purposes under this Indenture, if a portion of the principal
of any Original Issue Discount Securities shall have been accelerated and
declared due and payable pursuant to the provisions hereof, then, from and after
such declaration, unless such declaration has been rescinded and annulled, the
principal amount of such Original Issue Discount Securities shall be deemed, for
all purposes hereunder, to be such portion of the principal thereof as shall be
due and payable as a result of such acceleration, and payment of such portion of
the principal thereof as shall be due and payable as a result of such
acceleration, together with interest, if any, thereon and all other amounts
owing thereunder, shall constitute payment in full of such Original Issue
Discount Securities.
SECTION 5.02. Collection of Indebtedness by Trustee; Trustee May
Prove Debt. The Issuer covenants that (a) in case default shall be made in the
payment of any instalment of interest on any of the Securities of any series
when such interest shall have become due and payable, and such default shall
have continued for a period of 30 days or (b) in case default shall be made in
the payment of all or any part of the principal of any of the Securities of any
series when the same shall have become due and payable, whether upon maturity of
the Securities of such series or upon any redemption or by declaration or
otherwise -- then upon demand of the Trustee, the Issuer will pay to the Trustee
for the benefit of the Holders of the Securities of such series the whole amount
that then shall have become due and payable on all Securities of such series,
and such Coupons, for principal or interest, as the case may be (with interest
to the date of such payment upon the overdue principal and, to the extent that
payment of such interest is enforceable under applicable law, on overdue
instalments of interest at the same rate as the rate of interest or Yield to
Maturity (in the case of Original Issue Discount Securities) specified in the
Securities of such series); and in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses
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of collection, including reasonable compensation to the Trustee and each
predecessor Trustee, their respective agents, attorneys and counsel, and any
expenses and liabilities incurred, and all advances made, by the Trustee and
each predecessor Trustee except as a result of its negligence or bad faith.
Until such demand is made by the Trustee, the Issuer may pay the
principal of and interest on the Securities of any series to the Holders,
whether or not the Securities of such series be overdue.
In case the Issuer shall fail forthwith to pay such amounts upon
such demand, the Trustee, in its own name and as trustee of an express trust,
shall be entitled and empowered to institute any action or proceedings at law or
in equity for the collection of the sums so due and unpaid, and may prosecute
any such action or proceedings to judgment or final decree, and may enforce any
such judgment or final decree against the Issuer or other obligor upon the
Securities and collect in the manner provided by law out of the property of the
Issuer or other obligor upon the Securities, wherever situated the moneys
adjudged or decreed to be payable.
In case there shall be pending proceedings relative to the Issuer or
any other obligor upon the Securities under Title 11 of the United States Code
or any other applicable Federal or state bankruptcy, insolvency or other similar
law, or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor, or in case
of any other comparable judicial proceedings relative to the Issuer or other
obligor upon the Securities, or to the creditors or property of the Issuer or
such other obligor, the Trustee, irrespective of whether the principal of the
Securities shall then be due and payable as therein expressed or by declaration
or otherwise and irrespective of whether the Trustee shall have made any demand
pursuant to the provisions of this Section, shall be entitled and empowered, by
intervention in such proceedings or otherwise:
(a) to file and prove a claim or claims for the whole amount of
principal and interest (or, if the Securities of any series are Original Issue
Discount Securities, such portion of the principal amount as may be specified in
the terms of such series) owing and unpaid in respect of the Securities of any
series, and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
reasonable compensation to the Trustee and each predecessor Trustee, and their
respective agents, attorneys and counsel, and for reimbursement of all expenses
and liabilities incurred, and all advances made, by the Trustee and each
predecessor Trustee, except as a result of negligence or bad faith) and of the
Securityholders allowed in any judicial
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proceedings relative to the Issuer or other obligor upon the Securities, or to
the creditors or property of the Issuer or such other obligor,
(b) unless prohibited by applicable law and regulations, to vote
on behalf of the holders of the Securities of any series in any election of a
trustee or a standby trustee in arrangement, reorganization, liquidation or
other bankruptcy or insolvency proceedings or person performing similar
functions in comparable proceedings, and
(c) to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute all amounts received with
respect to the claims of the Securityholders and of the Trustee on their behalf;
and any trustee, receiver, or liquidator, custodian or other similar official is
hereby authorized by each of the Securityholders to make payments to the
Trustee, and, in the event that the Trustee shall consent to the making of
payments directly to the Securityholders, to pay to the Trustee such amounts as
shall be sufficient to cover reasonable compensation to the Trustee, each
predecessor Trustee and their respective agents, attorneys and counsel, and all
other expenses and liabilities incurred, and all advances made, by the Trustee
and each predecessor Trustee except as a result of negligence or bad faith.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities of any series or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Securityholder in any such proceeding except, as aforesaid, to vote for the
election of a trustee in bankruptcy or similar person.
All rights of action and of asserting claims under this Indenture,
or under any of the Securities of any series or Coupons appertaining to such
Securities, may be enforced by the Trustee without the possession of any of the
Securities of such series or Coupons appertaining to such Securities or the
production thereof on any trial or other proceedings relative thereto, and any
such action or proceedings instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment, subject to
the payment of the expenses, disbursements and compensation of the Trustee, each
predecessor Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Holders of the Securities or Coupons appertaining to such
Securities in respect of which such action was taken.
In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture to which the
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Trustee shall be a party), the Trustee shall be held to represent all the
Holders of the Securities or Coupons appertaining to such Securities in respect
to which such action was taken and it shall not be necessary to make any Holders
of such Securities or Coupons appertaining to such Securities parties to any
such proceedings.
SECTION 5.03. Applications of Proceeds. Any moneys collected by the
Trustee pursuant to this Article in respect of any series shall, subject to the
subordination provisions hereof, be applied in the following order at the date
or dates fixed by the Trustee and, in case of the distribution of such moneys on
account of principal or interest, upon presentation of the several Securities
and Coupons appertaining to such Securities in respect of which monies have been
collected and stamping (or otherwise noting) thereon the payment, or issuing
Securities of such series in reduced principal amounts in exchange for the
presented Securities of like series if only partially paid, or upon surrender
thereof if fully paid:
FIRST: To the payment of costs and expenses applicable
to such series in respect of which monies have been collected,
including reasonable compensation to the Trustee and each
predecessor Trustee and their respective agents and attorneys and of
all expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee except as a result of
negligence or bad faith;
SECOND: In case the principal of the Securities of such
series in respect of which moneys have been collected shall not have
become and be then due and payable, to the payment of interest on
the Securities of such series in default in the order of the
maturity of the instalments of such interest, with interest (to the
extent that such interest has been collected by the Trustee) upon
the overdue instalments of interest at the same rate as the rate of
interest or Yield to Maturity (in the case of Original Issue
Discount Securities) specified in such Securities, such payments to
be made ratably to the persons entitled thereto, without
discrimination or preference;
THIRD: In case the principal of the Securities of such
series in respect of which moneys have been collected shall have
become and shall be then due and payable, to the payment of the
whole amount then owing and unpaid upon all the Securities of such
series for principal and interest, with interest upon the overdue
principal, and (to the extent that such interest has been collected
by the Trustee) upon overdue instalments of interest at the same
rate as the rate of interest or Yield to Maturity (in the case of
Original Issue Discount Securities) specified in the Securities of
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such series; and in case such moneys shall be insufficient to pay in
full the whole amount so due and unpaid upon the Securities of such
series, then to the payment of such principal and interest or Yield
to Maturity, without preference or priority of principal over
interest or Yield to Maturity, or of interest or Yield to Maturity
over principal, or of any instalment of interest over any other
instalment of interest, or of any Security of such series over any
other Security of such series, ratably to the aggregate of such
principal and accrued and unpaid interest or Yield to Maturity; and
FOURTH: To the payment of the remainder, if any, to the Issuer or
any other person lawfully entitled thereto.
SECTION 5.04. Suits for Enforcement. In case an Event of Default has
occurred, has not been waived and is continuing, the Trustee may in its
discretion proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any of such rights, either at law or in
equity or in bankruptcy or otherwise, whether for the specific enforcement of
any covenant or agreement contained in this Indenture or in aid of the exercise
of any power granted in this Indenture or to enforce any other legal or
equitable right vested in the Trustee by this Indenture or by law.
SECTION 5.05. Restoration of Rights on Abandonment of Proceedings.
In case the Trustee shall have proceeded to enforce any right under this
Indenture and such proceedings shall have been discontinued or abandoned for any
reason, or shall have been determined adversely to the Trustee, then and in
every such case the Issuer and the Trustee shall be restored respectively to
their former positions and rights hereunder, and all rights, remedies and powers
of the Issuer, the Trustee and the Securityholders and any rights of holders of
Capital Securities to institute a Direct Action shall continue as though no such
proceedings had been taken.
SECTION 5.06. Limitations on Suits by Securityholder. No Holder of
any Security of any series or of any Coupon appertaining thereto shall have any
right by virtue or by availing of any provision of this Indenture to institute
any action or proceeding at law or in equity or in bankruptcy or otherwise upon
or under or with respect to this Indenture, or for the appointment of a trustee,
receiver, liquidator, custodian or other similar official or for any other
remedy hereunder, unless such Holder previously shall have given to the Trustee
written notice of default and of the continuance thereof, as hereinbefore
provided, and unless also the Holders of not less than 25% in aggregate
principal amount of the Securities of each affected series then Outstanding
(treated as a single class) shall have made written request upon the Trustee to
institute such action or proceedings in its own name as trustee
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hereunder and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses and liabilities to be incurred therein
or thereby and the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity shall have failed to institute any such action or
proceeding and no direction inconsistent with such written request shall have
been given to the Trustee pursuant to Section 5.09; it being understood and
intended, and being expressly covenanted by the taker and Holder of every
Security or Coupon with every other taker and Holder and the Trustee, that no
one or more Holders of Securities of any series or Coupons appertaining to such
Securities shall have any right in any manner whatever by virtue or by availing
of any provision of this Indenture to affect, disturb or prejudice the rights of
any other such Holder of Securities or Coupons appertaining to such Securities,
or to obtain or seek to obtain priority over or preference to any other such
Holder or to enforce any right under this Indenture, except in the manner herein
provided and for the equal, ratable and common benefit of all Holders of
Securities of the applicable series and Coupons appertaining to such Securities.
For the protection and enforcement of the provisions of this Section, each and
every Securityholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
SECTION 5.07. Unconditional Right of Securityholders to Institute
Certain Suits. Notwithstanding any other provision in this Indenture and any
provision of any Security, the right of any Holder of any Security or Coupon to
receive payment of the principal of and interest on such Security or Coupon on
or after the respective due dates expressed in such Security or Coupon, or to
institute suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Holder; provided however, that if a series of Securities is held by an MSDW
Capital Trust, the Holder of such Securities shall not give such consent without
the consent of each holder of the Capital Securities of such trust.
Notwithstanding the foregoing, nothing in this Section shall be deemed to impair
the right of any holder of Capital Securities to institute a Direct Action.
SECTION 5.08. Powers and Remedies Cumulative; Delay or Omission Not
Waiver of Default; Restoration of Rights and Remedies. Except as provided in
Section 5.06, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders of Securities or Coupons or to holders of the Capital
Securities is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
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No delay or omission of the Trustee or of any Holder of Securities
or Coupons or of any holder of Capital Securities to exercise any right or power
accruing upon any Event of Default occurring and continuing as aforesaid shall
impair any such right or power or shall be construed to be a waiver of any such
Event of Default or an acquiescence therein; and, subject to Section 5.06, every
power and remedy given by this Indenture or by law to the Trustee or to the
Holders of Securities or Coupons or to holders of Capital Securities may be
exercised from time to time, and as often as shall be deemed expedient, by the
Trustee or by the Holders of Securities or Coupons or by the holders of Capital
Securities.
If the Trustee, any Holder or any holder of Capital Securities has
instituted any proceeding to enforce any right or remedy under this Indenture
and such proceeding has been discontinued or abandoned for any reason, or has
been determined adversely to the Trustee, such Holder or such holder of Capital
Securities, then and in every case the Company, the Trustee, the Holders and
such holder of Capital Securities shall, subject to any determination in such
proceeding, be restored severally and respectively to their former positions
hereunder, and thereafter all rights and remedies of the Trustee, the Holders
and the holders of Capital Securities shall continue as though no such
proceeding had been instituted.
SECTION 5.09. Control by Holders of Securities. The Holders of a
majority in aggregate principal amount of the Securities of each series affected
(with all such series voting as a single class) at the time Outstanding shall
have the right to direct the time, method, and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee with respect to the Securities of such series by
this Indenture; provided that such direction shall not be otherwise than in
accordance with law and the provisions of this Indenture and provided further
that (subject to the provisions of Section 6.01) the Trustee shall have the
right to decline to follow any such direction if the Trustee, being advised by
counsel, shall determine that the action or proceeding so directed may not
lawfully be taken or if the Trustee in good faith by its board of directors, the
executive committee, or a trust committee of directors or Responsible Officers
of the Trustee shall determine that the action or proceedings so directed would
involve the Trustee in personal liability or if the Trustee in good faith shall
so determine that the actions or forebearances specified in or pursuant to such
direction would be unduly prejudicial to the interests of Holders of the
Securities of all series so affected not joining in the giving of said
direction, it being understood that (subject to Section 6.01) the Trustee shall
have no duty to ascertain whether or not such actions or forebearances are
unduly prejudicial to such Holders.
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Nothing in this Indenture shall impair the right of the Trustee in
its discretion to take any action deemed proper by the Trustee and which is not
inconsistent with such direction or directions by Securityholders.
SECTION 5.10. Waiver of Past Defaults. Prior to the acceleration of
the maturity of any Securities as provided in Section 5.01, the Holders of a
majority in aggregate principal amount of the Securities of all series at the
time Outstanding with respect to which an Event of Default shall have occurred
and be continuing (voting as a single class) may on behalf of the Holders of all
such Securities waive any past default or Event of Default described in Section
5.01 and its consequences, except a default in respect of a covenant or
provision hereof which cannot be modified or amended without the consent of the
Holder of each Security affected; provided, that if the Securities of such
series are held by an MSDW Capital Trust or a trustee of such trust, such waiver
shall not be effective as to such Securities unless the holders of at least a
majority in aggregate liquidation amount of the Capital Securities of such trust
shall have consented to such waiver; provided further, that if the consent of
the Holder of each Outstanding Security of such series is required, such waiver
shall not be effective unless each holder of the Capital Securities of such
trust shall have consented to such waiver. In the case of any such waiver, the
Issuer, the Trustee, the Holders of all such Securities and the holders of any
Capital Securities shall be restored to their former positions and rights
hereunder, respectively; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
Upon any such waiver, such default shall cease to exist and be
deemed to have been cured and not to have occurred, and any Event of Default
arising therefrom shall be deemed to have been cured, and not to have occurred
for every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
SECTION 5.11. Trustee to Give Notice of Default, But May Withhold in
Certain Circumstances. The Trustee shall, within ninety days after the
occurrence of a default with respect to the Securities of any series, give
notice of all defaults with respect to that series known to the Trustee (a) if
any Unregistered Securities of that series are then Outstanding, to the Holders
thereof, by publication at least once in an Authorized Newspaper in the Borough
of Manhattan, The City of New York and at least once in an Authorized Newspaper
in London (and, if required by Section 3.06, at least once in an Authorized
Newspaper in Luxembourg) and (b) by mail to all Holders of Registered Securities
of such series and to such other Holders of Securities as have, within two years
preceding such transmission, filed their names and addresses with the Trustee
for that purpose, unless in each case such defaults shall have been cured before
the mailing or publication of such notice (the term "DEFAULTS" for the purpose
of this Section being hereby defined to
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mean any event or condition which is, or with notice or lapse of time or both
would become, an Event of Default); provided that, except in the case of default
in the payment of the principal of or interest on any of the Securities of such
series, or in the payment of any sinking fund instalment on such series, the
Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee, or a trust committee of directors
or trustees and/or Responsible Officers of the Trustee in good faith determines
that the withholding of such notice is in the interests of the Securityholders
of such series.
SECTION 5.12. Right of Court to Require Filing of Undertaking to Pay
Costs. All parties to this Indenture agree, and each Holder of any Security or
Coupon by his acceptance thereof shall be deemed to have agreed, that any court
may in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture or in any suit against the Trustee for any action
taken, suffered or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that such court
may in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Securityholder or group of
Securityholders of any series holding in the aggregate more than 10% in
aggregate principal amount of the Securities of such series, or, in the case of
any suit relating to or arising under clause (c) or (h) of Section 5.01 (if the
suit relates to Securities of more than one but less than all series), 10% in
aggregate principal amount of Securities then Outstanding and affected thereby,
or in the case of any suit relating to or arising under clause (c) or (h) (if
the suit under clause (c) or (h) relates to all the Securities then
Outstanding), (d), (e), (f) or (g) of Section 5.01, 10% in aggregate principal
amount of all Securities then Outstanding, or to any suit instituted by any
Securityholder for the enforcement of the payment of the principal of or
interest (including any Additional Interest) on any Security on or after the due
date expressed in such Security or any date fixed for redemption.
ARTICLE 6
CONCERNING THE TRUSTEE
SECTION 6.01. Duties and Responsibilities of the Trustee; During
Default; Prior to Default. With respect to the Holders of any series of
Securities issued hereunder, the Trustee, prior to the occurrence of an Event of
Default with respect to the Securities of a particular series and after the
curing or waiving of all Events
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of Default which may have occurred with respect to such series, undertakes to
perform such duties and only such duties as are specifically set forth in this
Indenture. In case an Event of Default with respect to the Securities of a
series has occurred (which has not been cured or waived) the Trustee shall
exercise with respect to such series of Securities such of the rights and powers
vested in it by this Indenture, and use the same degree of care and skill in
their exercise, as a prudent man would exercise or use under the circumstances
in the conduct of his own affairs.
No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own wilful misconduct, except that
(a) prior to the occurrence of an Event of Default with respect to
the Securities of any series and after the curing or waiving of all such Events
of Default with respect to such series which may have occurred:
(i) the duties and obligations of the Trustee with respect to the
Securities of any series shall be determined solely by the express
provisions of this Indenture, and the Trustee shall not be liable
except for the performance of such duties and obligations as are
specifically set forth in this Indenture, and no implied covenants
or obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any
statements, certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture; but in the case of
any such statements, certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer or Responsible Officers of the Trustee,
unless it shall be proved that the Trustee was negligent in ascertaining the
pertinent facts; and
(c) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders pursuant to Section 5.09 relating to the time, method
and place of
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conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee, under this Indenture.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if there shall be reasonable ground for believing that the
repayment of such funds or adequate indemnity against such liability is not
reasonably assured to it.
The provisions of this Section 6.01 are in furtherance of and
subject to Section 315 of the Trust Indenture Act of 1939.
SECTION 6.02. Certain Rights of the Trustee. In furtherance of and
subject to the Trust Indenture Act of 1939, and subject to Section 6.01:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate or any other
certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture, note, coupon, security or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request, direction, order or demand of the Issuer
mentioned herein shall be sufficiently evidenced by an Officer's Certificate
(unless other evidence in respect thereof be herein specifically prescribed);
and any resolution of the Board of Directors may be evidenced to the Trustee by
a copy thereof certified by the secretary or an assistant secretary of the
Issuer;
(c) the Trustee may consult with counsel and any written advice or
any Opinion of Counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted to be taken by it hereunder
in good faith and in reliance thereon in accordance with such advice or Opinion
of Counsel;
(d) the Trustee shall be under no obligation to exercise any of
the trusts or powers vested in it by this Indenture at the request, order or
direction of any of the Securityholders pursuant to the provisions of this
Indenture, unless such Securityholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which might be incurred therein or thereby;
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(e) the Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Indenture;
(f) prior to the occurrence of an Event of Default hereunder and
after the curing or waiving of all Events of Default, the Trustee shall not be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, appraisal, bond, debenture, note, coupon,
security, or other paper or document unless requested in writing so to do by the
Holders of not less than a majority in aggregate principal amount of the
Securities of all series affected then Outstanding; provided that, if the
payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation is,
in the opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Indenture, the Trustee may require
reasonable indemnity against such expenses or liabilities as a condition to
proceeding; the reasonable expenses of every such investigation shall be paid by
the Issuer or, if paid by the Trustee or any predecessor Trustee, shall be
repaid by the Issuer upon demand; and
(g) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys not regularly in its employ and the Trustee shall not be responsible
for any misconduct or negligence on the part of any such agent or attorney
appointed with due care by it hereunder.
SECTION 6.03. Trustee Not Responsible for Recitals, Disposition of
Securities or Application of Proceeds Thereof. The recitals contained herein and
in the Securities, except the Trustee's certificates of authentication, shall be
taken as the statements of the Issuer, and the Trustee assumes no responsibility
for the correctness of the same. The Trustee makes no representation as to the
validity or sufficiency of this Indenture or of the Securities or Coupons. The
Trustee shall not be accountable for the use or application by the Issuer of any
of the Securities or of the proceeds thereof.
SECTION 6.04. Trustee and Agents May Hold Securities or Coupons;
Collections, etc. The Trustee or any agent of the Issuer or the Trustee, in its
individual or any other capacity, may become the owner or pledgee of Securities
or Coupons with the same rights it would have if it were not the Trustee or such
agent and may otherwise deal with the Issuer and receive, collect, hold and
retain collections from the Issuer with the same rights it would have if it were
not the Trustee or such agent.
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SECTION 6.05. Moneys Held by Trustee. Subject to the provisions of
Section 11.04 hereof, all moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the extent
required by mandatory provisions of law. Neither the Trustee nor any agent of
the Issuer or the Trustee shall be under any liability for interest on any
moneys received by it hereunder.
SECTION 6.06. Compensation and Indemnification of Trustee and Its
Prior Claim. The Issuer covenants and agrees to pay to the Trustee from time to
time, and the Trustee shall be entitled to, such compensation as the parties
shall agree in writing from time to time (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express trust)
and the Issuer covenants and agrees to pay or reimburse the Trustee and each
predecessor Trustee upon its request for all reasonable expenses, disbursements
and advances incurred or made by or on behalf of it in accordance with any of
the provisions of this Indenture (including the reasonable compensation and the
expenses and disbursements of its counsel and of all agents and other persons
not regularly in its employ) except any such expense, disbursement or advance as
may arise from its negligence or bad faith. The Issuer also covenants to
indemnify the Trustee and each predecessor Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or bad faith
on its part, arising out of or in connection with the acceptance or
administration of this Indenture or the trusts hereunder and its duties
hereunder, including the costs and expenses of defending itself against or
investigating any claim of liability in the premises. The obligations of the
Issuer under this Section to compensate and indemnify the Trustee and each
predecessor Trustee and to pay or reimburse the Trustee and each predecessor
Trustee for expenses, disbursements and advances shall constitute additional
indebtedness hereunder and shall survive the satisfaction and discharge of this
Indenture. Such additional indebtedness shall be a senior claim to that of the
Securities upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the benefit of the Holders of particular
Securities or Coupons, and the Securities are hereby subordinated to such senior
claim.
SECTION 6.07. Right of Trustee to Rely on Officer's Certificate,
etc. Subject to Sections 6.01 and 6.02, whenever in the administration of the
trusts of this Indenture the Trustee shall deem it necessary or desirable that a
matter be proved or established prior to taking or suffering or omitting any
action hereunder, such matter (unless other evidence in respect thereof be
herein specifically prescribed) may, in the absence of negligence or bad faith
on the part of the Trustee, be deemed to be conclusively proved and established
by an Officer's Certificate delivered to the Trustee, and such certificate, in
the absence
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of negligence or bad faith on the part of the Trustee, shall be full warrant to
the Trustee for any action taken, suffered or omitted by it under the provisions
of this Indenture upon the faith thereof.
SECTION 6.08. Indentures Not Creating Potential Conflicting Interests
for the Trustee. The following indenture is hereby specifically described for
the purposes of Section 310(b)(1) of the Trust Indenture Act of 1939: this
Indenture with respect to the Securities of any other series.
SECTION 6.09. Persons Eligible for Appointment as Trustee. The
Trustee for each series of Securities hereunder shall at all times be a
corporation organized and doing business under the laws of the United States of
America or of any State or the District of Columbia having a combined capital
and surplus of at least $5,000,000, and which is authorized under such laws to
exercise corporate trust powers and is subject to supervision or examination by
Federal, State or District of Columbia authority. Such corporation shall have
its principal place of business in the Borough of Manhattan, The City of New
York if there be such a corporation in such location willing to act upon
reasonable and customary terms and conditions. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purposes of
this Section, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Trustee shall cease to
be eligible in accordance with the provisions of this Section, the Trustee shall
resign immediately in the manner and with the effect specified in Section 6.10.
The provisions of this Section 6.09 are in furtherance of and
subject to Section 310(a) of the Trust Indenture Act of 1939.
SECTION 6.10. Resignation and Removal; Appointment of Successor
Trustee. (a) The Trustee, or any trustee or trustees hereafter appointed, may at
any time resign with respect to one or more or all series of Securities by
giving written notice of resignation to the Issuer and (i) if any Unregistered
Securities of a series affected are then Outstanding, by giving notice of such
resignation to the Holders thereof, by publication at least once in an
Authorized Newspaper in the Borough of Manhattan, The City of New York, and at
least once in an Authorized Newspaper in London (and, if required by Section
3.06, at least once in an Authorized Newspaper in Luxembourg), (ii) if any
Unregistered Securities of a series affected are then Outstanding, by mailing
notice of such resignation to the Holders thereof who have filed their names and
addresses with the Trustee within the two years preceding the notice at such
addresses as were so furnished to the Trustee and (iii) by mailing notice of
such resignation to the Holders of then
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Outstanding Registered Securities of each series affected at their addresses as
they shall appear on the registry books. Upon receiving such notice of
resignation, the Issuer shall promptly appoint a successor trustee or trustees
with respect to the applicable series by written instrument in duplicate,
executed by authority of the Board of Directors, one copy of which instrument
shall be delivered to the resigning Trustee and one copy to the successor
trustee or trustees. If no successor trustee shall have been so appointed with
respect to any series and have accepted appointment within 30 days after the
mailing of such notice of resignation, the resigning trustee may petition any
court of competent jurisdiction for the appointment of a successor trustee, or
any Securityholder who has been a bona fide Holder of a Security or Securities
of the applicable series for at least six months may, subject to the provisions
of Section 5.12, on behalf of himself and all others similarly situated,
petition any such court for the appointment of a successor trustee. Such court
may thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(i) the Trustee shall fail to comply with the provisions of
Section 310(b) of the Trust Indenture Act of 1939 with respect to
any series of Securities after written request therefor by the
Issuer or by any Securityholder who has been a bona fide Holder of a
Security or Securities of such series for at least six months; or
(ii) the Trustee shall cease to be eligible in accordance with the
provisions of Section 6.09 and Section 310(a) of the Trust Indenture
Act of 1939 and shall fail to resign after written request therefor by
the Issuer or by any Securityholder; or
(iii) the Trustee shall become incapable of acting with respect to
any series of Securities, or shall be adjudged a bankrupt or
insolvent, or a receiver or liquidator of the Trustee or of its
property shall be appointed, or any public officer shall take charge
or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation;
then, in any such case, the Issuer may remove the Trustee with respect to the
applicable series of Securities and appoint a successor trustee for such series
by written instrument, in duplicate, executed by order of the Board of Directors
of the Issuer, one copy of which instrument shall be delivered to the Trustee so
removed and one copy to the successor trustee, or, subject to the provisions of
Section 315(e) of the Trust Indenture Act of 1939, any Securityholder who has
been a bona fide Holder of a Security or Securities of such series for at least
six
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months may on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor trustee with respect to such series. Such court may
thereupon, after such notice, if any, as it may deem proper and prescribe,
remove the Trustee and appoint a successor trustee. If no successor trustee
shall have been so appointed with respect to any series and have accepted
appointment within 30 days after the mailing of such notice of removal, the
retiring trustee may petition any court of competent jurisdiction for the
appointment of a successor trustee, or any Securityholder who has been a bona
fide Holder of a Security or Securities of the applicable series for at least
six months may, subject to the provisions of Section 5.12, on behalf of himself
and all others similarly situated, petition any such court for the appointment
of a successor trustee. Such court may thereupon, after such notice, if any, as
it may deem proper and prescribe, appoint a successor trustee.
(c) The Holders of a majority in aggregate principal amount of the
Securities of each series at the time outstanding may at any time remove the
Trustee with respect to Securities of such series and appoint a successor
trustee with respect to the Securities of such series by delivering to the
Trustee so removed, to the successor trustee so appointed and to the Issuer the
evidence provided for in Section 7.01 of the action in that regard taken by the
Securityholders.
(d) Any resignation or removal of the Trustee with respect to any
series and any appointment of a successor trustee with respect to such series
pursuant to any of the provisions of this Section 6.10 shall become effective
upon acceptance of appointment by the successor trustee as provided in Section
6.11.
SECTION 6.11. Acceptance of Appointment by Successor Trustee. Any
successor trustee appointed as provided in Section 6.10 shall execute and
deliver to the Issuer and to its predecessor trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee with respect to all or any applicable series shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become vested with all rights, powers, duties and obligations
with respect to such series of its predecessor hereunder, with like effect as if
originally named as trustee for such series hereunder; but, nevertheless, on the
written request of the Issuer or of the successor trustee, upon payment of its
charges then unpaid, the trustee ceasing to act shall, subject to Section 10.04,
pay over to the successor trustee all moneys at the time held by it hereunder
and shall execute and deliver an instrument transferring to such successor
trustee all such rights, powers, duties and obligations. Upon request of any
such successor trustee, the Issuer shall execute any and all instruments in
writing for more fully and certainly vesting in and confirming to such successor
trustee all such rights and powers. Any trustee
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ceasing to act shall, nevertheless, retain a prior claim upon all property or
funds held or collected by such trustee to secure any amounts then due it
pursuant to the provisions of Section 6.06.
If a successor trustee is appointed with respect to the Securities
of one or more (but not all) series, the Issuer, the predecessor Trustee and
each successor trustee with respect to the Securities of any applicable series
shall execute and deliver an indenture supplemental hereto which shall contain
such provisions as shall be deemed necessary or desirable to confirm that all
the rights, powers, trusts and duties of the predecessor Trustee with respect to
the Securities of any series as to which the predecessor Trustee is not retiring
shall continue to be vested in the predecessor Trustee, and shall add to or
change any of the provisions of this Indenture as shall be necessary to provide
for or facilitate the administration of the trusts hereunder by more than one
trustee, it being understood that nothing herein or in such supplemental
indenture shall constitute such trustees co-trustees of the same trust and that
each such trustee shall be trustee of a trust or trusts under separate
indentures.
No successor trustee with respect to any series of Securities shall
accept appointment as provided in this Section 6.11 unless at the time of such
acceptance such successor trustee shall be qualified under Section 310(b) of the
Trust Indenture Act of 1939 and eligible under the provisions of Section 6.09.
Upon acceptance of appointment by any successor trustee as provided
in this Section 6.11, the Issuer shall give notice thereof (a) if any
Unregistered Securities of a series affected are then Outstanding, to the
Holders thereof, by publication of such notice at least once in an Authorized
Newspaper in the Borough of Manhattan, The City of New York and at least once in
an Authorized Newspaper in London (and, if required by Section 3.06, at least
once in an Authorized Newspaper in Luxembourg), (b) if any Unregistered
Securities of a series affected are then Outstanding, to the Holders thereof who
have filed their names and addresses with the Trustee within the two years
preceding the notice, by mailing such notice to such Holders at such addresses
as were so furnished to the Trustee (and the Trustee shall make such information
available to the Issuer for such purpose) and (c) to the Holders of Registered
Securities of each series affected, by mailing such notice to such Holders at
their addresses as they shall appear on the registry books. If the acceptance of
appointment is substantially contemporaneous with the resignation, then the
notice called for by the preceding sentence may be combined with the notice
called for by Section 6.10. If the Issuer fails to give such notice within ten
days after acceptance of appointment by the successor trustee, the successor
trustee shall cause such notice to be given at the expense of the Issuer.
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SECTION 6.12. Merger, Conversion, Consolidation or Succession to
Business of Trustee. Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided that such
corporation shall be qualified under Section 310(b) of the Trust Indenture Act
of 1939 and eligible under the provisions of Section 6.09, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding.
In case at the time such successor to the Trustee shall succeed to
the trusts created by this Indenture any of the Securities of any series shall
have been authenticated but not delivered, any such successor to the Trustee may
adopt the certificate of authentication of any predecessor Trustee and deliver
such Securities so authenticated; and, in case at that time any of the
Securities of any series shall not have been authenticated, any successor to the
Trustee may authenticate such Securities either in the name of any predecessor
hereunder or in the name of the successor Trustee; and in all such cases such
certificate shall have the full force which it is anywhere in the Securities of
such series or in this Indenture provided that the certificate of the Trustee
shall have; provided, that the right to adopt the certificate of authentication
of any predecessor Trustee or to authenticate Securities of any series in the
name of any predecessor Trustee shall apply only to its successor or successors
by merger, conversion or consolidation.
SECTION 6.13. Preferential Collection of Claims Against the Issuer.
[This Section intentionally left blank.]
SECTION 6.14. Appointment of Authenticating Agent. As long as any
Securities of a series remain Outstanding, the Trustee may, by an instrument in
writing, appoint with the approval of the Issuer an authenticating agent (the
"Authenticating Agent") which shall be authorized to act on behalf of the
Trustee to authenticate Securities, including Securities issued upon exchange,
registration of transfer, partial redemption or pursuant to Section 2.09.
Securities of each such series authenticated by such Authenticating Agent shall
be entitled to the benefits of this Indenture and shall be valid and obligatory
for all purposes as if authenticated by the Trustee. Whenever reference is made
in this Indenture to the authentication and delivery of Securities of any series
by the Trustee or to the Trustee's Certificate of Authentication, such reference
shall be deemed to include authentication and delivery on behalf of the Trustee
by an Authenticating Agent for such series and a Certificate of Authentication
executed on behalf of the Trustee by such Authenticating Agent. Such
Authenticating Agent shall at all times be a corporation organized and doing
business under the laws of the United
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States of America or of any State, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$5,000,000 (determined as provided in Section 6.09 with respect to the Trustee)
and subject to supervision or examination by Federal or State authority.
Any corporation into which any Authenticating Agent may be merged or
converted, or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency business
of any Authenticating Agent, shall continue to be the Authenticating Agent with
respect to all series of Securities for which it served as Authenticating Agent
without the execution or filing of any paper or any further act on the part of
the Trustee or such Authenticating Agent. Any Authenticating Agent may at any
time, and if it shall cease to be eligible shall, resign by giving written
notice of resignation to the Trustee and to the Issuer.
Upon receiving such a notice of resignation or upon such a
termination, or in case at any time any Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section 6.14 with respect to
one or more series of Securities, the Trustee shall upon receipt of an Issuer
Order appoint a successor Authenticating Agent and the Issuer shall provide
notice of such appointment to all Holders of Securities of such series in the
manner and to the extent provided in Section 11.04. Any successor Authenticating
Agent upon acceptance of its appointment hereunder shall become vested with all
rights, powers, duties and responsibilities of its predecessor hereunder, with
like effect as if originally named as Authenticating Agent. The Issuer agrees to
pay to the Authenticating Agent for such series from time to time reasonable
compensation. The Authenticating Agent for the Securities of any series shall
have no responsibility or liability for any action taken by it as such at the
direction of the Trustee.
Sections 6.02, 6.03, 6.04, 6.06, 6.09 and 7.03 shall be applicable
to any Authenticating Agent.
ARTICLE 7
CONCERNING THE SECURITYHOLDERS
SECTION 7.01. Evidence of Action Taken by Securityholders. Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by a specified percentage
in principal
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amount of the Securityholders of any or all series or holders of Capital
Securities interested therein may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such specified percentage
of Securityholders or holders of Capital Securities in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee. Proof of execution of any instrument or of a writing appointing
any such agent shall be sufficient for any purpose of this Indenture and
(subject to Sections 6.01 and 6.02) conclusive in favor of the Trustee and the
Issuer, if made in the manner provided in this Article.
SECTION 7.02. Proof of Execution of Instruments and of Holding of
Securities. Subject to Sections 6.01 and 6.02, the execution of any instrument
by a Securityholder or, if a series of Securities is held by an MSDW Capital
Trust, a holder of Capital Securities or, in each case, his agent or proxy may
be proved in the following manner:
(a) The fact and date of the execution by any Holder or, if a
series of Securities is held by an MSDW Capital Trust, by any holder of Capital
Securities of any instrument may be proved by the certificate of any notary
public or other officer of any jurisdiction authorized to take acknowledgments
of deeds or administer oaths that the person executing such instruments
acknowledged to him the execution thereof, or by an affidavit of a witness to
such execution sworn to before any such notary or other such officer. Where such
execution is by or on behalf of any legal entity other than an individual, such
certificate or affidavit shall also constitute sufficient proof of the authority
of the person executing the same. The fact of the holding by any Holder or, if a
series of Securities is held by an MSDW Capital Trust, by any holder of Capital
Securities of an Unregistered Security of any series, and the identifying number
of such Security and the date of his holding the same, may be proved by the
production of such Security or by a certificate executed by any trust company,
bank, banker or recognized securities dealer wherever situated satisfactory to
the Trustee, if such certificate shall be deemed by the Trustee to be
satisfactory. Each such certificate shall be dated and shall state that on the
date thereof a Security of such series bearing a specified identifying number
was deposited with or exhibited to such trust company, bank, banker or
recognized securities dealer by the person named in such certificate. Any such
certificate may be issued in respect of one or more Unregistered Securities of
one or more series specified therein. The holding by the person named in any
such certificate of any Unregistered Securities of any series specified therein
shall be presumed to continue for a period of one year from the date of such
certificate unless at the time of any determination of such holding (i) another
certificate bearing a later date issued in respect of the same Securities shall
be produced, or (ii) the Security of such series specified in such certificate
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shall be produced by some other person, or (iii) the Security of such series
specified in such certificate shall have ceased to be Outstanding. Subject to
Sections 6.01 and 6.02, the fact and date of the execution of any such
instrument and the amount and numbers of Securities of any series held by the
person so executing such instrument and the amount and numbers of any Security
or Securities for such series may also be proven in accordance with such
reasonable rules and regulations as may be prescribed by the Trustee for such
series or in any other manner which the Trustee for such series may deem
sufficient.
(b) In the case of Registered Securities, the ownership of such
Securities shall be proved by the Security register or by a certificate of the
Security registrar.
The Issuer may set a record date for purposes of determining the
identity of Holders of Registered Securities or, if a series of Securities is
held by an MSDW Capital Trust, of holders of registered Capital Securities of
any series entitled to vote or consent to any action referred to in Section
7.01, which record date may be set at any time or from time to time by notice to
the Trustee, for any date or dates (in the case of any adjournment or
reconsideration) not more than 60 days nor less than five days prior to the
proposed date of such vote or consent, and thereafter, notwithstanding any other
provisions hereof, with respect to Registered Securities of any series, only
Holders of Registered Securities or, if a series of Securities is held by an
MSDW Capital Trust, holders of registered Capital Securities of such series of
record on such record date shall be entitled to so vote or give such consent or
revoke such vote or consent.
SECTION 7.03. Holders to Be Treated as Owners. The Issuer, the
Trustee and any agent of the Issuer or the Trustee may deem and treat the person
in whose name any Security shall be registered upon the Security register for
such series as the absolute owner of such Security (whether or not such Security
shall be overdue and notwithstanding any notation of ownership or other writing
thereon) for the purpose of receiving payment of or on account of the principal
of and, subject to the provisions of this Indenture, interest on such Security
and for all other purposes; and neither the Issuer nor the Trustee nor any agent
of the Issuer or the Trustee shall be affected by any notice to the contrary.
The Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the
Holder of any Unregistered Security and the Holder of any Coupon or, if a series
of Securities is held by an MSDW Capital Trust, the holder of any unregistered
Capital Security as the absolute owner of such Unregistered Security or Coupon
(whether or not such Unregistered Security or Coupon shall be overdue) for the
purpose of receiving payment thereof or on account thereof and for all other
purposes and neither the Issuer, the Trustee, nor any agent of the Issuer or the
Trustee shall be affected by any notice to the contrary. All such payments so
made to any such person, or upon his order, shall be valid, and, to the extent
of the sum or sums so
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paid, effectual to satisfy and discharge the liability for moneys payable upon
any such Unregistered Security or Coupon.
Notwithstanding the foregoing, if the Securities of such series are
held by an MSDW Capital Trust, nothing in this Section 7.03 shall be deemed to
impair the right of any holder of Capital Securities to institute a Direct
Action or to declare an Event of Default and accelerate the maturity of such
series.
SECTION 7.04. Securities Owned by Issuer Deemed Not Outstanding. In
determining whether the Holders of the requisite aggregate principal amount of
Outstanding Securities of any or all series have concurred in any direction,
consent or waiver under this Indenture, Securities which are owned by the Issuer
or any other obligor on the Securities with respect to which such determination
is being made or by any person directly or indirectly controlling or controlled
by or under direct or indirect common control with the Issuer or any other
obligor on the Securities with respect to which such determination is being made
shall be disregarded and deemed not to be Outstanding for the purpose of any
such determination, except that for the purpose of determining whether the
Trustee shall be protected in relying on any such direction, consent or waiver
only Securities which the Trustee knows are so owned shall be so disregarded;
provided, that, if the Securities of such series are held by an MSDW Capital
Trust or a trustee of such trust, the provisions of this Section 7.04 shall not
apply. Securities so owned which have been pledged in good faith may be regarded
as Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Securities and that the pledgee
is not the Issuer or any other obligor upon the Securities or any person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Issuer or any other obligor on the Securities. In case
of a dispute as to such right, the advice of counsel shall be full protection in
respect of any decision made by the Trustee in accordance with such advice. Upon
request of the Trustee, the Issuer shall furnish to the Trustee promptly an
Officer's Certificate listing and identifying all Securities, if any, known by
the Issuer to be owned or held by or for the account of any of the
above-described persons; and, subject to Sections 6.01 and 6.02, the Trustee
shall be entitled to accept such Officer's Certificate as conclusive evidence of
the facts therein set forth and of the fact that all Securities not listed
therein are Outstanding for the purpose of any such determination.
SECTION 7.05. Right of Revocation of Action Taken. At any time prior
to (but not after) the evidencing to the Trustee, as provided in Section 7.01,
of the taking of any action by the Holders of the percentage in aggregate
principal amount of the Securities of any or all series, as the case may be,
specified in this Indenture in connection with such action, any Holder of a
Security or, if any such series is held by an MSDW Capital Trust, any holder of
a Capital Security the
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serial number of which is shown by the evidence to be included among the serial
numbers of the Securities the Holders of which have consented to such action
may, by filing written notice at the Corporate Trust Office and upon proof of
holding as provided in this Article, revoke such action so far as concerns such
Security. Except as aforesaid any such action taken by the Holder of any
Security shall be conclusive and binding upon such Holder and upon all future
Holders and owners of such Security and of any Securities issued in exchange or
substitution therefor or on registration of transfer thereof, irrespective of
whether or not any notation in regard thereto is made upon any such Security.
Any action taken by the Holders of the percentage in aggregate principal amount
of the Securities of any or all series, as the case may be, specified in this
Indenture in connection with such action shall be conclusively binding upon the
Issuer, the Trustee and the Holders of all the Securities affected by such
action.
ARTICLE 8
SUPPLEMENTAL INDENTURES
SECTION 8.01. Supplemental Indentures Without Consent of
Securityholders. The Issuer, when authorized by a resolution of its Board of
Directors (which resolution may provide general terms or parameters for such
action and may provide that the specific terms of such action may be determined
in accordance with or pursuant to an Issuer Order), and the Trustee may from
time to time and at any time enter into an indenture or indentures supplemental
hereto for one or more of the following purposes:
(a) to convey, transfer, assign, mortgage or pledge to the Trustee
as security for the Securities of one or more series any property or assets;
(b) to evidence the succession of another corporation to the
Issuer, or successive successions, and the assumption by the successor
corporation of the covenants, agreements and obligations of the Issuer pursuant
to Article 9;
(c) to add to the covenants of the Issuer such further covenants,
restrictions, conditions or provisions as the Issuer and the Trustee shall
consider to be for the protection of the Holders of Securities or Coupons, and
to make the occurrence, or the occurrence and continuance, of a default in any
such additional covenants, restrictions, conditions or provisions an Event of
Default permitting the enforcement of all or any of the several remedies
provided in this Indenture as herein set forth; provided, that in respect of any
such additional covenant, restriction, condition or provision such supplemental
indenture may provide for a
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particular period of grace after default (which period may be shorter or longer
than that allowed in the case of other defaults) or may provide for an immediate
enforcement upon such an Event of Default or may limit the remedies available to
the Trustee upon such an Event of Default or may limit the right of the Holders
of a majority in aggregate principal amount of the Securities of such series to
waive such an Event of Default;
(d) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental indenture which may be
defective or inconsistent with any other provision contained herein or in any
supplemental indenture, or to make any other provisions as the Issuer may deem
necessary or desirable, provided that no such action shall adversely affect the
interests of the Holders of the Securities or Coupons;
(e) to establish the forms or terms of Securities of any series or
of the Coupons appertaining to such Securities as permitted by Sections 2.01 and
2.03; and
(f) to evidence and provide for the acceptance of appointment
hereunder by a successor trustee with respect to the Securities of one or more
series and to add to or change any of the provisions of this Indenture as shall
be necessary to provide for or facilitate the administration of the trusts
hereunder by more than one trustee, pursuant to the requirements of Section
6.11.
The Trustee is hereby authorized to join with the Issuer in the
execution of any such supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer, assignment, mortgage or pledge of any property thereunder,
but the Trustee shall not be obligated to enter into any such supplemental
indenture which affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this
Section may be executed without the consent of the Holders of any of the
Securities at the time outstanding, notwithstanding any of the provisions of
Section 8.02.
SECTION 8.02. Supplemental Indentures With Consent of
Securityholders. With the consent (evidenced as provided in Article 7) of the
Holders of not less than a majority in aggregate principal amount of the
Securities at the time Outstanding of all series affected by such supplemental
indenture (voting as one class), the Issuer, when authorized by a resolution of
its Board of Directors (which resolution may provide general terms or parameters
for such action and may provide that the specific terms of such action may be
determined in accordance
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with or pursuant to an Issuer Order), and the Trustee may, from time to time and
at any time, enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Indenture or of any supplemental indenture or of
modifying in any manner the rights of the Holders of the Securities of each such
series or of the Coupons appertaining to such Securities; provided, that no such
supplemental indenture shall (a) extend the final maturity of any Security, or
reduce the principal amount thereof, or reduce the rate or extend the time of
payment of interest thereon, or reduce any amount payable on redemption thereof,
or make the principal thereof (including any amount in respect of original issue
discount), or interest thereon payable in any coin or currency other than that
provided in the Securities and Coupons or in accordance with the terms thereof,
or reduce the amount of the principal of an Original Issue Discount Security
that would be due and payable upon an acceleration of the maturity thereof
pursuant to Section 5.01 or the amount thereof provable in bankruptcy pursuant
to Section 5.02, or alter the provisions of Sections 11.11 or 11.12 or impair or
affect the right of any Securityholder to institute suit for the payment thereof
or, if the Securities provide therefor, any right of repayment at the option of
the Securityholder, in each case without the consent of the Holder of each
Security so affected, or (b) reduce the aforesaid percentage of Securities of
any series, the consent of the Holders of which is required for any such
supplemental indenture, without the consent of the Holders of each Security so
affected; provided further, that, if the Securities of such series are held by
an MSDW Capital Trust or a trustee of such trust, so long as any of the Capital
Securities of such trust remain outstanding, no such modification may be made
that adversely affects the holders of such Capital Securities in any material
respect, and no termination of this Indenture may occur, without the prior
consent of the holders of at least a majority of the aggregate liquidation
amount of the outstanding Capital Securities of such trust unless and until the
principal of such Securities and all accrued and unpaid interest thereon have
been paid in full, and none of the modifications described in clauses (a) and
(b) above may be made without the prior written consent of all the holders of
Capital Securities of such MSDW Trust. In addition, the Issuer may not amend
this Indenture to remove the rights of holders of Capital Securities of an MSDW
Capital Trust to institute a Direct Action without the prior written consent of
all the holders of Capital Securities of such trust or to remove the obligation
to obtain the consent of such holders of Capital Securities in accordance with
this Section, without the consent of the required percentage of holders of the
Capital Securities of such Trust.
A supplemental indenture which changes or eliminates any covenant or
other provision of this Indenture which has expressly been included solely for
the benefit of one or more particular series of Securities, or which modifies
the rights of Holders of Securities of such series, or of Coupons appertaining
to such
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Securities, with respect to such covenant or provision, shall be deemed not to
affect the rights under this Indenture of the Holders of Securities of any other
series or of the Coupons appertaining to such Securities.
Upon the request of the Issuer, accompanied by a copy of a
resolution of the Board of Directors (which resolution may provide general terms
or parameters for such action and may provide that the specific terms of such
action may be determined in accordance with or pursuant to an Issuer Order)
certified by the secretary or an assistant secretary of the Issuer authorizing
the execution of any such supplemental indenture, and upon the filing with the
Trustee of evidence of the consent of the Holders of the Securities as aforesaid
and other documents, if any, required by Section 7.01, the Trustee shall join
with the Issuer in the execution of such supplemental indenture unless such
supplemental indenture affects the Trustee's own rights, duties or immunities
under this Indenture or otherwise, in which case the Trustee may in its
discretion, but shall not be obligated to, enter into such supplemental
indenture.
It shall not be necessary for the consent of the Securityholders
under this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to the provisions of this Section, the Trustee
shall give notice thereof (a) to the Holders of then Outstanding Registered
Securities of each series affected thereby, by mailing a notice thereof by
first-class mail to such Holders at their addresses as they shall appear on the
Security register, (b) if any Unregistered Securities of a series affected
thereby are then Outstanding, to the Holders thereof who have filed their names
and addresses with the Trustee within two years preceding such notice, by
mailing a notice thereof by first-class mail to such Holders at such addresses
as were so furnished to the Trustee and (c) if any Unregistered Securities of a
series affected thereby are then Outstanding, to all Holders thereof, by
publication of a notice thereof at least once in an Authorized Newspaper in the
Borough of Manhattan, The City of New York and at least once in an Authorized
Newspaper in London (and, if required by Section 3.06, at least once in an
Authorized Newspaper in Luxembourg), and in each case such notice shall set
forth in general terms the substance of such supplemental indenture. Any failure
of the Issuer to give such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture.
SECTION 8.03. Effect of Supplemental Indenture. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith and
the
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respective rights, limitations of rights, obligations, duties and immunities
under this Indenture of the Trustee, the Issuer and the Holders of Securities of
each series affected thereby shall thereafter be determined, exercised and
enforced hereunder subject in all respects to such modifications and amendments,
and all the terms and conditions of any such supplemental indenture shall be and
be deemed to be part of the terms and conditions of this Indenture for any and
all purposes.
SECTION 8.04. Documents to Be Given to Trustee. The Trustee, subject
to the provisions of Sections 6.01 and 6.02, may receive an Officer's
Certificate and an Opinion of Counsel as conclusive evidence that any
supplemental indenture executed pursuant to this Article 8 complies with the
applicable provisions of this Indenture.
SECTION 8.05. Notation on Securities in Respect of Supplemental
Indentures. Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to the provisions of this
Article may bear a notation in form approved by the Trustee for such series as
to any matter provided for by such supplemental indenture or as to any action
taken by Securityholders. If the Issuer or the Trustee shall so determine, new
Securities of any series so modified as to conform, in the opinion of the
Trustee and the Board of Directors, to any modification of this Indenture
contained in any such supplemental indenture may be prepared by the Issuer,
authenticated by the Trustee and delivered in exchange for the Securities of
such series then Outstanding.
SECTION 8.06. Subordination Unimpaired. This Indenture may not be
amended to alter the subordination of any of the Outstanding Securities without
the written consent of each holder of Senior Indebtedness then outstanding that
would be adversely affected thereby.
ARTICLE 9
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 9.01. Covenant Not to Merge, Consolidate, Sell or Convey
Property Except Under Certain Conditions. The Issuer covenants that it will not
merge or consolidate with any other person or sell, lease or convey all or
substantially all of its assets to any other person, unless (a) either the
Issuer shall be the continuing corporation, or the successor corporation or the
person which acquires by sale, lease or conveyance substantially all the assets
of the Issuer (if
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other than the Issuer) shall be a corporation organized under the laws of the
United States of America or any State thereof or the District of Columbia and
shall expressly assume the due and punctual payment of the principal of and
interest on all the Securities and Coupons, if any, according to their tenor,
and the due and punctual performance and observance of all of the covenants and
conditions of this Indenture to be performed or observed by the Issuer, by
supplemental indenture satisfactory to the Trustee, executed and delivered to
the Trustee by such corporation, and (b) the Issuer, such person or such
successor corporation, as the case may be, shall not, immediately after such
merger or consolidation, or such sale, lease or conveyance, be in default in the
performance of any such covenant or condition.
SECTION 9.02. Successor Corporation Substituted. In case of any such
consolidation, merger, sale, lease or conveyance, and following such an
assumption by the successor corporation, such successor corporation shall
succeed to and be substituted for the Issuer, with the same effect as if it had
been named herein. Such successor corporation may cause to be signed, and may
issue either in its own name or in the name of the Issuer prior to such
succession any or all of the Securities issuable hereunder which together with
any Coupons appertaining thereto theretofore shall not have been signed by the
Issuer and delivered to the Trustee; and, upon the order of such successor
corporation, instead of the Issuer, and subject to all the terms, conditions and
limitations in this Indenture prescribed, the Trustee shall authenticate and
shall deliver any Securities together with any Coupons appertaining thereto
which previously shall have been signed and delivered by the officers of the
Issuer to the Trustee for authentication, and any Securities which such
successor corporation thereafter shall cause to be signed and delivered to the
Trustee for that purpose. All of the Securities so issued together with any
Coupons appertaining thereto shall in all respects have the same legal rank and
benefit under this Indenture as the Securities theretofore or thereafter issued
in accordance with the terms of this Indenture as though all of such Securities
had been issued at the date of the execution hereof.
In case of any such consolidation, merger, sale, lease or conveyance
such changes in phrasing and form (but not in substance) may be made in the
Securities and Coupons thereafter to be issued as may be appropriate.
In the event of any such sale or conveyance (other than a conveyance
by way of lease) the Issuer or any successor corporation which shall theretofore
have become such in the manner described in this Article shall be discharged
from all obligations and covenants under this Indenture and the Securities and
may be liquidated and dissolved.
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SECTION 9.03. Opinion of Counsel Delivered to Trustee. The Trustee,
subject to the provisions of Sections 6.01 and 6.02, may receive an Opinion of
Counsel as conclusive evidence that any such consolidation, merger, sale, lease
or conveyance, and any such assumption, and any such liquidation or dissolution,
complies with the applicable provisions of this Indenture.
ARTICLE 10
SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS
SECTION 10.01. Satisfaction and Discharge of Indenture. (a) If at
any time (i) the Issuer shall have paid or caused to be paid the principal of
and interest on all the Securities of any series Outstanding hereunder and all
unmatured Coupons appertaining thereto (other than Securities of such series and
Coupons appertaining thereto which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 2.09) as and when the same
shall have become due and payable, or (ii) the Issuer shall have delivered to
the Trustee for cancellation all Securities of any series theretofore
authenticated and all unmatured Coupons appertaining thereto (other than any
Securities of such series and Coupons appertaining thereto which shall have been
destroyed, lost or stolen and which shall have been replaced or paid as provided
in Section 2.09) or (iii) in the case of any series of Securities where the
exact amount (including the currency of payment) of principal of and interest
due on which can be determined at the time of making the deposit referred to in
clause (B) below, (A) all the Securities of such series and all unmatured
Coupons appertaining thereto not theretofore delivered to the Trustee for
cancellation shall have become due and payable, or are by their terms to become
due and payable within one year or are to be called for redemption within one
year under arrangements satisfactory to the Trustee for the giving of notice of
redemption, and (B) the Issuer shall have irrevocably deposited or caused to be
deposited with the Trustee as trust funds the entire amount in cash (other than
moneys repaid by the Trustee or any paying agent to the Issuer in accordance
with Section 10.04) or, in the case of any series of Securities the payments on
which may only be made in Dollars, direct obligations of the United States of
America, backed by its full faith and credit ("U.S. GOVERNMENT OBLIGATIONS"),
maturing as to principal and interest at such times and in such amounts as will
insure the availability of cash, or a combination thereof, sufficient in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to pay
(1) the principal and interest on all Securities of such series and
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Coupons appertaining thereto on each date that such principal or interest is due
and payable and (2) any mandatory sinking fund payments on the dates on which
such payments are due and payable in accordance with the terms of the Indenture
and the Securities of such series; and if, in any such case, the Issuer shall
also pay or cause to be paid all other sums payable hereunder by the Issuer,
then this Indenture shall cease to be of further effect (except as to (i) rights
of registration of transfer and exchange of Securities of such Series and of
Coupons appertaining thereto and the Issuer's right of optional redemption, if
any, (ii) substitution of mutilated, defaced, destroyed, lost or stolen
Securities or Coupons, (iii) rights of holders of Securities and Coupons
appertaining thereto to receive payments of principal thereof and interest
thereon, upon the original stated due dates therefor (but not upon
acceleration), and remaining rights of the Holders to receive mandatory sinking
fund payments, if any, (iv) the rights, obligations, duties and immunities of
the Trustee hereunder, (v) the rights of the Holders of Securities of such
series and Coupons appertaining thereto as beneficiaries hereof with respect to
the property so deposited with the Trustee payable to all or any of them, and
(vi) the obligations of the Issuer under Section 3.02) and the Trustee, on
demand of the Issuer accompanied by an Officer's Certificate and an Opinion of
Counsel and at the cost and expense of the Issuer, shall execute proper
instruments acknowledging such satisfaction of and discharging this Indenture;
provided, that the rights of Holders of the Securities and Coupons to receive
amounts in respect of principal of and interest on the Securities and Coupons
held by them shall not be delayed longer than required by then-applicable
mandatory rules or policies of any securities exchange upon which the Securities
are listed. The Issuer agrees to reimburse the Trustee for any costs or expenses
thereafter reasonably and properly incurred and to compensate the Trustee for
any services thereafter reasonably and properly rendered by the Trustee in
connection with this Indenture or the Securities of such series.
(b) The following provisions shall apply to the Securities of each
series unless specifically otherwise provided in a Board Resolution, Officer's
Certificate or indenture supplemental hereto provided pursuant to Section 2.03.
In addition to discharge of the Indenture pursuant to the next preceding
paragraph, in the case of any series of Securities the exact amounts (including
the currency of payment) of principal of and interest due on which can be
determined at the time of making the deposit referred to in clause (i) below,
the Issuer shall be deemed to have paid and discharged the entire indebtedness
on all the Securities of such a series and the Coupons appertaining thereto on
the 91st day after the date of the deposit referred to in subparagraph (i)
below, and the provisions of this Indenture with respect to the Securities of
such series and Coupons appertaining thereto shall no longer be in effect
(except as to (A) rights of registration of transfer and exchange of Securities
of such series and of Coupons appertaining thereto and the Issuer's right of
optional redemption, if any, (B) substitution of mutilated, defaced,
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destroyed, lost or stolen Securities or Coupons, (C) rights of Holders of
Securities and Coupons appertaining thereto to receive payments of principal
thereof and interest thereon, upon the original stated due dates therefor (but
not upon acceleration), and remaining rights of the Holders to receive mandatory
sinking fund payments, if any, (D) the rights, obligations, duties and
immunities of the Trustee hereunder, (E) the rights of the Holders of Securities
of such series and Coupons appertaining thereto as beneficiaries hereof with
respect to the property so deposited with the Trustee payable to all or any of
them and (F) the obligations of the Issuer under Section 3.02) and the Trustee,
at the expense of the Issuer, shall at the Issuer's request, execute proper
instruments acknowledging the same, if
(i) with reference to this provision the Issuer has irrevocably
deposited or caused to be irrevocably deposited with the Trustee as
trust funds in trust, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of the Securities of
such series and Coupons appertaining thereto (A) cash in an amount, or
(B) in the case of any series of Securities the payments on which may
only be made in Dollars, U.S. Government Obligations, maturing as to
principal and interest at such times and in such amounts as will
insure the availability of cash or (C) a combination thereof,
sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay (1) the principal and
interest on all Securities of such series and Coupons appertaining
thereto on each date that such principal or interest is due and
payable and (2) any mandatory sinking fund payments on the dates on
which such payments are due and payable in accordance with the terms
of the Indenture and the Securities of such series;
(ii) such deposit will not result in a breach or violation of, or
constitute a default under, any agreement or instrument to which the
Issuer is a party or by which it is bound;
(iii) the Issuer has delivered to the Trustee an Opinion of
Counsel based on the fact that (x) the Issuer has received from, or
there has been published by, the Internal Revenue Service a ruling or
(y) since the date hereof, there has been a change in the applicable
Federal income tax law, in either case to the effect that, and such
opinion shall confirm that, the Holders of the Securities of such
series and Coupons appertaining thereto will not recognize income,
gain or loss for Federal income tax purposes as a result of such
deposit, defeasance and discharge and will be subject to Federal
income tax on the same amount and in the same manner and at the
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same times, as would have been the case if such deposit, defeasance
and discharge had not occurred;
(iv) the Issuer has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to the defeasance
contemplated by this provision have been complied with;
(v) no event or condition shall exist that, pursuant to the
provisions of Section 13.01, would prevent the Issuer from making
payments of the principal of or interest on the Securities of such
series and Coupons appertaining thereto on the date of such deposit or
at any time during the period ending on the 91st day after the date of
such deposit (it being understood that this condition shall not be
deemed satisfied until the expiration of such period); and
(vi) the Issuer has delivered to the Trustee an Opinion of Counsel
to the effect that (x) the trust funds will not be subject to any
rights of holders of Senior Indebtedness, including without limitation
those arising under Article 13 of this Indenture, and (y) after the
91st day following the deposit, the trust funds will not be subject to
the effect of any applicable bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally, except that if a
court were to rule under any such law in any case or proceeding that
the trust funds remained property of the Issuer, no opinion is given
as to the effect of such laws on the trust funds except the following:
(A) assuming such trust funds remained in the Trustee's possession
prior to such court ruling to the extent not paid to Holders of
Securities of such series and Coupons appertaining thereto, the
Trustee will hold, for the benefit of such Holders, a valid and
perfected security interest in such trust funds that is not avoidable
in bankruptcy or otherwise, (B) such Holders will be entitled to
receive adequate protection of their interests in such trust funds if
such trust funds are used, and (C) no property, rights in property or
other interests granted to the Trustee or such Holders in exchange for
or with respect to any of such funds will be subject to any prior
rights of holders of Senior Indebtedness, including without limitation
those arising under Article 13 of this Indenture.
(c) The Issuer shall be released from its obligations under
Section 9.01 with respect to the Securities of any Series, and any Coupons
appertaining thereto, Outstanding on and after the date the conditions set forth
below are satisfied (hereinafter, "COVENANT DEFEASANCE"). For this purpose, such
covenant defeasance means that, with respect to the Outstanding Securities of
any Series, the Issuer may omit to comply with and shall have no liability in
respect of any term,
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condition or limitation set forth in such Section, whether directly or
indirectly by reason of any reference elsewhere herein to such Section or by
reason of any reference in such Section to any other provision herein or in any
other document and such omission to comply shall not constitute an Event of
Default under Section 5.01, but the remainder of this Indenture and such
Securities and Coupons shall be unaffected thereby. The following shall be the
conditions to application of this subsection (c) of this Section 10.01:
(i) The Issuer has irrevocably deposited or caused to be deposited
with the Trustee as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the holders of the Securities of
such series and Coupons appertaining thereto, (A) cash in an amount,
or (B) in the case of any series of Securities the payments on which
may only be made in Dollars, U.S. Government Obligations maturing as
to principal and interest at such times and in such amounts as will
insure the availability of cash or (C) a combination thereof,
sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay (1) the principal and
interest on all Securities of such series and Coupons appertaining
thereto and (2) any mandatory sinking fund payments on the day on
which such payments are due and payable in accordance with the terms
of the Indenture and the Securities of such series.
(ii) No Event of Default or event which with notice or lapse of
time or both would become an Event of Default with respect to the
Securities shall have occurred and be continuing on the date of such
deposit or, insofar as subsections 5.01(d) and 5.01(e) are concerned,
at any time during the period ending on the 91st day after the date of
such deposit (it being understood that this condition shall not be
deemed satisfied until the expiration of such period).
(iii) Such covenant defeasance shall not cause the Trustee to have a
conflicting interest as defined in Section 6.08 and for purposes of
the Trust Indenture Act of 1939 with respect to any securities of the
Issuer.
(iv) Such covenant defeasance shall not result in a breach or
violation of, or constitute a default under, this Indenture or any
other agreement or instrument to which the Issuer is a party or by
which it is bound.
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(v) Such covenant defeasance shall not cause any Securities then
listed on any registered national securities exchange under the
Securities Exchange Act of 1934, as amended, to be delisted.
(vi) No event or condition shall exist that, pursuant to the
provisions of Section 13.01, would prevent the Issuer from making
payments of the principal of or interest on the Securities of such
series and Coupons appertaining thereto on the date of such deposit or
at any time during the period ending on the 91st day after the date of
such deposit (it being understood that this condition shall not be
deemed satisfied until the expiration of such period).
(vii) The Issuer shall have delivered to the Trustee an Officer's
Certificate and Opinion of Counsel to the effect that the Holders of
the Securities of such series and Coupons appertaining thereto will
not recognize income, gain or loss for Federal income tax purposes as
a result of such covenant defeasance and will be subject to Federal
income tax on the same amounts, in the same manner and at the same
times as would have been the case if such covenant defeasance had not
occurred.
(viii) The Issuer shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to the covenant defeasance
contemplated by this provision have been complied with.
(ix) The Issuer has delivered to the Trustee an Opinion of Counsel
to the effect that (x) the trust funds will not be subject to any
rights of holders of Senior Indebtedness, including without limitation
those arising under Article 13 of this Indenture, and (y) after the
91st day following the deposit, the trust funds will not be subject to
the effect of any applicable bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally, except that if a
court were to rule under any such law in any case or proceeding that
the trust funds remained property of the Issuer, no opinion is given
as to the effect of such laws on the trust funds except the following:
(A) assuming such trust funds remained in the Trustee's possession
prior to such court ruling to the extent not paid to Holders of
Securities of such series and Coupons appertaining thereto, the
Trustee will hold, for the benefit of such Holders, a valid and
perfected security interest in such trust funds that is not avoidable
in bankruptcy or otherwise, (B) such Holders will be entitled to
receive adequate protection of their interests in such trust funds if
such trust funds are used, and (C) no property, rights in property or
other interests granted to the Trustee or such Holders in exchange for
or with
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respect to any of such funds will be subject to any prior rights of
holders of Senior Indebtedness, including without limitation those
arising under Article 13 of this Indenture.
SECTION 10.02. Application by Trustee of Funds Deposited for Payment
of Securities. Subject to Section 10.04, all moneys deposited with the Trustee
(or other trustee) pursuant to Section 10.01 shall be held in trust and applied
by it to the payment, either directly or through any paying agent (including the
Issuer acting as its own paying agent), to the Holders of the particular
Securities of such series and of Coupons appertaining thereto for the payment or
redemption of which such moneys have been deposited with the Trustee, of all
sums due and to become due thereon for principal and interest; but such money
need not be segregated from other funds except to the extent required by law.
SECTION 10.03. Repayment of Moneys Held by Paying Agent. In
connection with the satisfaction and discharge of this Indenture with respect to
Securities of any series, all moneys then held by any paying agent under the
provisions of this Indenture with respect to such series of Securities shall,
upon demand of the Issuer, be repaid to it or paid to the Trustee and thereupon
such paying agent shall be released from all further liability with respect to
such moneys.
SECTION 10.04. Return of Moneys Held by Trustee and Paying Agent
Unclaimed for Two Years. Any moneys deposited with or paid to the Trustee or any
paying agent for the payment of the principal of or interest on any Security of
any series or Coupons attached thereto and not applied but remaining unclaimed
for two years after the date upon which such principal or interest shall have
become due and payable, shall, upon the written request of the Issuer and unless
otherwise required by mandatory provisions of applicable escheat or abandoned or
unclaimed property law, be repaid to the Issuer by the Trustee for such series
or such paying agent, and the Holder of the Securities of such series and of any
Coupons appertaining thereto shall, unless otherwise required by mandatory
provisions of applicable escheat or abandoned or unclaimed property laws,
thereafter look only to the Issuer for any payment which such Holder may be
entitled to collect, and all liability of the Trustee or any paying agent with
respect to such moneys shall thereupon cease; provided, however, that the
Trustee or such paying agent, before being required to make any such repayment
with respect to moneys deposited with it for any payment (a) in respect of
Registered Securities of any series, shall at the expense of the Issuer, mail by
first-class mail to Holders of such Securities at their addresses as they shall
appear on the Security register, an (b) in respect of Unregistered Securities of
any series, shall at the expense of the Issuer cause to be published once, in an
Authorized Newspaper in the Borough of Manhattan, The City of New York and once
in an Authorized Newspaper in
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London (and if required by Section 3.06, once in an Authorized Newspaper in
Luxembourg), notice, that such moneys remain and that, after a date specified
therein, which shall not be less than thirty days from the date of such mailing
or publication, any unclaimed balance of such money then remaining will be
repaid to the Issuer.
SECTION 10.05. Indemnity for U.S. Government Obligations. The Issuer
shall pay and indemnify the Trustee against any tax, fee or other charge imposed
on or assessed against the U.S. Government Obligations deposited pursuant to
Section 10.01 or the principal or interest received in respect of such
obligations.
ARTICLE 11
MISCELLANEOUS PROVISIONS
SECTION 11.01. Incorporators, Stockholders, Officers and Directors
of Issuer Exempt from Individual Liability. No recourse under or upon any
obligation, covenant or agreement contained in this Indenture, or in any
Security, or because of any indebtedness evidenced thereby, shall be had against
any incorporator, as such or against any past, present or future stockholder,
officer or director, as such, of the Issuer or of any successor, either directly
or through the Issuer or any successor, under any rule of law, statute or
constitutional provision or by the enforcement of any assessment or by any legal
or equitable proceeding or otherwise, all such liability being expressly waived
and released by the acceptance of the Securities and the Coupons appertaining
thereto by the Holders thereof and as part of the consideration for the issue of
the Securities and the Coupons appertaining thereto.
SECTION 11.02. Provisions of Indenture for the Sole Benefit of
Parties and Holders of Securities and Coupons. Nothing in this Indenture, in the
Securities or in the Coupons appertaining thereto, expressed or implied, shall
give or be construed to give to any person, firm or corporation, other than the
parties hereto and their successors and the holders of Senior Indebtedness and
the Holders of the Securities or Coupons, if any, any legal or equitable right,
remedy or claim under this Indenture or under any covenant or provision herein
contained, all such covenants and provisions being for the sole benefit of the
parties hereto and their successors, the holders of the Senior Indebtedness and
the Holders of the Securities or Coupons, if any.
SECTION 11.03. Successors and Assigns of Issuer Bound by Indenture.
All the covenants, stipulations, promises and agreements in this Indenture
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contained by or in behalf of the Issuer shall bind its successors and assigns,
whether so expressed or not.
SECTION 11.04. Notices and Demands on Issuer, Trustee and Holders of
Securities and Coupons. Any notice or demand which by any provision of this
Indenture is required or permitted to be given or served by the Trustee or by
the Holders of Securities or Coupons to or on the Issuer may be given or served
by being deposited postage prepaid, first-class mail (except as otherwise
specifically provided herein) addressed (until another address of the Issuer is
filed by the Issuer with the Trustee) to Morgan Stanley, Dean Witter, Discover &
Co., 1585 Broadway, New York, New York 10036, Attention: Secretary. Any notice,
direction, request or demand by the Issuer or any Holder of Securities or
Coupons to or upon the Trustee shall be deemed to have been sufficiently given
or served by being deposited postage prepaid, first-class mail (except as
otherwise specifically provided herein) addressed (until another address of the
Trustee is filed by the Trustee with the Issuer) to The Bank of New York, 101
Barclay St, Floor 31 West, New York, New York 10286, Attention: Corporate Trust
Administration.
Where this Indenture provides for notice to Holders of Registered
Securities, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, to
each Holder entitled thereto, at his last address as it appears in the Security
register. In any case where notice to such Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case, by reason of the suspension of or irregularities in regular
mail service, it shall be impracticable to mail notice to the Issuer when such
notice is required to be given pursuant to any provision of this Indenture, then
any manner of giving such notice as shall be reasonably satisfactory to the
Trustee shall be deemed to be a sufficient giving of such notice.
SECTION 11.05. Officer's Certificates and Opinions of Counsel;
Statements to Be Contained Therein. Upon any application or demand by the Issuer
to the Trustee to take any action under any of the provisions of this Indenture,
the Issuer shall furnish to the Trustee an Officer's Certificate stating that
all conditions precedent provided for in this Indenture relating to the
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proposed action have been complied with and an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent have been complied
with, except that in the case of any such application or demand as to which the
furnishing of such documents is specifically required by any provision of this
Indenture relating to such particular application or demand, no additional
certificate or opinion need be furnished.
Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this Indenture shall include (a) a statement that the person
making such certificate or opinion has read such covenant or condition (b) a
brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion
are based (c) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an opinion
as to whether or not such covenant or condition has been complied with an (d) a
statement as to whether or not, in the opinion of such person, such condition or
covenant has been complied with.
Any certificate, statement or opinion of an officer of the Issuer
may be based, insofar as it relates to legal matters, upon a certificate or
opinion of or representations by counsel, unless such officer knows that the
certificate or opinion or representations with respect to the matters upon which
his certificate, statement or opinion may be based as aforesaid are erroneous,
or in the exercise of reasonable care should know that the same are erroneous.
Any certificate, statement or opinion of counsel may be based, insofar as it
relates to factual matters, information with respect to which is in the
possession of the Issuer, upon the certificate, statement or opinion of or
representations by an officer or officers of the Issuer, unless such counsel
knows that the certificate, statement or opinion or representations with respect
to the matters upon which his certificate, statement or opinion may be based as
aforesaid are erroneous, or in the exercise of reasonable care should know that
the same are erroneous.
Any certificate, statement or opinion of an officer of the Issuer or
of counsel may be based, insofar as it relates to accounting matters, upon a
certificate or opinion of or representations by an accountant or firm of
accountants in the employ of the Issuer, unless such officer or counsel, as the
case may be, knows that the certificate or opinion or representations with
respect to the accounting matters upon which his certificate, statement or
opinion may be based as aforesaid are erroneous, or in the exercise of
reasonable care should know that the same are erroneous.
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Any certificate or opinion of any independent firm of public
accountants filed with and directed to the Trustee shall contain a statement
that such firm is independent.
SECTION 11.06. Payments Due on Saturdays, Sundays and Holidays. If
the date of maturity of interest on or principal of the Securities of any series
or any Coupons appertaining thereto or the date fixed for redemption or
repayment of any such Security or Coupon shall not be a Business Day, then
payment of interest or principal need not be made on such date, but may be made
on the next succeeding Business Day with the same force and effect as if made on
the date of maturity or the date fixed for redemption, and no interest shall
accrue for the period after such date.
SECTION 11.07. Conflict of Any Provision of Indenture with Trust
Indenture Act of 1939. If and to the extent that any provision of this Indenture
limits, qualifies or conflicts with the duties imposed by, or with another
provision (an "incorporated provision") included in this Indenture by operation
of, Sections 310 to 318, inclusive, of the Trust Indenture Act of 1939, such
imposed duties or incorporated provision shall control.
SECTION 11.08. New York Law to Govern. This Indenture and each
Security and Coupon shall be deemed to be a contract under the laws of the State
of New York, and for all purposes shall be construed in accordance with the laws
of such State, except as may otherwise be required by mandatory provisions of
law.
SECTION 11.09. Counterparts. This Indenture may be executed in any
number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
SECTION 11.10. Effect of Headings. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
SECTION 11.11. Securities in a Foreign Currency. Unless otherwise
specified in an Officer's Certificate delivered pursuant to Section 2.03 of this
Indenture with respect to a particular series of Securities, whenever for
purposes of this Indenture any action may be taken by the Holders of a specified
percentage in aggregate principal amount of Securities of all series or all
series affected by a particular action at the time Outstanding and, at such
time, there are Outstanding Securities of any series which are denominated in a
Foreign Currency, then the principal amount of Securities of such series which
shall be deemed to be Outstanding for the purpose of taking such action shall be
that amount of Dollars
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that could be obtained for such amount at the Market Exchange Rate. For purposes
of this Section 11.11, Market Exchange Rate shall mean the noon Dollar buying
rate in New York City for cable transfers of that currency published by the
Federal Reserve Bank of New York; provided, however, in the case of ECUs, Market
Exchange Rate shall mean the rate of exchange determined by the Commission of
the European Communities (or any successor thereto) as published in the Official
Journal of the European Communities (such publication or any successor
publication, the "Journal"). If such Market Exchange Rate is not available for
any reason with respect to such currency, the Trustee shall use, in its sole
discretion and without liability on its part, such quotation of the Federal
Reserve Bank of New York or, in the case of ECUs, the rate of exchange as
published in the Journal, as of the most recent available date, or quotations
or, in the case of ECUs, rates of exchange from one or more major banks in The
City of New York or in the country of issue of the currency in question, which
for purposes of the ECU shall be Brussels, Belgium, or such other quotations or,
in the case of ECU, rates of exchange as the Trustee shall deem appropriate. The
provisions of this paragraph shall apply in determining the equivalent principal
amount in respect of Securities of a series denominated in a currency other than
Dollars in connection with any action taken by Holders of Securities pursuant to
the terms of this Indenture, including, without limitation, any determination
contemplated in Sections 5.01(f) or 5.01(g).
All decisions and determinations of the Trustee regarding the Market
Exchange Rate or any alternative determination provided for in the preceding
paragraph shall be in its sole discretion and shall, in the absence of manifest
error, be conclusive to the extent permitted by law for all purposes and
irrevocably binding upon the Issuer and all Holders.
SECTION 11.12. Judgment Currency. The Issuer agrees, to the fullest
extent that it may effectively do so under applicable law, that (a) if for the
purpose of obtaining judgment in any court it is necessary to convert the sum
due in respect of the principal of or interest on the Securities of any series
(the "Required Currency") into a currency in which a judgment will be rendered
(the "Judgment Currency"), the rate of exchange used shall be the rate at which
in accordance with normal banking procedures the Trustee could purchase in The
City of New York the Required Currency with the Judgment Currency on the day on
which final unappealable judgment is entered, unless such day is not a New York
Banking Day, then, to the extent permitted by applicable law, the rate of
exchange used shall be the rate at which in accordance with normal banking
procedures the Trustee could purchase in The City of New York the Required
Currency with the Judgment Currency on the New York Banking Day preceding the
day on which a final unappealable judgment is entered, and (b) its obligations
under this Indenture to make payments in the Required Currency (i) shall not be
discharged
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or satisfied by any tender, or any recovery pursuant to any judgment (whether or
not entered in accordance with subsection (a)), in any currency other than the
Required Currency, except to the extent that such tender or recovery shall
result in the actual receipt, by the payee, of the full amount of the Required
Currency expressed to be payable in respect of such payments, (ii) shall be
enforceable as an alternative or additional cause of action for the purpose of
recovering in the Required Currency the amount, if any, by which such actual
receipt shall fall short of the full amount of the Required Currency so
expressed to be payable and (iii) shall not be affected by judgment being
obtained for any other sum due under this Indenture. For purposes of the
foregoing, "New York Banking Day" means any day except a Saturday, Sunday or a
legal holiday in The City of New York or a day on which banking institutions in
The City of New York are authorized or required by law or executive order to
close.
ARTICLE 12
REDEMPTION OF SECURITIES AND SINKING FUNDS
SECTION 12.01. Applicability of Article. The provisions of this
Article shall be applicable to the Securities of any series which are redeemable
before their maturity or to any sinking fund for the retirement of Securities of
a series except as otherwise specified as contemplated by Section 2.03 for
Securities of such series.
SECTION 12.02. Notice of Redemption; Partial Redemptions. Notice of
redemption to the Holders of Registered Securities of any series to be redeemed
as a whole or in part at the option of the Issuer shall be given by mailing
notice of such redemption by first class mail, postage prepaid, at least 30 days
and not more than 60 days prior to the date fixed for redemption to such Holders
of Securities of such series at their last addresses as they shall appear upon
the registry books. Notice of redemption to the Holders of Unregistered
Securities to be redeemed as a whole or in part, who have filed their names and
addresses with the Trustee within the two years preceding such notice of
redemption, shall be given by mailing notice of such redemption, by first class
mail, postage prepaid, at least 30 days and not more than 60 prior to the date
fixed for redemption, to such Holders at such addresses as were so furnished to
the Trustee (and, in the case of any such notice given by the Issuer, the
Trustee shall make such information available to the Issuer for such purpose).
Notice of redemption to all other Holders of Unregistered Securities shall be
published in an Authorized Newspaper in the Borough of Manhattan, The City of
New York and in an Authorized Newspaper in London (and, if required by Section
3.06, in an Authorized Newspaper in
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Luxembourg), in each case, once in each of three successive calendar weeks, the
first publication to be not less than 30 nor more than 60 days prior to the date
fixed for redemption. Any notice which is mailed in the manner herein provided
shall be conclusively presumed to have been duly given, whether or not the
Holder receives the notice. Failure to give notice by mail, or any defect in the
notice to the Holder of any Security of a series designated for redemption as a
whole or in part shall not affect the validity of the proceedings for the
redemption of any other Security of such series.
The notice of redemption to each such Holder shall specify the
principal amount of each Security of such series held by such Holder to be
redeemed, the date fixed for redemption, the redemption price, the place or
places of payment, that payment will be made upon presentation and surrender of
such Securities and, in the case of Securities with Coupons attached thereto, of
all Coupons appertaining thereto maturing after the date fixed for redemption,
that such redemption is pursuant to the mandatory or optional sinking fund, or
both, if such be the case, that interest accrued to the date fixed for
redemption will be paid as specified in such notice and that on and after said
date interest thereon or on the portions thereof to be redeemed will cease to
accrue. In case any Security of a series is to be redeemed in part only the
notice of redemption shall state the portion of the principal amount thereof to
be redeemed and shall state that on and after the date fixed for redemption,
upon surrender of such Security, a new Security or Securities of such series in
principal amount equal to the unredeemed portion thereof will be issued.
The notice of redemption of Securities of any series to be redeemed
at the option of the Issuer shall be given by the Issuer or, at the Issuer's
request, by the Trustee in the name and at the expense of the Issuer.
On or before the redemption date specified in the notice of
redemption given as provided in this Section, the Issuer will deposit with the
Trustee or with one or more paying agents (or, if the Issuer is acting as its
own paying agent, set aside, segregate and hold in trust as provided in Section
3.04) an amount of money sufficient to redeem on the redemption date all the
Securities of such series so called for redemption at the appropriate redemption
price, together with accrued interest to the date fixed for redemption. The
Issuer will deliver to the Trustee at least 70 days prior to the date fixed for
redemption an Officer's Certificate stating the aggregate principal amount of
Securities to be redeemed. In case of a redemption at the election of the Issuer
prior to the expiration of any restriction on such redemption, the Issuer shall
deliver to the Trustee, prior to the giving of any notice of redemption to
Holders pursuant to this Section, an Officer's Certificate stating that such
restriction has been complied with.
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If less than all the Securities of a series are to be redeemed, the
Trustee shall select, in such manner as it shall deem appropriate and fair,
Securities of such Series to be redeemed in whole or in part. Securities may be
redeemed in part in multiples equal to the minimum authorized denomination for
Securities of such series or any multiple thereof. The Trustee shall promptly
notify the Issuer in writing of the Securities of such series selected for
redemption and, in the case of any Securities of such series selected for
partial redemption, the principal amount thereof to be redeemed. For all
purposes of this Indenture, unless the context otherwise requires, all
provisions relating to the redemption of Securities of any series shall relate,
in the case of any Security redeemed or to be redeemed only in part, to the
portion of the principal amount of such Security which has been or is to be
redeemed.
SECTION 12.03. Payment of Securities Called for Redemption. If
notice of redemption has been given as above provided, the Securities or
portions of Securities specified in such notice shall become due and payable on
the date and at the place stated in such notice at the applicable redemption
price, together with interest accrued to the date fixed for redemption, and on
and after said date (unless the Issuer shall default in the payment of such
Securities at the redemption price, together with interest accrued to said date)
interest on the Securities or portions of Securities so called for redemption
shall cease to accrue, and the unmatured Coupons, if any, appertaining thereto
shall be void, and, except as provided in Sections 6.05 and 10.04, such
Securities shall cease from and after the date fixed for redemption to be
entitled to any benefit or security under this Indenture, and the Holders
thereof shall have no right in respect of such Securities except the right to
receive the redemption price thereof and unpaid interest to the date fixed for
redemption. On presentation and surrender of such Securities at a place of
payment specified in said notice, together with all Coupons, if any,
appertaining thereto maturing after the date fixed for redemption, said
Securities or the specified portions thereof shall be paid and redeemed by the
Issuer at the applicable redemption price, together with interest accrued
thereon to the date fixed for redemption; provided that payment of interest
becoming due on or prior to the date fixed for redemption shall be payable in
the case of Securities with Coupons attached thereto, to the Holders of the
Coupons for such interest upon surrender thereof, and in the case of Registered
Securities, to the Holders of such Registered Securities registered as such on
the relevant record date subject to the terms and provisions of Sections 2.03
and 2.07 hereof.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal shall, until paid or duly
provided for, bear interest from the date fixed for redemption at the rate of
interest or Yield to Maturity (in the case of an Original Issue Discount
Security) borne by such Security.
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If any Security with Coupons attached thereto is surrendered for
redemption and is not accompanied by all appurtenant Coupons maturing after the
date fixed for redemption, the surrender of such missing Coupon or Coupons may
be waived by the Issuer and the Trustee, if there be furnished to each of them
such security or indemnity as they may require to save each of them harmless.
Upon presentation of any Security redeemed in part only, the Issuer
shall execute and the Trustee shall authenticate and deliver to or on the order
of the Holder thereof, at the expense of the Issuer, a new Security or
Securities of such series, of authorized denominations, in principal amount
equal to the unredeemed portion of the Security so presented.
SECTION 12.04. Exclusion of Certain Securities from Eligibility for
Selection for Redemption. Securities shall be excluded from eligibility for
selection for redemption if they are identified by registration and certificate
number in an Officer's Certificate delivered to the Trustee at least 40 days
prior to the last date on which notice of redemption may be given as being owned
of record and beneficially by, and not pledged or hypothecated by either (a) the
Issuer or (b) an entity specifically identified in such written statement as
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Issuer.
SECTION 12.05. Mandatory and Optional Sinking Funds. The minimum
amount of any sinking fund payment provided for by the terms of the Securities
of any series is herein referred to as a "mandatory sinking fund payment", and
any payment in excess of such minimum amount provided for by the terms of the
Securities of any series is herein referred to as an "optional sinking fund
payment". The date on which a sinking fund payment is to be made is herein
referred to as the "sinking fund payment date".
In lieu of making all or any part of any mandatory sinking fund
payment with respect to any series of Securities in cash, the Issuer may at its
option (a) deliver to the Trustee Securities of such series theretofore
purchased or otherwise acquired (except upon redemption pursuant to the
mandatory sinking fund) by the Issuer or receive credit for Securities of such
series (not previously so credited) theretofore purchased or otherwise acquired
(except as aforesaid) by the Issuer and delivered to the Trustee for
cancellation pursuant to Section 2.10, (b) receive credit for optional sinking
fund payments (not previously so credited) made pursuant to this Section, or (c)
receive credit for Securities of such series (not previously so credited)
redeemed by the Issuer through any optional redemption provision contained in
the terms of such series. Securities so delivered or credited shall be received
or credited by the Trustee at the sinking fund redemption price specified in
such Securities.
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On or before the 60th day next preceding each sinking fund payment
date for any series, the Issuer will deliver to the Trustee an Officer's
Certificate (which need not contain the statements required by Section 11.05)
(a) specifying the portion of the mandatory sinking fund payment to be satisfied
by payment of cash and the portion to be satisfied by credit of Securities of
such series and the basis for such credit, (b) stating that none of the
Securities of such series has theretofore been so credited, (c) stating that no
defaults in the payment of interest or Events of Default with respect to such
series have occurred (which have not been waived or cured) and are continuing
and (d) stating whether or not the Issuer intends to exercise its right to make
an optional sinking fund payment with respect to such series and, if so,
specifying the amount of such optional sinking fund payment which the Issuer
intends to pay on or before the next succeeding sinking fund payment date. Any
Securities of such series to be credited and required to be delivered to the
Trustee in order for the Issuer to be entitled to credit therefor as aforesaid
which have not theretofore been delivered to the Trustee shall be delivered for
cancellation pursuant to Section 2.10 to the Trustee with such Officer's
Certificate (or reasonably promptly thereafter if acceptable to the Trustee).
Such Officer's Certificate shall be irrevocable and upon its receipt by the
Trustee the Issuer shall become unconditionally obligated to make all the cash
payments or payments therein referred to, if any, on or before the next
succeeding sinking fund payment date. Failure of the Issuer, on or before any
such 60th day, to deliver such Officer's Certificate and Securities specified in
this paragraph, if any, shall not constitute a default but shall constitute, on
and as of such date, the irrevocable election of the Issuer (i) that the
mandatory sinking fund payment for such series due on the next succeeding
sinking fund payment date shall be paid entirely in cash without the option to
deliver or credit Securities of such series in respect thereof and (ii) that the
Issuer will make no optional sinking fund payment with respect to such series as
provided in this Section.
If the sinking fund payment or payments (mandatory or optional or
both) to be made in cash on the next succeeding sinking fund payment date plus
any unused balance of any preceding sinking fund payments made in cash shall
exceed $50,000 (or the equivalent thereof in any Foreign Currency) or a lesser
sum in Dollars (or the equivalent thereof in any Foreign Currency) if the Issuer
shall so request with respect to the Securities of any particular series, such
cash shall be applied on the next succeeding sinking fund payment date to the
redemption of Securities of such series at the sinking fund redemption price
together with accrued interest to the date fixed for redemption. If such amount
shall be $50,000 (or the equivalent thereof in any Foreign Currency) or less and
the Issuer makes no such request then it shall be carried over until a sum in
excess of $50,000 (or the equivalent thereof in any Foreign Currency) is
available. The Trustee shall select, in the manner provided in Section 12.02,
for redemption on such sinking fund payment date a sufficient principal amount
of Securities of such
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series to absorb said cash, as nearly as may be, and shall (if requested in
writing by the Issuer) inform the Issuer of the serial numbers of the Securities
of such series (or portions thereof) so selected. Securities shall be excluded
from eligibility for redemption under this Section if they are identified by
registration and certificate number in an Officer's Certificate delivered to the
Trustee at least 60 days prior to the sinking fund payment date as being owned
of record and beneficially by, and not pledged or hypothecated by either (a) the
Issuer or (b) an entity specifically identified in such Officer's Certificate as
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Issuer. The Trustee, in the name and at the expense of
the Issuer (or the Issuer, if it shall so request the Trustee in writing) shall
cause notice of redemption of the Securities of such series to be given in
substantially the manner provided in Section 12.02 (and with the effect provided
in Section 12.03) for the redemption of Securities of such series in part at the
option of the Issuer. The amount of any sinking fund payments not so applied or
allocated to the redemption of Securities of such series shall be added to the
next cash sinking fund payment for such series and, together with such payment,
shall be applied in accordance with the provisions of this Section. Any and all
sinking fund moneys held on the stated maturity date of the Securities of any
particular series (or earlier, if such maturity is accelerated), which are not
held for the payment or redemption of particular Securities of such series shall
be applied, together with other moneys, if necessary, sufficient for the
purpose, to the payment of the principal of, and interest on, the Securities of
such series at maturity.
On or before each sinking fund payment date, the Issuer shall pay to
the Trustee in cash or shall otherwise provide for the payment of all interest
accrued to the date fixed for redemption on Securities to be redeemed on the
next following sinking fund payment date.
The Trustee shall not redeem or cause to be redeemed any Securities
of a series with sinking fund moneys or give any notice of redemption of
Securities for such series by operation of the sinking fund during the
continuance of a default in payment of interest on such Securities or of any
Event of Default except that, where the giving of notice of redemption of any
Securities shall theretofore have been made, the Trustee shall redeem or cause
to be redeemed such Securities, provided that it shall have received from the
Issuer a sum sufficient for such redemption. Except as aforesaid, any moneys in
the sinking fund for such series at the time when any such default or Event of
Default shall occur, and any moneys thereafter paid into the sinking fund,
shall, during the continuance of such default or Event of Default, be deemed to
have been collected under Article 5 and held for the payment of all such
Securities. In case such Event of Default shall have been waived as provided in
Section 5.10 or the default cured on or before the sixtieth day preceding the
sinking fund payment date in any year, such moneys
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shall thereafter be applied on the next succeeding sinking fund payment date in
accordance with this Section to the redemption of such Securities.
ARTICLE 13
SUBORDINATION
SECTION 13.01. Securities and Coupons Subordinated to Senior
Indebtedness. The Issuer covenants and agrees, and each Holder of a Security or
Coupon, by his acceptance thereof, likewise covenants and agrees, that the
indebtedness represented by the Securities and any Coupons and the payment of
the principal of and interest on each and all of the Securities and of any
Coupons is hereby expressly subordinated, to the extent and in the manner
hereinafter set forth, in right of payment to the prior payment in full of
Senior Indebtedness.
In the event (a) of any insolvency or bankruptcy proceedings or any
receivership, liquidation, reorganization or other similar proceedings in
respect of the Issuer or a substantial part of its property, or of any
proceedings for liquidation, dissolution or other winding up of the Issuer,
whether or not involving insolvency or bankruptcy, or (b) subject to the
provisions of Section 13.02 that (i) a default shall have occurred with respect
to the payment of principal of or interest on or other monetary amounts due and
payable on any Senior Indebtedness, or (ii) there shall have occurred an event
of default (other than a default in the payment of principal or interest or
other monetary amounts due and payable) in respect of any Senior Indebtedness,
as defined therein or in the instrument under which the same is outstanding,
permitting the holder or holders thereof to accelerate the maturity thereof
(with notice or lapse of time, or both), and such event of default shall have
continued beyond the period of grace, if any, in respect thereof, and, in the
cases of subclauses (i) and (ii) of this clause (b), such default or event of
default shall not have been cured or waived or shall not have ceased to exist,
or (c) that the principal of and accrued interest on the Securities of any
series shall have been declared due and payable pursuant to Section 5.01 and
such declaration shall not have been rescinded and annulled as provided in
Section 5.01 then:
(i) the holders of all Senior Indebtedness shall first be entitled
to receive payment of the full amount due thereon, or provision shall
be made for such payment in money or money's worth, before the Holders
of any of the Securities or Coupons are entitled to receive a payment
on account of the principal of or interest on the indebtedness
evidenced by the Securities or of the Coupons, including, without
limitation, any payments made pursuant to Article 12;
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(ii) any payment by, or distribution of assets of, the Issuer of
any kind or character, whether in cash, property or securities, to
which the Holders of any of the Securities or Coupons or the Trustee
would be entitled except for the provisions of this Article shall be
paid or delivered by the person making such payment or distribution,
whether a trustee in bankruptcy, a receiver or liquidating trustee or
otherwise, directly to the holders of such Senior Indebtedness or
their representative or representatives or to the trustee or trustees
under any indenture under which any instruments evidencing any of such
Senior Indebtedness may have been issued, ratably according to the
aggregate amounts remaining unpaid on account of such Senior
Indebtedness held or represented by each, to the extent necessary to
make payment in full of all Senior Indebtedness remaining unpaid after
giving effect to any concurrent payment or distribution (or provision
therefor) to the holders of such Senior Indebtedness, before any
payment or distribution is made to the holders of the indebtedness
evidenced by the Securities or Coupons or to the Trustee under this
instrument; and
(iii) in the event that, notwithstanding the foregoing, any
payment by, or distribution of assets of, the Issuer of any kind or
character, whether in cash, property or securities, in respect of
principal of or interest on the Securities or in connection with any
repurchase by the Issuer of the Securities, shall be received by the
Trustee or the Holders of any of the Securities or Coupons before all
Senior Indebtedness is paid in full, or provision made for such
payment in money or money's worth, such payment or distribution in
respect of principal of or interest on the Securities or in connection
with any repurchase by the Issuer of the Securities shall be paid over
to the holders of such Senior Indebtedness or their representative or
representatives or to the trustee or trustees under any indenture
under which any instruments evidencing any such Senior Indebtedness
may have been issued, ratably as aforesaid, for application to the
payment of all Senior Indebtedness remaining unpaid until all such
Senior Indebtedness shall have been paid in full, after giving effect
to any concurrent payment or distribution (or provision therefor) to
the holders of such Senior Indebtedness.
Notwithstanding the foregoing, at any time after the 91st day
following the date of deposit of cash or, in the case of Securities payable only
in Dollars, U.S. Government Obligations pursuant to Section 10.01(b) or 10.01(c)
(provided all other conditions set out in such Section shall have been
satisfied) the funds so deposited and any interest thereon will not be subject
to any rights of holders of
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Senior Indebtedness including, without limitation, those arising under this
Article 13.
SECTION 13.02. Disputes with Holders of Certain Senior Indebtedness.
Any failure by the Issuer to make any payment on or perform any other obligation
under Senior Indebtedness, other than any indebtedness incurred by the Issuer or
assumed or guaranteed, directly or indirectly, by the Issuer for money borrowed
(or any deferral, renewal, extension or refunding thereof) or any indebtedness
or obligation as to which the provisions of this Section shall have been waived
by the Issuer in the instrument or instruments by which the Issuer incurred,
assumed, guaranteed or otherwise created such indebtedness or obligation, shall
not be deemed a default or event of default under Section 13.01(b) if (a) the
Issuer shall be disputing its obligation to make such payment or perform such
obligation and (b) either (i) no final judgment relating to such dispute shall
have been issued against the Issuer which is in full force and effect and is not
subject to further review, including a judgment that has become final by reason
of the expiration of the time within which a party may seek further appeal or
review, and (ii) in the event of a judgment that is subject to further review or
appeal has been issued, the Issuer shall in good faith be prosecuting an appeal
or other proceeding for review and a stay of execution shall have been obtained
pending such appeal or review.
SECTION 13.03. Subrogation. Subject to the payment in full of all
Senior Indebtedness, the Holders of the Securities and any Coupons shall be
subrogated (equally and ratably with the holders of all obligations of the
Issuer which by their express terms are subordinated to Senior Indebtedness of
the Issuer to the same extent as the Securities are subordinated and which are
entitled to like rights of subrogation) to the rights of the holders of Senior
Indebtedness to receive payments or distributions of cash, property or
securities of the Issuer applicable to the Senior Indebtedness until all amounts
owing on the Securities and any Coupons shall be paid in full, and as between
the Issuer, its creditors other than holders of such Senior Indebtedness and the
Holders, no such payment or distribution made to the holders of Senior
Indebtedness by virtue of this Article that otherwise would have been made to
the Holders shall be deemed to be a payment by the Issuer on account of such
Senior Indebtedness, it being understood that the provisions of this Article are
and are intended solely for the purpose of defining the relative rights of the
Holders, on the one hand, and the holders of Senior Indebtedness, on the other
hand.
SECTION 13.04. Obligation of Issuer Unconditional. Nothing contained
in this Article or elsewhere in this Indenture or in the Securities or any
Coupons is intended to or shall impair, as among the Issuer, its creditors other
than the holders of Senior Indebtedness and the Holders, the obligation of the
Issuer, which is absolute and unconditional, to pay to the Holders the principal
of and
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interest on the Securities and the amounts owed pursuant to any Coupons as and
when the same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the Holders and creditors of
the Issuer other than the holders of Senior Indebtedness, nor shall anything
herein or therein prevent the Trustee or any Holder from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture, subject
to the rights, if any, under this Article of the holders of Senior Indebtedness
in respect of cash, property or securities of the Issuer received upon the
exercise of any such remedy.
Upon payment or distribution of assets of the Issuer referred to in
this Article, the Trustee and the Holders shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which any such
dissolution, winding up, liquidation or reorganization proceeding affecting the
affairs of the Issuer is pending or upon a certificate of the trustee in
bankruptcy, receiver, assignee for the benefit of creditors, liquidating trustee
or agent or other person making any payment or distribution, delivered to the
Trustee or to the Holders, for the purpose of ascertaining the persons entitled
to participate in such payment or distribution, the holders of the Senior
Indebtedness and other indebtedness of the Issuer, the amount thereof or payable
thereon, the amount paid or distributed thereon and all other facts pertinent
thereto or to this Article.
SECTION 13.05. Payments on Securities and Coupons Permitted. Nothing
contained in this Article or elsewhere in this Indenture or in the Securities or
Coupons shall affect the obligations of the Issuer to make, or prevent the
Issuer from making, payment of the principal of or interest on the Securities
and of any Coupons in accordance with the provisions hereof and thereof, except
as otherwise provided in this Article.
SECTION 13.06. Effectuation of Subordination by Trustee. Each holder
of Securities or Coupons, by his acceptance thereof, authorizes and directs the
Trustee on his behalf to take such action as may be necessary or appropriate to
effectuate the subordination provided in this Article and appoints the Trustee
his attorney-in-fact for any and all such purposes.
SECTION 13.07. Knowledge of Trustee. Notwithstanding the provisions
of this Article or any other provisions of this Indenture, the Trustee shall not
be charged with knowledge of the existence of any facts that would prohibit the
making of any payment of moneys to or by the Trustee, or the taking of any other
action by the Trustee, unless and until the Trustee shall have received written
notice thereof mailed or delivered to the Trustee at its Corporate Trust Office
from the Issuer, any Holder, any paying agent or the holder or representative of
any class of Senior Indebtedness; provided that if at least three Business Days
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prior to the date upon which by the terms hereof any such moneys may become
payable for any purpose (including, without limitation, the payment of the
principal or interest on any Security or interest on any Coupon) the Trustee
shall not have received with respect to such moneys the notice provided for in
this Section, then, anything herein contained to the contrary notwithstanding,
the Trustee shall have full power and authority to receive such moneys and to
apply the same to the purpose for which they were received and shall not be
affected by any notice to the contrary that may be received by it within three
Business Days prior to or on or after such date.
SECTION 13.08. Trustee May Hold Senior Indebtedness. The Trustee
shall be entitled to all the rights set forth in this Article with respect to
any Senior Indebtedness at the time held by it, to the same extent as any other
holder of Senior Indebtedness, and nothing in Section 6.03 or elsewhere in this
Indenture shall deprive the Trustee of any of its rights as such holder.
SECTION 13.09. Rights of Holders of Senior Indebtedness Not
Impaired. No right of any present or future holder of any Senior Indebtedness to
enforce the subordination herein shall at any time or in any way be prejudiced
or impaired by any act or failure to act on the part of the Issuer or by any
noncompliance by the Issuer with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
With respect to the holders of Senior Indebtedness, (a) the duties
and obligations of the Trustee shall be determined solely by the express
provisions of this Indenture, (b) the Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set forth in this
Indenture, (c) no implied covenants or obligations shall be read into this
Indenture against the Trustee and (d) the Trustee shall not be deemed to be a
fiduciary as to such holders.
SECTION 13.10. Article Applicable to Paying Agents. In case at any
time any paying agent other than the Trustee shall have been appointed by the
Issuer and be then acting hereunder, the term "Trustee" as used in this Article
shall in such case (unless the context shall require otherwise) be construed as
extending to and including such paying agent within its meaning as fully for all
intents and purposes as if such paying agent were named in this Article in
addition to or in place of the Trustee, provided, however, that Sections 13.07
and 13.08 shall not apply to the Issuer if it acts as its own paying agent.
SECTION 13.11. Trustee; Compensation Not Prejudiced. Nothing in this
Article shall apply to claims of, or payments to, the Trustee pursuant to
Section 6.06.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of March 1, 1998.
MORGAN STANLEY, DEAN WITTER,
DISCOVER & CO.
[CORPORATE SEAL]
By:___________________________________
Name: Alexander C. Frank
Title: Assistant Treasurer
Attest:
By:_____________________________
THE BANK OF NEW YORK, TRUSTEE
By:___________________________________
Name:
Title:
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STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ of ________, 1998 before me personally came , to me
personally known, who, being by me duly sworn, did depose and say that he
resides at that he is the of Morgan Stanley, Dean Witter,
Discover & Co., one of the corporations described in and which executed the
above instrument; that he knows the corporate seal of said corporation; that
the seal affixed to said instrument is such corporate seal; that it was so
affixed by authority of the Board of Directors of said corporation, and that
he signed his name thereto by like authority.
[NOTARIAL SEAL]
- ---------------------------------------
Notary Public
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STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ of ________, 1998 before me personally came , to me
personally known, who, being by me duly sworn, did depose and say that he
resides at that he is a Vice President of The Bank of New York, one
of the corporations described in and which executed the above instrument and
that he signed his name thereto by like authority.
[NOTARIAL SEAL]
- ---------------------------------------
Notary Public
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EXHIBIT 4.2
JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE
REGISTERED REGISTERED
NO. 1 $412,371,150
CUSIP: 617446CV9
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT
IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE REGISTERED FORM, THIS CERTIFICATE MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANY OTHER
NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A
NOMINEE OF SUCH SUCCESSOR DEPOSITORY.
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE
Morgan Stanley, Dean Witter, Discover & Co., a Delaware corporation
(together with its successors and assigns, the "ISSUER"), for value received,
hereby promises to pay to The Bank of New York, as Property Trustee (the
"PROPERTY TRUSTEE," which term includes any successor Property Trustee for MSDW
Capital Trust I) for MSDW Capital Trust I, a statutory business trust formed
under the laws of the State of Delaware (the "Issuer Trust"), or registered
assignees, the principal sum of $412, 371,150 (UNITED STATES DOLLARS FOUR
HUNDRED AND TWELVE MILLION, THREE HUNDRED SEVENTY-ONE THOUSAND, ONE HUNDRED AND
FIFTY) on February 28, 2038, such date, as it may be advanced as set forth
below, the "STATED MATURITY," and to pay interest thereon at the annual rate of
7.10% from and including March 12, 1998, until the principal hereof is paid or
duly made available for payment (except as provided below) payable quarterly in
arrears on the 28th day of February and the 30th day of May, August and
November of each year (each an "INTEREST PAYMENT DATE"), commencing May 30,
1998.
Interest on this Debenture will accrue from and including the most recent
Interest Payment Date to which interest has been paid or duly provided for, or,
if no interest has been paid or duly provided for, from and including March 12,
1998, until, but excluding the date the principal hereof has been paid or duly
made available for payment. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, subject to certain exceptions
described herein, be paid to the person in whose name this Debenture (or one or
more predecessor Debentures) is registered at the close of business on the 15th
calendar day (whether or not a Business Day) next preceding such Interest
Payment Date (each such date a "RECORD DATE"). As used herein, "BUSINESS DAY"
means any day, other than a Saturday or Sunday, that is not a day on which
banking institutions in the City of New York are authorized or required by law
or executive order to remain closed. A Holder of U.S. $1,000,000 or more in
aggregate principal amount of Debentures having the same Interest Payment Date,
the interest on which is payable in U.S. dollars, shall be entitled to receive
payments of interest, other than interest due at maturity or on any date of
redemption or repayment, by wire transfer of immediately available funds if
appropriate wire transfer instructions have been received by the Paying Agent in
writing not less than 15 calendar days prior to the applicable Interest Payment
Date.
Reference is hereby made to the further provisions of this Debenture set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place, including, without
limitation, the provisions relating to the subordination of this Debenture to
the Issuer's Senior Indebtedness, as defined on the reverse hereof.
Unless the certificate of authentication hereon has been executed by the
Trustee by manual signature, this Debenture shall not be entitled to any benefit
under the Junior Subordinated Indenture, as defined on the reverse hereof, or be
valid or obligatory for any purpose.
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IN WITNESS WHEREOF, the Issuer has caused this Debenture to be duly executed.
DATED: March 12, 1998 MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
By:
---------------------------------------
Name: Alexander C. Frank
Title: Assistant Treasurer
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This is one of the Debentures referred
to in the within-mentioned
Junior Subordinated Indenture.
DATED: March 12, 1998
THE BANK OF NEW YORK,
as Trustee
By:
------------------------------
Authorized Signatory
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[REVERSE OF SECURITY]
This debenture is one of a duly authorized issue of 7.10% Junior Subordinated
Debentures due February 28, 2038 (the "DEBENTURES") of the Issuer. The
Debentures are issuable under a Junior Subordinated Indenture, dated as of March
1, 1998, between Morgan Stanley, Dean Witter, Discover & Co. (the "ISSUER") and
The Bank of New York, as Trustee (the "TRUSTEE," which term includes any
successor trustee under the Junior Subordinated Indenture) (the "JUNIOR
SUBORDINATED INDENTURE"), to which Junior Subordinated Indenture reference is
hereby made for a statement of the respective rights, limitations of rights,
duties and immunities of the Issuer, the Trustee and holders of the Debentures
and the terms upon which the Debentures are, and are to be, authenticated and
delivered. The Issuer has appointed The Bank of New York at its corporate trust
office in The City of New York as the paying agent (the "PAYING AGENT," which
term includes any additional or successor Paying Agent appointed by the Issuer)
with respect to the Debentures. To the extent not inconsistent herewith, the
terms of the Junior Subordinated Indenture are hereby incorporated by reference
herein. Capitalized terms not otherwise defined herein have the meaning given
to such terms in the Junior Subordinated Indenture.
This Debenture will not be subject to any sinking fund and, except as
provided below, will not be redeemable or subject to repayment at the option of
the holder prior to its Stated Maturity.
This Debenture may be redeemed at the option of the Issuer (i) on or after
March 12, 2003 in whole at any time or in part from time to time and (ii) prior
to March 12, 2003, in whole (but not in part) at any time within 90 days
following the occurrence and continuation of a Tax Event or an Investment
Company Event (the "90-DAY PERIOD"), in each case at a redemption price equal to
the accrued and unpaid interest on the Debentures so redeemed to the date fixed
for redemption, plus 100% of the principal amount thereof (the "REDEMPTION
PRICE"). Notice of redemption shall be mailed to the registered holders of the
Debentures designated for redemption at their addresses as the same shall appear
on the Debenture register not less than 30 nor more than 60 days prior to the
date fixed for redemption, subject to all the conditions and provisions of the
Junior Subordinated Indenture. In the event of redemption of this Debenture in
part only, a new Debenture or Debentures for the amount of the unredeemed
portion hereof shall be issued in the name of the holder hereof upon the
cancellation hereof.
The Issuer's right to redeem the Debentures under clause (ii) of the
preceding paragraph shall be subject to the condition that if at the time there
is available to the Issuer or MSDW Capital Trust I (the "ISSUER TRUST," the
terms of which have been established pursuant to the Amended and Restated Trust
Agreement dated as of March 12, 1998, among the Issuer, as depositor, The Bank
of New York, as Property Trustee, The Bank of New York (Delaware), as Delaware
Trustee and the Administrators, the "TRUST AGREEMENT") the opportunity to
eliminate, within the 90-Day Period, the Tax Event or Investment Company Event
by taking some ministerial action ("MINISTERIAL ACTION"), such as filing a form
or making an election, or pursuing some other similar reasonable measure that
will have no adverse effect on the Issuer, the Issuer Trust or the holders of
the securities issued by the Issuer Trust and will involve no material cost, the
Issuer shall pursue such measures in lieu of redemption; provided further, that
the Issuer shall have no right to redeem the Debentures
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while the Issuer Trust is pursuing any Ministerial Action pursuant to the Trust
Agreement. The Redemption Price shall be paid prior to 12:00 noon, New York
time, on the date of such redemption or such earlier time as the Issuer
determines; provided, that the Issuer shall deposit with the Trustee an amount
sufficient to pay the Redemption Price prior to the redemption date.
In addition, if a Tax Event occurs, then the Issuer will have the right prior
to the termination of the Issuer Trust, to advance the Stated Maturity of this
Debenture to the minimum extent required in order to allow for the payments of
interest in respect this Debenture to continue to be tax deductible, but in no
event shall the resulting maturity of this Debenture be less than 15 years from
the date of original issuance thereof. The Stated Maturity shall be advanced
only if, in the opinion of counsel to the Issuer, experienced in such matters,
(a) after advancing the Stated Maturity, interest paid on this Debenture will be
deductible for United States federal income tax purposes and (b) advancing the
Stated Maturity will not result in a taxable event to the holders of the Capital
Securities.
The term "TAX EVENT" means the receipt by the Issuer Trust of an opinion of
counsel to the Issuer experienced in such matters, who shall not be an officer
or employee of the Issuer or any of its affiliates, to the effect that, as a
result of any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, or as a result of
any official or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which pronouncement, action or decision is announced on or after
the date of issuance of Capital Securities of the Issuer Trust, there is more
than an insubstantial risk that (i) the Issuer Trust is, or will be within 90
days of the delivery of such opinion, subject to United States federal income
tax with respect to income received or accrued on the Debentures, (ii) interest
payable by the Issuer on the Debentures is not, or within 90 days of the
delivery of such opinion will not be, deductible by the Issuer, in whole or in
part, for United States federal income tax purposes or (iii) the Issuer Trust
is, or will be within 90 days of the delivery of the opinion, subject to more
than a de minimis amount of other taxes, duties or other governmental charges.
"INVESTMENT COMPANY EVENT" means the receipt by the Issuer Trust of an opinion
of counsel to the Issuer experienced in such matters, who shall not be an
officer or employee of the Issuer or any of its affiliates, to the effect that,
as a result of the occurrence of a change in law or regulation or a written
change (including any announced prospective change) in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, there is more than an insubstantial risk that
the Issuer Trust is or will be considered an "investment company" that is
required to be registered under the Investment Company Act of 1940, as amended
(the "Investment Company Act"), which change or prospective change becomes
effective or would become effective, as the case may be, on or after the date of
the issuance of the Capital Securities of the Issuer Trust.
Interest payments on this Debenture will include interest accrued to but
excluding the Interest Payment Dates or the Stated Maturity (or any earlier
redemption or repayment date), as the case may be. Interest payments for this
Debenture will be computed and paid on the basis of a 360-day year
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<PAGE>
of twelve 30-day months and the actual days elapsed in a partial month in such
period. The amount of interest payable for any full interest period will be
computed by dividing the rate per annum by four. Accrued interest that is not
paid on the applicable Interest Payment Date will bear additional interest on
the amount thereof at the rate per annum of 7.10% (the "COUPON RATE"),
compounded quarterly and computed on the basis of a 360-day year of twelve 30-
day months and the actual days elapsed in a partial month in such period. The
amount of additional interest payable for any full interest period will be
computed by dividing the rate per annum by four. The term "interest' as used
herein includes quarterly interest payments, interest on quarterly interest
payments not paid on the applicable Interest Payment Date and Additional Sums
(as defined below), as applicable.
If any Interest Payment Date or the Stated Maturity (or any redemption or
repayment date) does not fall on a Business Day, payment of interest, premium,
if any, or principal otherwise payable on such date need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the Interest Payment Date or at the Stated Maturity
(or any redemption or repayment date), and no interest on such payment shall
accrue for the period from and after the Interest Payment Date or the Stated
Maturity (or any redemption or repayment date) to such next succeeding Business
Day.
The Junior Subordinated Indenture provides that, (a) if an Event of Default
(as defined in the Junior Subordinated Indenture) due to the default in payment
of principal of, premium, if any, or interest on, any series of debt securities
issued under the Junior Subordinated Indenture, including the series of
Debentures of which this Debenture forms a part, or due to the default in the
performance or breach of any other covenant or warranty of the Issuer applicable
to the debt securities of such series but not applicable to all outstanding debt
securities issued under the Junior Subordinated Indenture shall have occurred
and be continuing, either the Trustee or the holders of not less than 25% in
principal amount of the debt securities of each affected series (voting as a
single class) may then declare the principal of all debt securities of all such
series and interest accrued thereon to be due and payable immediately and (b) if
an Event of Default due to a default in the performance of any other of the
covenants or agreements in the Junior Subordinated Indenture applicable to all
outstanding debt securities issued thereunder, including this Debenture, or due
to certain events of bankruptcy, insolvency and reorganization of the Issuer,
shall have occurred and be continuing, either the Trustee or the holders of not
less than 25% in principal amount of all debt securities issued under the Junior
Subordinated Indenture then outstanding (treated as one class) may declare the
principal of all such debt securities and interest accrued thereon to be due and
payable immediately, but upon certain conditions such declarations may be
annulled and past defaults may be waived (except a continuing default in payment
of principal (or premium, if any) or interest on such debt securities) by the
holders of a majority in principal amount of the debt securities of all affected
series then outstanding. Deferral of any due date for the payment of interest
in connection with an Extension Period (as defined herein) does not constitute
an Event of Default.
So long as no Event of Default has occurred and is continuing, the Issuer
shall have the right at any time, and from time to time, during the term of the
Debentures to defer payments of interest by extending the interest payment
period of this Debenture for a period not exceeding 20 consecutive quarters (the
"EXTENSION PERIOD"), during which Extension Period no interest shall be due and
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<PAGE>
payable; provided, that no Extension Period may extend beyond the Stated
Maturity. Interest, the payment of which has been deferred because of the
extension of the interest payment period pursuant to this paragraph, will bear
interest thereon at the Coupon Rate compounded quarterly for each quarter of the
Extension Period and computed on the basis of a 360-day year of twelve 30-day
months and the actual days elapsed in a partial month in such period
("ADDITIONAL INTEREST"). The Coupon Rate payable for any full interest period
will be computed by dividing the rate per annum by four. At the end of the
Extension Period, the Issuer shall pay all interest accrued and unpaid on this
Debenture, including any Additional Sums and Additional Interest (together,
"DEFERRED INTEREST") that shall be payable to the Holders of this Debenture in
whose names this Debenture is registered in the Securities Register on the first
Record Date after the end of the Extension Period. Before the termination of any
Extension Period, the Issuer may further extend such period; provided, that such
period together with all such further extensions thereof shall not exceed 20
consecutive quarters, or extend beyond the Stated Maturity. In the event that
the Stated Maturity is advanced to a date prior to the end of an Extension
Period, such Extension Period shall be deemed to end on such date or such
earlier date as may be determined by the Issuer. In the event that any
Debentures are called for redemption on a date prior to the end of an Extension
Period, with respect to such Debentures, such Extension Period shall be deemed
to end on such date or such earlier date as may be determined by the Issuer.
Upon the termination of any Extension Period and upon the payment of all
Deferred Interest then due, the Issuer may commence a new Extension Period,
subject to the foregoing requirements. No interest shall be due and payable
during an Extension Period, except at the end thereof, but the Issuer may prepay
at any time all or any portion of the interest accrued during an Extension
Period.
If the Property Trustee (as defined in the Trust Agreement) is the only
Holder of the Debentures at the time the Issuer selects an Extension Period, the
Issuer shall give written notice to the Issuer Trustees (as defined in the Trust
Agreement) of its selection of such Extension Period at least 30 calendar days
prior to the date the Distributions (as defined in the Trust Agreement) on the
Trust Securities (as defined in the Trust Agreement) would have been payable but
for the election to begin such Extension Period.
If the Property Trustee is not the only Holder, or is not itself the Holder,
of the Debentures at the time the Issuer selects an Extension Period, the Issuer
shall give the Holders of the Debentures and the Trustee written notice of its
selection of such Extension Period at least 10 Business Days before the earlier
of the next succeeding Interest Payment Date or the date the Issuer is required
to give notice of the record or payment date of such interest payment to Holders
of the Debentures.
The Issuer covenants that it will not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Issuer's capital stock or (ii) make any payment of
principal of or interest or premium, if any, on or repay, repurchase or redeem
any debt securities of the Issuer that rank pari passu in all respects with or
junior in interest to the Debentures (other than (a) repurchases, redemptions or
other acquisitions of shares of capital stock of the Issuer (1) in connection
with any employment contract, benefit plan or other similar arrangement with or
for the benefit of any one or more employees, officers, directors or
consultants, (2) in connection with a dividend reinvestment or stockholder stock
purchase plan or
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(3) in connection with the issuance of capital stock of the Issuer (or
securities convertible into or exercisable for such capital stock) as
consideration in an acquisition transaction entered into prior to the applicable
Extension Period or other event referred to below, (b) as a result of an
exchange, redemption or conversion of any class or series of the Issuer's
capital stock (or any capital stock of a subsidiary of the Issuer) for any class
or series of the Issuer's capital stock or of any class or series of the
Issuer's indebtedness for any class or series of the Issuer's capital stock, (c)
the purchase of fractional interests in shares of the Issuer's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged, (d) any declaration of a dividend in
connection with any stockholder's rights plan, or the issuance of rights, stock
or other property under any stockholder's rights plan, or the redemption or
repurchase of rights pursuant thereto, (e) payments under the Guarantee executed
and delivered by the Issuer and The Bank of New York, as trustee, for the
benefit of the holders of any Capital Securities (as defined in the Trust
Agreement), as amended from time to time (the "GUARANTEE") or (f) any dividend
in the form of stock, warrants, options or other rights where the dividend stock
or the stock issuable upon exercise of such warrants, options or other rights is
the same stock as that on which the dividend is being paid or ranks pari passu
with or junior to such stock), if at such time (i) there has occurred any event
(a) of which the Issuer has actual knowledge that with the giving of notice or
the lapse of time, or both, would constitute an Event of Default and (b) that
the Issuer has not taken reasonable steps to cure, (ii) if the Debentures are
held by the Issuer Trust, the Issuer is in default with respect to its payment
of any obligations under the Guarantee or (iii) the Issuer has given notice of
its election of an Extension Period as provided in the Junior Subordinated
Indenture and has not rescinded such notice, or such Extension Period, or any
extension thereof, is continuing.
If an Event of Default has occurred and is continuing and such event is
attributable to the failure of the Issuer to pay any amounts payable in respect
of the Debentures on the date such amounts are otherwise payable, a registered
holder of Capital Securities may institute a legal proceeding directly against
the Issuer for enforcement of payment to such registered holder of an amount
equal to the amount payable in respect of Debentures having a principal amount
equal to the aggregate Liquidation Amount (as defined in the Trust Agreement) of
the Capital Securities held by such registered holder (a "Direct Action"). The
Issuer shall have the right to set off any payment made to such registered
holder of Capital Securities by the Issuer in connection with a Direct Action.
As long as any Debentures are held by the Issuer Trust, the Issuer covenants
(i) to continue to hold, directly or indirectly, 100% of the Common Securities
(as defined in the Trust Agreement), provided that certain successors that are
permitted pursuant to the Junior Subordinated Indenture may succeed to the
Issuer's ownership of the Common Securities, (ii) as holder of the Common
Securities, not to voluntarily dissolve, windup or liquidate the Issuer Trust,
other than (a) in connection with a distribution of Debentures to the holders of
the Capital Securities in liquidation of the Issuer Trust or (b) in connection
with certain mergers, consolidations or amalgamations permitted by the Trust
Agreement and (iii) to use its reasonable efforts, consistent with the terms and
provisions of the Trust Agreement, to cause the Issuer Trust to continue not to
be taxable as a corporation for United States federal income tax purposes.
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If, and for so long as, (i) the Issuer Trust is the holder of all the
Debentures and (ii) the Issuer Trust is required to pay any additional taxes,
duties or other governmental charges as a result of a Tax Event, the Issuer will
pay as additional sums on the Debentures ("ADDITIONAL SUMS") such amounts as may
be required so that the Distributions (as defined in the Trust Agreement) paid
by the Issuer Trust will not be reduced as a result of any such additional
taxes, duties or other governmental charges.
The Issuer, as borrower, agrees to pay all debts and other obligations (other
than with respect to the Capital Securities issued by the Issuer Trust) and all
costs and expenses of the Issuer Trust (including costs and expenses relating to
the organization of the Issuer Trust, the fees and expenses of the Issuer
Trustees (as defined in the Trust Agreement) for the Issuer Trust and the costs
and expenses relating to the operation of the Issuer Trust) and to pay any and
all taxes and all costs and expenses with respect thereto (other than United
States withholding taxes) to which the Issuer Trust might become subject. The
foregoing obligations of the Issuer under the Debentures owned by the Issuer
Trust are for the benefit of, and shall be enforceable by, any person to whom
any such debts, obligations, costs, expenses and taxes are owed (a "CREDITOR")
whether or not such Creditor has received notice thereof. Any such Creditor may
enforce such obligations of the Issuer directly against the Issuer, and the
Issuer irrevocably waives any right or remedy to require that any such Creditor
take any action against the Issuer Trust or any other person before proceeding
against the Issuer. The Issuer agrees to execute any additional agreements as
may be necessary or desirable to give full effect to the foregoing.
The provisions of Section 3.04 and Section 10.01 of the Junior Subordinated
Indenture relating to discharge, defeasance and covenant defeasance are not
applicable to this Debenture.
This Debenture and all other obligations of the Issuer hereunder will
constitute part of the junior subordinated debt of the Issuer, will be issued
under the Junior Subordinated Indenture and will be subordinate and junior in
right of payment, to the extent and in the manner set forth in the Junior
Subordinated Indenture, to all "Senior Indebtedness" of the Issuer. The Junior
Subordinated Indenture defines "SENIOR INDEBTEDNESS" as obligations issued under
the Senior Indenture between Morgan Stanley (as predecessor to the Issuer) and
The Chase Manhattan Bank (formerly known as Chemical Bank), as trustee, dated
April 15, 1989, as supplemented by a First Supplemental Senior Indenture dated
as of May 15, 1991 and a Second Supplemental Indenture, dated as of April 15,
1996 and a Third Supplemental Indenture dated as of June 1, 1997, between the
Issuer and The Chase Manhattan Bank, as trustee, or the Senior Subordinated
Indenture between Morgan Stanley (as predecessor to the Issuer) and The First
National Bank of Chicago, as trustee, dated as of April 15, 1989, as
supplemented by a First Supplemental Subordinated Indenture dated as of May 15,
1991 and a Second Supplemental Subordinated Indenture dated as of April 15, 1996
and by a Third Supplemental Subordinated Indenture dated as of June 1, 1997
between the Issuer and The First National Bank of Chicago, as trustee, and any
other obligations (other than non-recourse obligations, the debt securities,
including this Debenture, issued under the Junior Subordinated Indenture or any
other obligations specifically designated as being subordinate in right of
payment to Senior Indebtedness) of, or guaranteed or assumed by, the Issuer for
borrowed money or evidenced by
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bonds, debentures or other similar instruments, and amendments, renewals,
extensions, modifications and refundings of any such indebtedness or obligation.
This Debenture, and any Debenture or Debentures issued upon transfer or
exchange hereof, is issuable only in fully registered form, without coupons, and
is issuable only in denominations of U.S. $25 and any integral multiple of U.S.
$25 in excess thereof, unless otherwise indicated on the face thereof.
The Bank of New York has been appointed registrar for the Debentures (the
"REGISTRAR," which term includes any successor registrar appointed by the
Issuer), and the Registrar will maintain at its office in The City of New York a
register for the registration and transfer of Debentures. This Debenture may be
transferred at the aforesaid office of the Registrar by surrendering this
Debenture for cancellation, accompanied by a written instrument of transfer in
form satisfactory to the Registrar and duly executed by the registered holder
hereof in person or by the holder's attorney duly authorized in writing, and
thereupon the Registrar shall issue in the name of the transferee or
transferees, in exchange herefor, a new Debenture or Debentures having identical
terms and provisions and having a like aggregate principal amount in authorized
denominations, subject to the terms and conditions set forth herein; provided,
however, that the Registrar will not be required (i) to register the transfer of
or exchange any Debenture that has been called for redemption in whole or in
part, except the unredeemed portion of Debentures being redeemed in part or (ii)
to register the transfer of or exchange Debentures to the extent and during the
period so provided in the Junior Subordinated Indenture with respect to the
redemption of Debentures. Debentures are exchangeable at said office for other
Debentures of other authorized denominations of equal aggregate principal amount
having identical terms and provisions. All such exchanges and transfers of
Debentures will be free of charge, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge in connection
therewith. All Debentures surrendered for exchange shall be accompanied by a
written instrument of transfer in form satisfactory to the Registrar and
executed by the registered holder in person or by the holder's attorney duly
authorized in writing. The date of registration of any Debenture delivered upon
any exchange or transfer of Debentures shall be such that no gain or loss of
interest results from such exchange or transfer.
In case this Debenture shall at any time become mutilated, defaced or be
destroyed, lost or stolen and this Debenture or evidence of the loss, theft or
destruction thereof (together with the indemnity hereinafter referred to and
such other documents or proof as may be required in the premises) shall be
delivered to the Registrar, a new Debenture of like tenor will be issued by the
Issuer in exchange for this Debenture, but, if this Debenture has been
destroyed, lost or stolen, only upon receipt of evidence satisfactory to the
Registrar and the Issuer that such Debenture was destroyed or lost or stolen
and, if required, upon receipt also of indemnity satisfactory to each of them.
All expenses and reasonable charges associated with procuring such indemnity and
with the preparation, authentication and delivery of a new Debenture shall be
borne by the owner of the Debenture mutilated, defaced, destroyed, lost or
stolen.
The Junior Subordinated Indenture permits the Issuer and the Trustee, with
the consent of the holders of not less than a majority in aggregate principal
amount of the debt securities of all
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series issued under the Junior Subordinated Indenture then outstanding and
affected (voting as one class), to execute supplemental indentures adding any
provisions to or changing in any manner the rights of the holders of each series
so affected; provided that the Issuer and the Trustee may not, without the
consent of the holder of each outstanding debt security affected thereby and the
prior written consent of each registered holder of Capital Securities, to the
extent that the Debentures are held by a MSDW Capital Trust, (a) extend the
final maturity of any such debt security, or reduce the principal amount
thereof, or reduce the rate or extend the time of payment of interest thereon,
except as otherwise provided herein or in the Junior Subordinated Indenture, or
reduce any amount payable on redemption or repayment thereof, or change the
currency of payment thereof, or impair or affect the rights of any holder to
institute suit for the payment thereof without the consent of the holder of each
debt security so affected or (b) reduce the aforesaid percentage in principal
amount of debt securities the consent of the holders of which is required for
any such supplemental indenture; provided, however, that neither this Debenture
nor the Junior Subordinated Indenture may be amended to alter the subordination
provisions hereof or thereof without the written consent of each holder of
Senior Indebtedness then outstanding that would be adversely affected thereby.
In addition, so long as any of the Capital Securities remain outstanding, no
such modification may be made that adversely affects the holders of such Capital
Securities in any material respect, and no termination of the Junior
Subordinated Indenture may occur, and no waiver of any Event of Default or
compliance with any covenant under the Junior Subordinated Indenture may be
effective, without the prior consent of the holders of at least a majority of
the aggregate Liquidation Amount of the outstanding Capital Securities unless
and until the principal of (and premium, if any, on) the Debentures and all
accrued and unpaid interest thereon have been paid in full and certain other
conditions are satisfied. So long as the Issuer acts in accordance with the
terms of the Debentures, the Issuer may shorten the Stated Maturity of and defer
interest payable on the Debentures, in each case in accordance with the terms
hereof without the consent of the Issuer Trust or the holders of Capital
Securities. However, the Issuer may not amend this Debenture or the Junior
Subordinated Indenture to remove the rights of registered holders of Capital
Securities to institute a Direct Action without the prior written consent of all
the registered holders of Capital Securities of the Trust.
So long as this Debenture shall be outstanding, the Issuer will cause to be
maintained an office or agency for the payment of the principal of and premium,
if any, and interest on this Debenture as herein provided in the Borough of
Manhattan, The City of New York, and an office or agency in said Borough of
Manhattan for the registration, transfer and exchange as aforesaid of the
Debentures. The Issuer may designate other agencies for the payment of said
principal, premium and interest at such place or places (subject to applicable
laws and regulations) as the Issuer may decide. So long as there shall be such
an agency, the Issuer shall keep the Trustee advised of the names and locations
of such agencies, if any are so designated.
With respect to moneys paid by the Issuer and held by the Trustee or any
Paying Agent for payment of the principal of or interest or premium, if any, on
any Debentures that remain unclaimed at the end of two years after such
principal, interest or premium shall have become due and payable (whether at
maturity or upon call for redemption or otherwise), (i) the Trustee or such
Paying Agent shall notify the holders of such Debentures that such moneys shall
be repaid to the Issuer and any person claiming such moneys shall thereafter
look only to the Issuer for payment thereof and (ii)
11
<PAGE>
such moneys shall be so repaid to the Issuer. Upon such repayment all liability
of the Trustee or such Paying Agent with respect to such moneys shall thereupon
cease, without, however, limiting in any way any obligation that the Issuer may
have to pay the principal of or interest or premium, if any, on this Debenture
as the same shall become due.
No provision of this Debenture or of the Junior Subordinated Indenture shall
alter or impair the obligation of the Issuer, which is absolute and
unconditional, to pay the principal of, premium, if any, and interest on this
Debenture at the time, place, and rate, and in the coin or currency, herein
prescribed unless otherwise agreed between the Issuer and the registered holder
of this Debenture.
Prior to due presentment of this Debenture for registration of transfer, the
Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the
holder in whose name this Debenture is registered as the owner hereof for all
purposes, whether or not this Debenture be overdue, and none of the Issuer, the
Trustee or any such agent shall be affected by notice to the contrary.
No recourse shall be had for the payment of the principal of, premium, if
any, or the interest on this Debenture, for any claim based hereon, or otherwise
in respect hereof, or based on or in respect of the Junior Subordinated
Indenture or any indenture supplemental thereto, against any incorporator,
shareholder, officer or director, as such, past, present or future, of the
Issuer or of any successor corporation, either directly or through the Issuer or
any successor corporation, whether by virtue of any constitution, statute or
rule of law or by the enforcement of any assessment or penalty or otherwise, all
such liability being, by the acceptance hereof and as part of the consideration
for the issue hereof, expressly waived and released.
This Debenture shall for all purposes be governed by, and construed in
accordance with, the laws of the State of New York.
12
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM as tenants in common
TEN ENT as tenants by the entireties
JT TEN as joint tenants with right of survivorship and not as
tenants in common
UNIF GIFT MIN ACT - __________________ Custodian _________________
(Minor) (Cust)
Under Uniform Gifts to Minors Act _________________________
(State)
Additional abbreviations may also be used though not in the above list.
13
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_______________________________________
[PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE]
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
[PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE]
the within Debenture and all rights thereunder, hereby irrevocably constituting
and appointing such person attorney to transfer such Debenture on the books of
the Issuer, with full power of substitution in the premises.
Dated: _______________________
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within Debenture in every particular
without alteration or enlargement or any change whatsoever.
Signature Guaranty: ________________________
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the [Registrar],
which requirements include membership or participation in
the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be
determined by the [Registrar] in addition to, or in
substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
14
<PAGE>
EXHIBIT 4.3
================================================================================
MSDW CAPITAL TRUST I
AMENDED AND RESTATED TRUST AGREEMENT
among
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO., as Depositor,
THE BANK OF NEW YORK, as Property Trustee,
THE BANK OF NEW YORK (DELAWARE), as Delaware Trustee
and
the Administrators named herein
March 12, 1998
<PAGE>
MSDW CAPITAL TRUST I
Certain Sections of this Trust Agreement relating to
Sections 310 through 318 of the Trust Indenture Act of 1939:
Trust Indenture Trust Agreement
Act Section Section
310(a)(1)................................................ 8.7
(a)(2)................................................... 8.7
(a)(3)................................................... 8.9
(a)(4)................................................... 2.7(a)(ii)
(b)...................................................... 8.8, 10.10(b)
311(a)................................................... 8.13, 10.10(b)
(b)...................................................... 8.13, 10.10(b)
312(a)................................................... 10.10(b)
(b)...................................................... 10.10(b),.(f)
(c)...................................................... 5.7
313(a)................................................... 8.15(a)
(b).................................................... 8.15(a), 8.15(b)
(c)...................................................... 8.15(a), 10.8
(d)...................................................... 8.15(a)
314(a)................................................... 8.16
(b)...................................................... Not Applicable
(c)(1)................................................... 8.16, 8.17
(c)(2)................................................... 8.16, 8.17
(c)(3)................................................... 8.16, 8.17
(e)...................................................... 8.17
315(a)................................................... 8.1(d)
(b)...................................................... 8.2
(c)...................................................... 8.1(c)
(d)...................................................... 8.1(d)
(e)...................................................... Not Applicable
316(a)................................................... Not Applicable
(a)(1)(A)................................................ Not Applicable
(a)(1)(B)................................................ Not Applicable
(a)(2)................................................... Not Applicable
(b)...................................................... 5.13
(c)....................................................... 6.7
317(a)(1)................................................ Not Applicable
(a)(2)................................................... 8.14
(b)...................................................... 5.10
318(a)................................................... 10.10(a)
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Trust
i
<PAGE>
TABLE OF CONTENTS
Page
----
<TABLE>
<CAPTION>
ARTICLE I
DEFINED TERMS
<C> <S> <C>
SECTION 1.1. Definitions.................................................... 1
<CAPTION>
ARTICLE II
CONTINUATION OF THE ISSUER TRUST
<C> <S> <C>
SECTION 2.1. Name........................................................... 9
SECTION 2.2. Office of the Delaware Trustee; Principal Place of Business.... 9
SECTION 2.3. Initial Contribution of Trust Property; Organizational Expenses 9
SECTION 2.4. Issuance of the Capital Securities............................. 9
SECTION 2.5. Issuance of the Common Securities; Subscription and Purchase
of Junior Subordinated Debentures.............................. 10
SECTION 2.6. Declaration of Trust........................................... 10
SECTION 2.7. Authorization to Enter into Certain Transactions............... 11
SECTION 2.8. Assets of Trust 13
SECTION 2.9. Title to Trust Property........................................ 13
<CAPTION>
ARTICLE III
PAYMENT ACCOUNT
<C> <S> <C>
SECTION 3.1. Payment Account................................................ 13
<CAPTION>
ARTICLE IV
DISTRIBUTIONS; REDEMPTION
<C> <S> <C>
SECTION 4.1. Distributions.................................................. 14
SECTION 4.2. Redemption..................................................... 15
SECTION 4.3. Subordination of Common Securities............................. 16
SECTION 4.4. Payment Procedures............................................. 17
SECTION 4.5. Tax Returns and Reports........................................ 17
SECTION 4.6. Payment of Taxes, Duties, Etc. of the Issuer Trust............. 18
SECTION 4.7. Payments under Indenture or Pursuant to Direct Actions......... 18
SECTION 4.8. Liability of the Holder of Common Securities................... 18
<CAPTION>
ARTICLE V
TRUST SECURITIES CERTIFICATES
<C> <S> <C>
SECTION 5.1. Initial Ownership.............................................. 18
SECTION 5.2. The Trust Securities Certificates.............................. 18
SECTION 5.3. Execution and Delivery of Trust Securities Certificates........ 19
</TABLE>
ii
<PAGE>
<TABLE>
<C> <S> <C>
SECTION 5.4. Global Capital Security........................................ 19
SECTION 5.5. Registration of Transfer and Exchange Generally; Certain
Transfers and Exchanges; Capital Securities Certificates....... 20
SECTION 5.6. Mutilated, Destroyed, Lost or Stolen Trust Securities
Certificates................................................... 21
SECTION 5.7. Persons Deemed Holders......................................... 21
SECTION 5.8. Access to List of Holders' Names and Addresses................. 21
SECTION 5.9. Maintenance of Office or Agency................................ 22
SECTION 5.10. Appointment of Paying Agent.................................... 22
SECTION 5.11. Ownership of Common Securities by Depositor.................... 22
SECTION 5.12. Notices to Clearing Agency..................................... 23
SECTION 5.13. Rights of Holders.............................................. 23
<CAPTION>
ARTICLE VI
ACTS OF HOLDERS; MEETINGS; VOTING
<C> <S> <C>
SECTION 6.1. Limitations on Holder's Voting Rights........................ 25
SECTION 6.2. Notice of Meetings........................................... 25
SECTION 6.3. Meetings of Holders.......................................... 25
SECTION 6.4. Voting Rights................................................ 26
SECTION 6.5. Proxies, etc................................................. 26
SECTION 6.6. Holder Action by Written Consent............................. 26
SECTION 6.7. Record Date for Voting and Other Purposes.................... 26
SECTION 6.8. Acts of Holders.............................................. 26
SECTION 6.9. Inspection of Records........................................ 27
<CAPTION>
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
<C> <S> <C>
SECTION 7.1. Representations and Warranties of the Property Trustee and
the Delaware Trustee........................................... 27
SECTION 7.2. Representations and Warranties of Depositor.................... 28
<CAPTION>
ARTICLE VIII
THE ISSUER TRUSTEES; THE ADMINISTRATORS
<C> <S> <C>
SECTION 8.1. Certain Duties and Responsibilities............................ 29
SECTION 8.2. Certain Notices................................................ 31
SECTION 8.3. Certain Rights of Property Trustee............................. 31
SECTION 8.4. Not Responsible for Recitals or Issuance of Securities......... 33
SECTION 8.5. May Hold Securities............................................ 33
SECTION 8.6. Compensation; Indemnity; Fees.................................. 33
SECTION 8.7. Corporate Property Trustee Required; Eligibility of Trustees
and Administrators............................................. 34
SECTION 8.8. Conflicting Interests.......................................... 34
SECTION 8.9. Co-Trustees and Separate Trustee............................... 35
SECTION 8.10. Resignation and Removal; Appointment of Successor.............. 36
SECTION 8.11. Acceptance of Appointment by Successor......................... 36
SECTION 8.12. Merger, Conversion, Consolidation or Succession to Business.... 37
</TABLE>
iii
<PAGE>
<TABLE>
<C> <S> <C>
SECTION 8.13. Preferential Collection of Claims Against Depositor or Issuer
Trust.......................................................... 37
SECTION 8.14. Trustee May File Proofs of Claim............................... 37
SECTION 8.15. Reports by Property Trustee.................................... 37
SECTION 8.16. Reports to the Property Trustee................................ 38
SECTION 8.17. Evidence of Compliance with Conditions Precedent............... 38
SECTION 8.18. Number of Issuer Trustees...................................... 38
SECTION 8.19. Delegation of Power............................................ 39
SECTION 8.20. Appointment of Administrators.................................. 39
<CAPTION>
ARTICLE IX
DISSOLUTION, LIQUIDATION AND MERGER
<C> <S> <C>
SECTION 9.1. Dissolution Upon Expiration Date............................... 39
SECTION 9.2. Early Termination.............................................. 39
SECTION 9.3. Termination.................................................... 40
SECTION 9.4. Liquidation.................................................... 40
SECTION 9.5. Mergers, Consolidations, Amalgamations or Replacements of
the Issuer Trust............................................... 41
<CAPTION>
ARTICLE X
MISCELLANEOUS PROVISIONS
<C> <S> <C>
SECTION 10.1. Limitation of Rights of Holders............................ 42
SECTION 10.2. Amendment.................................................. 42
SECTION 10.3. Separability............................................... 43
SECTION 10.4. Governing Law.............................................. 43
SECTION 10.5. Payments Due on Non-Business Day........................... 44
SECTION 10.6. Successors 44
SECTION 10.7. Headings 44
SECTION 10.8. Reports, Notices and Demands............................... 44
SECTION 10.9. Agreement Not to Petition.................................. 45
SECTION 10.10. Trust Indenture Act; Conflict with Trust Indenture Act..... 45
SECTION 10.11. Acceptance of Terms of Trust Agreement, Guarantee and
Indenture................................................... 46
SECTION 10.12. Counterparts................................................ 46
</TABLE>
Exhibit A Certificate of Trust
Exhibit B Form of Certificate Depositary Agreement
Exhibit C Form of Common Securities Certificate
Exhibit D Form of Capital Securities Certificate
Exhibit E Form of Expense Agreement
iv
<PAGE>
AGREEMENT
Amended and Restated Trust Agreement, dated as of March 12, 1998, among (i)
Morgan Stanley, Dean Witter, Discover & Co., a Delaware corporation (including
any successors or assigns, the "Depositor"), (ii) The Bank of New York, a New
York banking corporation, as property trustee, (in such capacity, the "Property
Trustee"), (iii) The Bank of New York (Delaware), a Delaware banking
corporation, as Delaware trustee (the "Delaware Trustee") (the Property Trustee
and the Delaware Trustee are referred to collectively herein as the"Issuer
Trustees"), (iv) two individuals selected by the holders of the Common
Securities (as defined herein) to act as administrators with respect to the
Issuer Trust (the "Administrators") and (v) the several Holders, as hereinafter
defined.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Issuer Trust (as defined herein) has been established under
the Delaware Business Trust Act pursuant to a certain Trust Agreement, dated as
of February 12, 1998 (the "Original Trust Agreement"), and by the filing of the
Certificate of Trust of the Issuer Trust with the Secretary of State of the
State of Delaware on February 12, 1998 (the "Certificate of Trust"), which
Certificate of Trust is attached as Exhibit A; and
WHEREAS, the Depositor, the Property Trustee and the Delaware Trustee
desire to amend and restate the Original Trust Agreement in its entirety as set
forth herein to provide for, among other things, (i) the issuance of the Common
Securities by the Issuer Trust to the Depositor, (ii) the issuance and sale of
the Capital Securities by the Issuer Trust pursuant to the Underwriting
Agreement, (iii) the acquisition by the Issuer Trust from the Depositor of all
of the right, title and interest in the Junior Subordinated Debentures, and (iv)
the appointment of the Administrators.
NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each party, for the benefit of the
other parties and for the benefit of the Holders, hereby amends and restates the
Original Trust Agreement in its entirety and agrees, intending to be legally
bound, as follows:
ARTICLE I
DEFINED TERMS
SECTION 1.1. Definitions. For all purposes of this Trust Agreement,
except as otherwise expressly provided or unless the context otherwise requires:
(a) The terms defined in this Article have the meanings assigned to them in
this Article and include the plural as well as the singular;
(b) All other terms used herein that are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;
(c) The words "include," "includes" and "including" shall be deemed to be
followed by the phrase "without limitation";
(d) All accounting terms used but not defined herein have the meanings
assigned to them in accordance with United States generally accepted accounting
principles as in effect at the time of computation;
<PAGE>
(e) Unless the context otherwise requires, any reference to an "Article"or
a "Section" refers to an Article or a Section, as the case may be, of this Trust
Agreement; and
(f) The words "herein", "hereof" and "hereunder" and other words of similar
import refer to this Trust Agreement as a whole and not to any particular
Article, Section or other subdivision.
"Act" has the meaning specified in Section 6.8.
"Additional Amount" means, with respect to Trust Securities of a given
Liquidation Amount and/or a given period, the amount of Additional Interest (as
defined in the Junior Subordinated Debt Indenture) paid by the Depositor on a
Like Amount of Junior Subordinated Debentures for such period.
"Additional Sums" has the meaning specified in the Junior Subordinated Debt
Indenture.
"Administrators" means each Person appointed in accordance with Section
8.20 solely in such Person's capacity as Administrator of the Issuer Trust and
not in such Person's individual capacity, or any successor Administrator
appointed as herein provided; with the initial Administrators being Alexander C.
Frank and Debra M. Aaron.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this
definition,"control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly,whether through the ownership of voting securities, by contract or
otherwise;and the terms "controlling" and "controlled" have meanings correlative
to the foregoing.
"Applicable Procedures" means, with respect to any transfer or transaction
involving a Global Capital Security or beneficial interest therein, the rules
and procedures of the Depositary for such Capital Security, in each case to the
extent applicable to such transaction and as in effect from time to time.
"Bankruptcy Event" means, with respect to any Person:
(a) the entry of a decree or order by a court having jurisdiction in the
premises judging such Person a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjudication or
composition of or in respect of such Person under any applicable federal or
State bankruptcy, insolvency, reorganization or other similar law, or appointing
a receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of such Person or of any substantial part of its property or ordering
the winding up or liquidation of its affairs, and the continuance of any such
decree or order unstayed and in effect for a period of 60 consecutive days; or
(b) the institution by such Person of proceedings to be adjudicated a
bankrupt or insolvent, or the consent by it to the institution of bankruptcy or
insolvency proceedings against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under any applicable federal or
State bankruptcy, insolvency, reorganization or other similar law, or the
consent by it to the filing of any such petition or to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or similar official) of
such Person or of any substantial part of its property or the making by it of an
assignment for the benefit of creditors, or the admission by it in writing of
its inability to pay its debts generally as they become due and its willingness
to be adjudicated a bankrupt, or the taking of corporate action by such Person
in furtherance of any such action.
"Bankruptcy Laws" has the meaning specified in Section 10.9.
"Board of Directors" means the board of directors of the Depositor or the
Executive Committee of the board of directors of the Depositor (or any other
committee of the board of directors of the Depositor
2
<PAGE>
performing similar functions) or a committee designated by the board of
directors of the Depositor (or any such committee), comprised of two or more
members of the board of directors of the Depositor or officers of the Depositor,
or both.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Depositor to have been duly adopted by the
Depositor's Board of Directors, or such committee of the Board of Directors or
officers of the Depositor to which authority to act on behalf of the Board of
Directors has been delegated, and to be in full force and effect on the date of
such certification, and delivered to the Issuer Trustees.
"Business Day" means a day other than (a) a Saturday or Sunday and (b) a
day on which banking institutions in The City of New York are authorized or
required by law or executive order to remain closed.
"Capital Securities Certificate" means a certificate evidencing ownership
of Capital Securities, substantially in the form attached as Exhibit D.
"Capital Security" means a preferred undivided beneficial interest in the
assets of the Issuer Trust, having a Liquidation Amount of $25 and having the
rights provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution as provided herein.
"Certificate Depositary Agreement" means the agreement among the Issuer
Trust, the Depositor and the Depositary, as the initial Clearing Agency, dated
as of the Closing Date, substantially in the form attached as Exhibit B, as the
same may be amended and supplemented from time to time.
"Certificate of Trust" has the meaning specified in the preamble to this
Trust Agreement.
"Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act. The Depositary shall be the
initial Clearing Agency.
"Clearing Agency Participant" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
"Closing Date" has the meaning specified in the Underwriting Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Common Securities Certificate" means a certificate evidencing ownership of
Common Securities, substantially in the form attached as Exhibit C.
"Common Securities Subscription Agreement" means the common securities
subscription agreement between the Issuer Trust and the Depositor dated March
12, 1998.
"Common Security" means an undivided beneficial interest in the assets of
the Issuer Trust, having a Liquidation Amount of $25 and having the rights
provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution as provided herein.
3
<PAGE>
"Corporate Trust Office" means the principal office of the Property Trustee
located in the City of New York which at the time of the execution of this Trust
Agreement is located at 101 Barclay Street, Floor 21 West, New York, New York
10286; Attention: Corporate Trust Administration.
"Debenture Event of Default" means an "Event of Default" as defined in the
Indenture.
"Debenture Redemption Date" means, with respect to any Junior Subordinated
Debentures to be redeemed under the Indenture, the date fixed for redemption of
such Junior Subordinated Debentures under the Indenture.
"Debt Securities Trustee" means The Bank of New York, a New York banking
corporation, as Trustee under the Indenture and any successor.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. C. (S)3801, et seq., as it may be amended from time to time.
"Delaware Trustee" means the corporation identified as the "Delaware
Trustee" in the preamble to this Trust Agreement solely in its capacity as
Delaware Trustee of the Issuer Trust and not in its individual capacity, or its
successor in interest in such capacity, or any successor trustee appointed as
herein provided.
"Depositor" has the meaning specified in the preamble to this Trust
Agreement.
"Depositary" means The Depository Trust Company or any successor thereto.
"Direct Action" has the meaning specified in Section 5.13.
"Distribution Date" has the meaning specified in Section 4.1(a).
"Distributions" means amounts payable in respect of the Trust Securities as
provided in Section 4.1.
"Early Termination Event" has the meaning specified in Section 9.2.
"Event of Default" means any one of the following events (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) the occurrence of a Debenture Event of Default; or
(b) default by the Issuer Trust or the Property Trustee in the payment of
any Distribution when it becomes due and payable, and continuation of such
default for a period of 30 days; or
(c) default by the Issuer Trust or the Property Trustee in the payment of
any Redemption Price of any Trust Security when it becomes due and payable; or
(d) default in the performance, or breach, in any material respect, of any
covenant or warranty of the Issuer Trustees in this Trust Agreement (other than
a covenant or warranty, a default in the performance of which or the breach of
which is dealt with in clause (b) or (c) above) and continuation of such default
or breach for a period of 60 days after there has been given, by registered or
certified mail, to the Issuer Trustees and the Depositor by the Holders of at
least 25% in aggregate Liquidation Amount of the Outstanding Capital Securities,
a written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default" hereunder; or
4
<PAGE>
(e) the occurrence of any Bankruptcy Event with respect to the Property
Trustee or all or substantially all of its property if a successor Property
Trustee has not been appointed within a period of 90 days thereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and any successor statute thereto, in each case as amended from time to time.
"Expense Agreement" means the Agreement as to Expenses and Liabilities,
dated as of the Closing Date, between the Depositor, in its capacity as holder
of the Common Securities, and the Issuer Trust, substantially in the form
attached as Exhibit E, as amended from time to time.
"Expiration Date" has the meaning specified in Section 9.1.
"Global Capital Securities Certificate" means a Capital Securities
Certificate evidencing ownership of Global Capital Securities.
"Global Capital Security" means a Capital Security, the ownership and
transfers of which shall be made through book entries by a Clearing Agency as
described in Section 5.4.
"Guarantee Agreement" means the Guarantee Agreement executed and delivered
by the Depositor and The Bank of New York, as Guarantee Trustee,
contemporaneously with the execution and delivery of this Trust Agreement, for
the benefit of the holders of the Capital Securities, as amended from time to
time.
"Holder" means a Person in whose name a Trust Security or Trust Securities
is registered in the Securities Register; any such Person shall be a beneficial
owner within the meaning of the Delaware Business Trust Act.
"Indenture" means the Junior Subordinated Debt Indenture, dated as of March
1, 1998, between the Depositor and the Debt Securities Trustee (as amended or
supplemented from time to time) relating to the issuance of the Junior
Subordinated Debentures.
"Investment Company Act" means the Investment Company Act of 1940, as
amended.
"Investment Company Event" means the receipt by the Issuer Trust of an
Opinion of Counsel experienced in such matters, who shall not be an officer or
employee of the Depositor or any of its Affiliates, to the effect that, as a
result of the occurrence of a change in law or regulation or a written change
(including any announced prospective change) in interpretation or application of
law or regulation by any legislative body, court, governmental agency or
regulatory authority, there is more than an insubstantial risk that the Issuer
Trust is or will be considered an "investment company" that is required to be
registered under the Investment Company Act, which change or prospective change
becomes effective or would become effective, as the case may be, on or after the
date of the issuance of the Capital Securities.
"Issuer Trust" means MSDW Capital Trust I.
"Issuer Trustees" means, collectively, the Property Trustee and the
Delaware Trustee.
"Junior Subordinated Debentures" means the aggregate principal amount of
the Depositor's 7.10% Junior Subordinated Deferrable Interest Debentures
maturing on February 28, 2038 unless such maturity is advanced pursuant to the
terms thereof, issued pursuant to the Indenture.
"Junior Subordinated Debenture Subscription Agreement" means the junior
subordinated debenture subscription agreement between the Issuer Trust and the
Depositor dated March 12, 1998.
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"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of
trust, adverse ownership interest, hypothecation, assignment, security interest
or preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever.
"Like Amount" means (a) with respect to a redemption of Trust Securities,
Trust Securities having a Liquidation Amount equal to that portion of the
principal amount of Junior Subordinated Debentures to be contemporaneously
redeemed in accordance with the Indenture, allocated to the Common Securities
and to the Capital Securities based upon the relative Liquidation Amounts of
such classes and (b) with respect to a distribution of Junior Subordinated
Debentures to Holders of Trust Securities in connection with a dissolution or
liquidation of the Issuer Trust, Junior Subordinated Debentures having a
principal amount equal to the Liquidation Amount of the Trust Securities of the
Holder to whom such Junior Subordinated Debentures are distributed.
"Liquidation Amount" means the stated amount of $25 per Trust Security.
"Liquidation Date" means the date on which Junior Subordinated Debentures
are to be distributed to Holders of Trust Securities in connection with a
dissolution and liquidation of the Issuer Trust pursuant to Section 9.4.
"Liquidation Distribution" has the meaning specified in Section 9.4(d).
"Majority in Liquidation Amount of the Capital Securities" or "Majority in
Liquidation Amount of the Common Securities" means, except as provided by the
Trust Indenture Act, Capital Securities or Common Securities, as the case maybe,
representing more than 50% of the aggregate Liquidation Amount of all then
Outstanding Capital Securities or Common Securities, as the case may be.
"Officer's Certificate" means a certificate signed by the Chairman of the
Board, the President, the Chief Financial Officer, the Chief Strategic and
Administrative Officer, the Chief Legal Officer, the Treasurer, any Assistant
Treasurer of the Depositor, or any other person authorized by the Board of
Directors of the Depositor to execute any such written statement, and delivered
to the party provided herein. Any Officer's Certificate delivered with respect
to compliance with a condition or covenant provided for in this Trust Agreement
shall include:
(a) a statement by the officer signing the Officer's Certificate that such
officer has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by such officer in rendering the Officer's Certificate;
(c) a statement that such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may, unless
otherwise specified herein, be counsel for or an officer or employee of the
Depositor or any Affiliate of the Depositor.
"Original Trust Agreement" has the meaning specified in the preamble to
this Trust Agreement.
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"Outstanding," with respect to Trust Securities, means, as of the date of
determination, all Trust Securities theretofore executed and delivered under
this Trust Agreement, except:
(a) Trust Securities theretofore canceled by the Property Trustee or
delivered to the Property Trustee for cancellation;
(b) Trust Securities for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Property Trustee or any Paying
Agent for the Holders of such Trust Securities, provided that if such Trust
Securities are to be redeemed, notice of such redemption has been duly given
pursuant to this Trust Agreement; and
(c) Trust Securities which have been paid or in exchange for or in lieu of
which other Trust Securities have been executed and delivered pursuant to
Sections 5.4, 5.5, 5.6 and 5.13; provided, however, that in determining whether
the Holders of the requisite Liquidation Amount of the Outstanding Capital
Securities have given any request,demand, authorization, direction, notice,
consent or waiver hereunder, Capital Securities owned by the Depositor, or any
Issuer Trustee, any Administrator or any Affiliate of the Depositor or any
Issuer Trustee shall be disregarded and deemed not to be Outstanding, except
that (a) in determining whether any Issuer Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Capital Securities that such Issuer Trustee or such Administrator,
as the case may be, actually knows to be so owned shall be so disregarded and
(b) the foregoing shall not apply at any time when all of the outstanding
Capital Securities are owned by the Depositor, one or more of the Issuer
Trustees, one or more of the Administrators and/or any such Affiliate. Capital
Securities so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Administrators
the pledgee's right so to act with respect to such Capital Securities and that
the pledgee is not the Depositor or any Affiliate of the Depositor.
"Owner" means each Person who is the beneficial owner of Global Capital
Securities as reflected in the records of the Clearing Agency or, if a Clearing
Agency Participant is not the Owner, then as reflected in the records of a
Person maintaining an account with such Clearing Agency (directly or
indirectly), in accordance with the rules of such Clearing Agency.
"Paying Agent" means any paying agent or co-paying agent appointed pursuant
to Section 5.10 and shall initially be the Property Trustee.
"Payment Account" means a segregated non-interest-bearing corporate trust
account maintained with the Property Trustee in its trust department for the
benefit of the Holders in which all amounts paid in respect of the Junior
Subordinated Debentures will be held and from which the Property Trustee,
through the Paying Agent, shall make payments to the Holders in accordance with
Sections 4.1 and 4.2.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, company,
limited liability company, trust, unincorporated organization or government or
any agency or political subdivision thereof, or any other entity of whatever
nature.
"Property Trustee" means the Person identified as the "Property Trustee"in
the preamble to this Trust Agreement solely in its capacity as Property Trustee
of the Issuer Trust and not in its individual capacity, or its successor in
interest in such capacity, or any successor property trustee appointed as herein
provided.
"Redemption Date" means, with respect to any Trust Security to be redeemed,
the date fixed for such redemption by or pursuant to this Trust Agreement;
provided that each Debenture Redemption Date and the stated maturity of the
Junior Subordinated Debentures shall be a Redemption Date for a Like Amount of
Trust Securities, including but not limited to any date of redemption pursuant
to the occurrence of any Special Event.
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"Redemption Price" means, with respect to any Trust Security, the
Liquidation Amount of such Trust Security, plus accumulated and unpaid
Distributions to the Redemption Date.
"Relevant Trustee" has the meaning specified in Section 8.10.
"Responsible Officer" when used with respect to the Property Trustee means
any officer assigned to the Corporate Trust Office, including any managing
director, vice president, assistant vice president, assistant treasurer,
assistant secretary or any other officer of the Property Trustee customarily
performing functions similar to those performed by any of the above designated
officers and having direct responsibility for the administration of this Trust
Agreement, and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"Securities Act" means the Securities Act of 1933, as amended, and any
successor statute thereto, in each case as amended from time to time.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 5.5.
"Senior Indebtedness" has the meaning specified in the Indenture.
"Special Event" means any Tax Event or Investment Company Event.
"Tax Event" means the receipt by the Issuer Trust of an Opinion of Counsel
experienced in such matters, who shall not be an officer or employee of the
Depositor or any of its Affiliates, to the effect that, as a result of any
amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which pronouncement, action or decision is announced on or after
the date of issuance of the Capital Securities, there is more than an
insubstantial risk that (i) the Issuer Trust is, or will be within 90 days of
the delivery of such Opinion of Counsel, subject to United States Federal income
tax with respect to income received or accrued on the Junior Subordinated
Debentures, (ii) interest payable by the Depositor on the Junior Subordinated
Debentures is not, or within 90 days of the delivery of such Opinion of Counsel
will not be, deductible by the Depositor, in whole or in part, for United States
federal income tax purposes, or (iii) the Issuer Trust is, or will be within 90
days of the delivery of such Opinion of Counsel, subject to more than a de
minimis amount of other taxes, duties or other governmental charges.
"Trust Agreement" means this Amended and Restated Trust Agreement, as the
same may be modified, amended or supplemented in accordance with the applicable
provisions hereof, including (i) all Exhibits hereto, and (ii) for all purposes
of this Amended and Restated Trust Agreement any such modification, amendment or
supplement, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this Amended and Restated Trust Agreement and any
modification, amendment or supplement, respectively.
"Trust Indenture Act" means the Trust Indenture Act of 1939 or any
successor statute, in each case as amended from time to time.
"Trust Property" means (a) the Junior Subordinated Debentures, (b) any cash
on deposit in, or owing to, the Payment Account, and (c) all proceeds and rights
in respect of the foregoing or any other property and assets for the time being
held or deemed to be held by the Property Trustee pursuant to the trusts of this
Trust Agreement.
"Trust Securities Certificate" means any one of the Common Securities
Certificates or the Capital Securities Certificates.
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"Trust Security" means any one of the Common Securities or the Capital
Securities.
"Underwriters" has the meaning specified in the Underwriting Agreement.
"Underwriting Agreement" means the Underwriting Agreement, dated as of
March 5, 1998, among the Issuer Trust, the Depositor and the Underwriters, as
the same may be amended from time to time.
ARTICLE II
CONTINUATION OF THE ISSUER TRUST
SECTION 2.1. Name. The Issuer Trust continued hereby shall be known as
"MSDW Capital Trust I", as such name may be modified from time to time by the
Administrators following written notice to the Holders of Trust Securities and
the Issuer Trustees, in which name the Administrators and the Issuer Trustees
may engage in the transactions contemplated hereby, make and execute contracts
and other instruments on behalf of the Issuer Trust and sue and be sued.
SECTION 2.2. Office of the Delaware Trustee; Principal Place of Business.
The address of the Delaware Trustee in the State of Delaware is White Clay
Center, Route 273, Newark, DE 19711, Attention: Corporate Trust Administration,
or such other address in the State of Delaware as the Delaware Trustee may
designate by written notice to the Holders and the Depositor. The principal
executive office of the Issuer Trust is in care of Morgan Stanley, Dean Witter,
Discover & Co., 1585 Broadway, New York, NY 10036 Attention: Office of the
Secretary.
SECTION 2.3. Initial Contribution of Trust Property; Organizational
Expenses.
The Issuer Trust acknowledges receipt in trust from the Depositor in
connection with this Trust Agreement of the sum of $10, which constitutes the
initial Trust Property. The Depositor shall pay all organizational expenses of
the Issuer Trust as they arise or shall, upon request of any Issuer Trustee,
promptly reimburse such Issuer Trustee for any such expenses paid by such Issuer
Trustee. The Depositor shall make no claim upon the Trust Property for the
payment of such expenses.
SECTION 2.4. Issuance of the Trust Securities.
The Depositor, both on its own behalf and on behalf of the Issuer Trust
pursuant to the Original Trust Agreement, executed and delivered the
Underwriting Agreement. Contemporaneously with the execution and delivery of
this Trust Agreement, an Administrator, on behalf of the Issuer Trust, shall
execute, manually or by facsimile, in accordance with Section 5.3 and the
Property Trustee shall authenticate in accordance with Section 5.3 and deliver
to the Underwriters, Capital Securities Certificates, registered in the names
requested by the Underwriters, in an aggregate amount of 16,000,000 Capital
Securities having an aggregate Liquidation Amount of $400,000,000, against
receipt of the aggregate purchase price of such Capital Securities of
$400,000,000 by the Property Trustee.
If the Underwriters exercise their option to purchase all or any portion of
an additional 2,400,000 Capital Securities pursuant to the terms of the
Underwriting Agreement, then an Administrator, on behalf of the Issuer Trust,
shall execute, manually or by facsimile, in accordance with Section 5.3 and the
Property Trustee shall authenticate in accordance with Section 5.3 and deliver
to the Underwriters, additional Capital Securities Certificates, registered in
the names requested by the Underwriters, in an aggregate amount of up to
2,400,000 additional Capital Securities having an aggregate Liquidation Amount
of up to $60,000,000, against receipt of the aggregate purchase price of such
additional Capital Securities of up to $60,000,000, by the Property Trustee.
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SECTION 2.5. Issuance of the Common Securities; Subscription and Purchase
of Junior Subordinated Debentures.
Contemporaneously with the execution and delivery of this Trust Agreement,
an Administrator, on behalf of the Issuer Trust, shall execute or cause to be
executed in accordance with Section 5.2 and deliver to the Depositor Common
Securities Certificates, registered in the name of the Depositor, in an
aggregate amount of 494,846 Common Securities having an aggregate Liquidation
Amount of $12,371,150 against receipt of the aggregate purchase price of such
Common Securities of $12,371,150 by the Property Trustee. Contemporaneously
therewith, an Administrator, on behalf of the Issuer Trust, shall subscribe for
and purchase from the Depositor the Junior Subordinated Debentures, registered
in the name of the Issuer Trust and having an aggregate principal amount equal
to $412,371,150 and, in satisfaction of the purchase price for such Junior
Subordinated Debentures, the Property Trustee, on behalf of the Issuer Trust,
shall deliver to the Depositor the sum of $412,371,150 (being the sum of the
amounts delivered to the Property Trustee pursuant to (i) the second sentence of
Section 2.4, and (ii) the first sentence of this Section 2.5) and receive on
behalf of the Issuer Trust the Junior Subordinated Debentures.
If the Underwriters exercise their option to purchase additional Capital
Securities pursuant to the terms of the Underwriting Agreement, then an
Administrator, on behalf of the Issuer Trust, shall execute or cause to be
executed in accordance with Section 5.2 and deliver to the Depositor, additional
Common Securities Certificates, registered in the name of the Depositor, in an
aggregate amount of up to 74,227 additional Common Securities having an
aggregate Liquidation Amount of up to $1,855,675 against receipt of the
aggregate purchase price of up to $1,855,675 by the Property Trustee.
Contemporaneously therewith, an Administrator, on behalf of the Issuer Trust,
shall subscribe for and purchase from the Depositor, Junior Subordinated
Debentures, registered in the name of the Issuer Trust and having an aggregate
principal amount of up to $474,226,825 and, in satisfaction of the purchase
price for such Junior Subordinated Debentures, the Property Trustee, on behalf
of the Issuer Trust, shall deliver to the Depositor an aggregate amount equal to
the sum of the amounts delivered to the Property Trustee pursuant to (i) the
third sentence of Section 2.4, and (ii) the third sentence of this Section 2.5,
and receive on behalf of the Issuer Trust such Junior Subordinated Debentures.
SECTION 2.6. Declaration of Trust.
The exclusive purposes and functions of the Issuer Trust are to (a) issue
and sell Trust Securities and use the proceeds from such sale to acquire the
Junior Subordinated Debentures, and (b) engage in only those other activities
necessary, convenient or incidental thereto. The Depositor hereby appoints the
Issuer Trustees as trustees of the Issuer Trust, to have all the rights, powers
and duties to the extent set forth herein, and the Issuer Trustees hereby accept
such appointment. The Property Trustee hereby declares that it will hold the
Trust Property in trust upon and subject to the conditions set forth herein for
the benefit of the Issuer Trust and the Holders. The Depositor hereby appoints
the Administrators, with such Administrators having all rights, powers and
duties set forth herein with respect to accomplishing the purposes of the Issuer
Trust, and the Administrators hereby accept such appointment, provided, however,
that it is the intent of the parties hereto that such Administrators shall not
be trustees with respect to the Issuer Trust and this Trust Agreement shall be
construed in a manner consistent with such intent. The Property Trustee shall
have the right and power to perform those duties assigned to the Administrators.
The Delaware Trustee shall not be entitled to exercise any powers, nor shall the
Delaware Trustee have any of the duties and responsibilities, of the Property
Trustee or the Administrators set forth herein. The Delaware Trustee shall be
one of the trustees of the Issuer Trust for the sole and limited purpose of
fulfilling the requirements of Section 3807 of the Delaware Business Trust Act
and for taking such actions as are required to be taken by a Delaware trustee
under the Delaware Business Trust Act.
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SECTION 2.7. Authorization to Enter into Certain Transactions.
(a) The Issuer Trustees and the Administrators shall conduct the affairs of
the Issuer Trust in accordance with the terms of this Trust Agreement. Subject
to the limitations set forth in paragraph (b) of this Section and in accordance
with the following provisions (i), (ii) and (iii), the Issuer Trustees and the
Administrators shall act as follows:
(i) Each Administrator, acting singly or jointly, is authorized, on
behalf of the Trust, to:
(A) comply with the Underwriting Agreement regarding the issuance
and sale of the Capital Securities;
(B) assist in compliance with the Securities Act, applicable
state securities or blue sky laws, and the Trust Indenture Act;
(C) assist in the listing of the Capital Securities upon such
securities exchange or exchanges as shall be determined by the
Depositor, with the registration of the Capital Securities under the
Exchange Act, if required, and the preparation and filing of all
periodic and other reports and other documents pursuant to the
foregoing;
(D) execute the Trust Securities on behalf of the Issuer Trust in
accordance with this Trust Agreement;
(E) execute and deliver an application for a taxpayer
identification number for the Issuer Trust;
(F) execute on behalf of the Issuer Trust any documents that the
Administrators have the power to execute pursuant to this Trust
Agreement, including without limitation a Junior Subordinated
Debenture Subscription Agreement, a Common Securities Subscription
Agreement, a Certificate Depositary Agreement and an Expense
Agreement, all by and between the Issuer Trust and the Depositor; and
(G) take any action incidental to the foregoing as necessary or
advisable to give effect to the terms of this Trust Agreement (and any
actions taken in furtherance of the above prior to the date of this
Trust Agreement by the Administrators are hereby ratified and
confirmed in all respects).
(ii) The Property Trustee shall have the power and authority to act on
behalf of the Issuer Trust with respect to the following matters:
(A) the establishment of the Payment Account;
(B) the receipt of the Junior Subordinated Debentures;
(C) the receipt and collection of interest, principal and any
other payments made in respect of the Junior Subordinated Debentures
in the Payment Account;
(D) the distribution of amounts owed to the Holders in respect of
the Trust Securities;
(E) the exercise of all of the rights, powers and privileges of a
holder of the Junior Subordinated Debentures;
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(F) the sending of notices of default and other information
regarding the Trust Securities and the Junior Subordinated Debentures
to the Holders in accordance with this Trust Agreement;
(G) the distribution of the Trust Property in accordance with the
terms of this Trust Agreement;
(H) to the extent provided in this Trust Agreement, the winding
up of the affairs of and liquidation of the Issuer Trust and the
execution of the certificate of cancellation with the Secretary of
State of the State of Delaware; and
(I) after an Event of Default (other than under the definition of
such term if such Event of Default is by or with respect to the
Property Trustee), compliance with the provisions of this Trust
Agreement and the taking of any action to give effect to the terms of
this Trust Agreement and protect and conserve the Trust Property for
the benefit of the Holders (without consideration of the effect of any
such action on any particular Holder);
provided, however, that nothing in this Section 2.7(a)(ii) shall require the
Property Trustee to take any action that is not otherwise required in this Trust
Agreement.
(b) So long as this Trust Agreement remains in effect, the Issuer Trust (or
the Issuer Trustees or Administrators acting on behalf of the Issuer Trust)
shall not undertake any business, activities or transaction except as expressly
provided herein or contemplated hereby. In particular, neither the Issuer
Trustees nor the Administrators shall (i) acquire any investments or engage in
any activities not authorized by this Trust Agreement, (ii) sell, assign,
transfer, exchange, mortgage, pledge, set-off or otherwise dispose of any of the
Trust Property or interests therein, including to Holders, except as expressly
provided herein, (iii) take any action that would reasonably be expected to
cause the Issuer Trust to become taxable as a corporation for United States
Federal income tax purposes, (iv) incur any indebtedness for borrowed money or
issue any other debt, or (v) take or consent to any action that would result in
the placement of a Lien on any of the Trust Property. The Property Trustee
shall defend all claims and demands of all Persons at any time claiming any Lien
on any of the Trust Property adverse to the interest of the Issuer Trust or the
Holders in their capacity as Holders.
(c) In connection with the issue and sale of the Capital Securities, the
Depositor shall have the right and responsibility to assist the Issuer Trust
with respect to, or effect on behalf of the Issuer Trust, the following (and any
actions taken by the Depositor in furtherance of the following prior to the date
of this Trust Agreement are hereby ratified and confirmed in all respects):
(i) the preparation and filing by the Issuer Trust, and execution on
behalf of the Issuer Trust, of a registration statement,and a prospectus in
relation to the Capital Securities, including any amendments thereto and
the taking of any action necessary or desirable to sell the Capital
Securities in a transaction or a series of transactions not exempt from the
registration requirements of the Securities Act;
(ii) the determination of the States in which to take appropriate
action to qualify or register for sale all or part of the Capital
Securities and the determination of any and all such acts, other than
actions that must betaken by or on behalf of the Issuer Trust, and the
advice to the Issuer Trustees of actions they must take on behalf of the
Issuer Trust, and the preparation for execution and filing of any documents
to be executed and filed by the Issuer Trust or on behalf of the Issuer
Trust, as the Depositor deems necessary or advisable in order to comply
with the applicable laws of any such States in connection with the sale of
the Capital Securities;
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(iii) the negotiation of the terms of, and the execution and delivery
of, the Underwriting Agreement providing for the sale of the Capital
Securities;
(iv) compliance with the listing requirements of the Capital
Securities upon such securities exchange or exchanges as shall be
determined by the Depositor, the registration of the Capital Securities
under the Exchange Act, if required, and the preparation and filing of all
periodic and other reports and other documents pursuant to the foregoing;
and
(v) the taking of any other actions necessary or desirable to carry
out any of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the Administrators and
the Property Trustee are authorized and directed to conduct the affairs of the
Issuer Trust and to operate the Issuer Trust so that the Issuer Trust will not
be deemed to be an "investment company" required to be registered under the
Investment Company Act, and will not be taxable as a corporation for the United
States Federal income tax purposes and so that the Junior Subordinated
Debentures will be treated as indebtedness of the Depositor for United States
Federal income tax purposes. In this connection, the Property Trustee and the
Holders of Common Securities are authorized to take any action, not inconsistent
with applicable law, the Certificate of Trust or this Trust Agreement, that the
Property Trustee and Holders of Common Securities determine in their discretion
to be necessary or desirable for such purposes, as long as such action does not
adversely affect in any material respect the interests of the holders of the
Outstanding Capital Securities. In no event shall the Administrators or the
Issuer Trustees be liable to the Issuer Trust or the Holders for any failure to
comply with this section that results from a change in law or regulations or in
the interpretation thereof.
SECTION 2.8. Assets of Trust.
The assets of the Issuer Trust shall consist solely of the Trust Property.
SECTION 2.9. Title to Trust Property.
Legal title to all Trust Property shall be vested at all times in the
Property Trustee (in its capacity as such) and shall be held and administered by
the Property Trustee for the benefit of the Issuer Trust and the Holders in
accordance with this Trust Agreement.
ARTICLE III
PAYMENT ACCOUNT
SECTION 3.1. Payment Account.
(a) On or prior to the Closing Date, the Property Trustee shall establish
the Payment Account. The Property Trustee and its agents shall have exclusive
control and sole right of withdrawal with respect to the Payment Account for the
purpose of making deposits in and withdrawals from the Payment Account in
accordance with this Trust Agreement. All monies and other property deposited
or held from time to time in the Payment Account shall be held by the Property
Trustee in the Payment Account for the exclusive benefit of the Holders and for
distribution as herein provided, including (and subject to) any priority of
payments provided for herein.
(b) The Property Trustee shall deposit in the Payment Account, promptly
upon receipt, all payments of principal of or interest on, and any other
payments or proceeds with respect to, the Junior
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Subordinated Debentures. Amounts held in the Payment Account shall not be
invested by the Property Trustee pending distribution thereof.
ARTICLE IV
DISTRIBUTIONS; REDEMPTION
SECTION 4.1. Distributions.
(a) The Trust Securities represent undivided beneficial interests in the
Trust Property, and Distributions (including of Additional Amounts) will be made
on the Trust Securities at the rate and on the dates that payments of interest
(including of Additional Interest, as defined in the Indenture) are made on the
Junior Subordinated Debentures. Accordingly:
(i) Distributions on the Trust Securities shall be cumulative and will
accumulate whether or not there are funds of the Issuer Trust available for
the payment of Distributions. Distributions shall accumulate from and
including March 12, 1998, and, except in the event (and to the extent) that
the Depositor exercises its right to defer the payment of interest on the
Junior Subordinated Debentures pursuant to the Indenture, shall be payable
quarterly in arrears on February 28, May 30, August 30 and November 30 of
each year, commencing on May 30, 1998. If any date on which a Distribution
is otherwise payable on the Trust Securities is not a Business Day, then
the payment of such Distribution shall be made on the next succeeding day
that is a Business Day (without any interest or other payment in respect of
any such delay), with the same force and effect as if made on the date on
which such payment was originally payable (each date on which distributions
are payable in accordance with this Section 4.1(a), a "Distribution Date").
(ii) The Trust Securities shall be entitled to Distributions payable
at a rate of 7.10% per annum of the Liquidation Amount of the Trust
Securities. The amount of Distributions payable for any period less than a
full Distribution period shall be computed on the basis of a 360-day year
of twelve 30-day months and the actual number of days elapsed in a partial
month in a period. Distributions payable for each full Distribution period
will be computed by dividing the rate per annum by four (4). The amount of
Distributions payable for any period shall include any Additional Amounts
in respect of such period.
(iii) So long as no Debenture Event of Default has occurred and is
continuing, the Depositor has the right under the Indenture to defer the
payment of interest on the Junior Subordinated Debentures at any time and
from time to time for a period not exceeding 20 consecutive quarterly
periods (an "Extension Period"), provided that no Extension Period may
extend beyond the stated maturity of the Junior Subordinated Debentures (as
such stated maturity may be shortened in accordance with the terms of the
Indenture). As a consequence of any such deferral, quarterly Distributions
on the Trust Securities by the Issuer Trust will also be deferred to the
extent and except as provided in the Junior Substantial Debentures, and the
amount of Distributions to which Holders of the Trust Securities are
entitled that have been so deferred will accumulate additional
Distributions thereon at the rate per annum of 7.10%, compounded quarterly
from the most recent Distribution payment date on which Distributions were
paid, computed on the basis of a 360-day year of twelve 30-day months and
the actual days elapsed in a partial month in such period. Additional
Distributions payable for each full Distribution period will be computed by
dividing the rate per annum by four (4). The term "Distributions" as used
in Section 4.1 shall include any such additional Distributions provided
pursuant to this Section 4.1(a)(iii).
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(iv) Distributions on the Trust Securities shall be made by the
Property Trustee from the Payment Account and shall be payable on each
Distribution Date only to the extent that the Issuer Trust has funds then
on hand and available in the Payment Account for the payment of such
Distributions.
(b) Distributions on the Trust Securities with respect to a Distribution
Date shall be payable to the Holders thereof as they appear on the Securities
Register for the Trust Securities at the close of business on the relevant
record date, which shall be at the close of business on the 15th calendar day of
the month next preceding the relevant Distribution Date, whether or not a
Business Day.
SECTION 4.2. Redemption.
(a) On each Debenture Redemption Date and on the stated maturity of the
Junior Subordinated Debentures, the Issuer Trust will be required to redeem a
Like Amount of Trust Securities at the Redemption Price.
(b) Notice of redemption shall be given by the Property Trustee by first-
class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior
to the Redemption Date to each Holder of Trust Securities to be redeemed, at
such Holder's address appearing in the Security Register. All notices of
redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price, or if the Redemption Price cannot be
calculated prior to the time the notice is required to be sent, the
estimate of the Redemption Price provided pursuant to the Indenture
together with a statement that it is an estimate and that the actual
Redemption Price will be calculated on the third Business Day prior to the
Redemption Date (and if an estimate is provided, a further notice shall be
sent of the actual Redemption Price on the date, or as soon as practicable
thereafter, that notice of such actual Redemption Price is received
pursuant to the Indenture);
(iii) the CUSIP number or CUSIP numbers of the Capital Securities
affected;
(iv) if less than all the Outstanding Trust Securities are to be
redeemed, the identification and the total Liquidation Amount of the
particular Trust Securities to be redeemed;
(v) that, on the Redemption Date, the Redemption Price will become due
and payable upon each such Trust Security to be redeemed and that
Distributions thereon will cease to accumulate on and after said date,
except as provided in Section 4.2(d) below; and
(vi) the place or places where Trust Securities are to be surrendered
for the payment of the Redemption Price.
The Issuer Trust in issuing the Trust Securities shall use "CUSIP"numbers,
and the Property Trustee shall indicate the "CUSIP" numbers of the Trust
Securities in notices of redemption and related materials as a convenience to
Holders; provided that any such notice may state that no representation is made
as to the correctness of such numbers either as printed on the Trust Securities
or as contained in any notice of redemption and related material.
(c) The Trust Securities redeemed on each Redemption Date shall be redeemed
at the Redemption Price with the applicable proceeds from the contemporaneous
redemption of Junior Subordinated Debentures. Redemptions of the Trust
Securities shall be made and the Redemption Price shall be payable on each
Redemption Date only to the extent that the Issuer Trust has funds then on hand
and legally available in the Payment Account for the payment of such Redemption
Price.
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(d) If the Issuer Trust gives a notice of redemption in respect of any
Capital Securities, then, by 12:00 noon, New York City time, on the Redemption
Date, subject to Section 4.2(c), the Property Trustee will, with respect to
Capital Securities held in book-entry form, irrevocably deposit with the
Clearing Agency for such Capital Securities, to the extent available therefor,
funds sufficient to pay the applicable Redemption Price and will give such
Clearing Agency irrevocable instructions and authority to pay the Redemption
Price to the Holders of the Capital Securities. With respect to Capital
Securities that are not held in book-entry form, the Property Trustee, subject
to Section 4.2(c), will irrevocably deposit with the Paying Agent, to the extent
available therefor, funds sufficient to pay the applicable Redemption Price and
will give the Paying Agent irrevocable instructions and authority to pay the
Redemption Price to the Holder of the Capital Securities upon surrender of their
Capital Securities Certificates. Notwithstanding the foregoing, Distributions
payable on or prior to the Redemption Date for any Trust Securities called for
redemption shall be payable to the Holders of such Trust Securities as they
appear on the Securities Register for the Trust Securities on the relevant
record dates for the related Distribution Dates. If notice of redemption shall
have been given and funds deposited as required, then, upon the date of such
deposit, all rights of Holders holding Trust Securities so called for redemption
will cease, except the right of such Holders to receive the Redemption Price and
any Distribution payable in respect of the Trust Securities on or prior to the
Redemption Date, but without interest, and such Securities will cease to be
Outstanding. In the event that any date on which any applicable Redemption
Price is payable is not a Business Day, then payment of the applicable
Redemption Price payable on such date will be made on the next succeeding day
that is a Business Day (and without any interest or other payment in respect of
any such delay) with the same force and effect as if made on such date. In the
event that payment of the Redemption Price in respect of any Trust Securities
called for redemption is improperly withheld or refused and not paid either by
the Issuer Trust or by the Depositor pursuant to the Guarantee Agreement,
Distributions on such Trust Securities will continue to accumulate, as set forth
in Section 4.1, from the Redemption Date originally established by the Issuer
Trust for such Trust Securities to the date such applicable Redemption Price is
actually paid, in which case the actual payment date will be the date fixed for
redemption for purposes of calculating the applicable Redemption Price.
(e) Subject to Section 4.3(a), if less than all the Outstanding Trust
Securities are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of such Trust Securities to be redeemed shall be allocated
pro rata to the Common Securities and the Capital Securities based on the
relative Liquidation Amounts of such classes. The particular Capital Securities
to be redeemed shall be selected on a pro rata basis based on their respective
Liquidation Amounts not more than 60 days prior to the Redemption Date by the
Property Trustee from the Outstanding Capital Securities not previously called
for redemption, or if the Capital Securities are then held in the form of a
Global Capital Security in accordance with the customary procedures for the
Clearing Agency. The Property Trustee shall promptly notify the Securities
Registrar in writing of the Capital Securities selected for redemption and, in
the case of any Capital Securities selected for partial redemption, the
Liquidation Amount thereof to be redeemed. For all purposes of this Trust
Agreement, unless the context otherwise requires, all provisions relating to the
redemption of Capital Securities shall relate, in the case of any Capital
Securities redeemed or to be redeemed only in part, to the portion of the
aggregate Liquidation Amount of Capital Securities that has been or is to be
redeemed.
SECTION 4.3. Subordination of Common Securities.
(a) Payment of Distributions (including Additional Amounts, if applicable)
on, the Redemption Price of, and the Liquidation Distribution in respect of, the
Trust Securities, as applicable, shall be made, subject to Section 4.2(e), pro
rata among the Common Securities and the Capital Securities based on the
Liquidation Amount of such Trust Securities; provided, however, that if on any
Distribution Date or Redemption Date any Event of Default resulting from a
Debenture Event of Default in Section 5.1(a) or 5.1(b) of the Indenture shall
have occurred and be continuing, no payment of any Distribution (including any
Additional Amounts) on, Redemption Price of, or Liquidation Distribution in
respect of, any Common Security, and no other payment on account of the
redemption, liquidation or other acquisition of Common Securities, shall
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be made unless payment in full in cash of all accumulated and unpaid
Distributions (including any Additional Amounts) on all Outstanding Capital
Securities for all Distribution periods terminating on or prior thereto, or, in
the case of payment of the Redemption Price, the full amount of such Redemption
Price on all Outstanding Capital Securities then called for redemption, or in
the case of payment of the Liquidation Distribution the full amount of such
Liquidation Distribution on all Outstanding Capital Securities, shall have been
made or provided for, and all funds immediately available to the Property
Trustee shall first be applied to the payment in full in cash of all
Distributions (including any Additional Amounts) on, the Redemption Price of, or
the Liquidation Distribution in respect of Capital Securities then due and
payable. The existence of an Event of Default does not entitle the Holders of
Trust Securities to accelerate the maturity thereof.
(b) In the case of the occurrence of any Event of Default resulting from
any Debenture Event of Default, the Holder of the Common Securities shall have
no right to act with respect to any such Event of Default under this Trust
Agreement until the effects of all such Events of Default with respect to the
Capital Securities have been cured, waived or otherwise eliminated. Until all
such Events of Default under this Trust Agreement with respect to the Capital
Securities have been so cured, waived or otherwise eliminated, the Property
Trustee shall act solely on behalf of the Holders of the Capital Securities and
not on behalf of the Holder of the Common Securities, and only the Holders of
the Capital Securities will have the right to direct the Property Trustee to act
on their behalf.
SECTION 4.4. Payment Procedures.
Payments of Distributions (including any Additional Amounts) in respect of
the Capital Securities shall be made by check mailed to the address of the
Person entitled thereto as such address shall appear on the Securities Register
or, if the Capital Securities are held by a Clearing Agency, such Distributions
shall be made to the Clearing Agency in immediately available funds, which will
credit the relevant accounts on the applicable Distribution Dates. Payments of
Distributions to Holders of $1,000,000 or more in aggregate Liquidation Amount
of Capital Securities may be made by wire transfer of immediately available
funds upon written request of such Holder to the Securities Registrar not later
than 15 calendar days prior to the date on which the Distribution is payable.
Payments in respect of the Common Securities shall be made in such manner as
shall be mutually agreed between the Property Trustee and the Holder of the
Common Securities.
SECTION 4.5. Tax Returns and Reports.
The Administrators shall prepare (or cause to be prepared), at the
Depositor's expense, and file all United States Federal, state and local tax and
information returns and reports required to be filed by or in respect of the
Issuer Trust. In this regard, the Administrators shall (a) prepare and file (or
cause to be prepared and filed) all Internal Revenue Service forms required to
be filed in respect of the Issuer Trust in each taxable year of the Issuer Trust
and (b) prepare and furnish (or cause to be prepared and furnished) to each
Holder all Internal Revenue Service forms required to be provided by the Issuer
Trust. The Administrators shall provide the Depositor and the Property Trustee
with a copy of all such returns and reports promptly after such filing or
furnishing. The Issuer Trustees shall comply with United States Federal
withholding and backup withholding tax laws and information reporting
requirements with respect to any payments to Holders under the Trust Securities.
On or before December 15 of each year during which any Capital Securities
are Outstanding, the Administrators shall furnish to the Property Trustee such
information as may be reasonably requested by the Property Trustee in order that
the Property Trustee may prepare the information which it is required to report
for such year on Internal Revenue Service Forms 1096 and 1099 pursuant to
Section 6049 of the Code. Such information shall include the amount of original
issue discount includible in income for each Outstanding Capital Security during
such year.
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SECTION 4.6. Payment of Taxes, Duties, Etc. of the Issuer Trust.
Upon receipt under the Junior Subordinated Debentures of Additional Sums,
the Property Trustee shall promptly pay, or cause the Administrators to pay in
connection with the filing of any tax returns or reports pursuant to Section
4.5, any taxes, duties or governmental charges of whatsoever nature (other than
withholding taxes) imposed on the Issuer Trust by the United States or any other
taxing authority.
SECTION 4.7. Payments under Indenture or Pursuant to Direct Actions.
Any amount payable hereunder to any Holder of Capital Securities shall be
reduced by the amount of any corresponding payment such Holder has directly
received pursuant to Section 5.8 of the Indenture or Section 5.13 of this Trust
Agreement.
SECTION 4.8. Liability of the Holder of Common Securities.
The Holder of Common Securities shall be liable for the debts and
obligations of the Issuer Trust as set forth in Section 6.7 of the Indenture
regarding allocation of expenses.
ARTICLE V
TRUST SECURITIES CERTIFICATES
SECTION 5.1. Initial Ownership.
Upon the creation of the Issuer Trust and the contribution by the Depositor
pursuant to Section 2.3 and until the issuance of the Trust Securities, and at
any time during which no Trust Securities are Outstanding, the Depositor shall
be the sole beneficial owner of the Issuer Trust.
SECTION 5.2. The Trust Securities Certificates.
(a) The Trust Securities Certificates shall be issued in multiples of $25
and shall be executed on behalf of the Issuer Trust by manual or facsimile
signature of at least one Administrator. Trust Securities Certificates bearing
the manual signatures of individuals who were, at the time when such signatures
shall have been affixed, authorized to sign on behalf of the Issuer Trust, shall
be validly issued and entitled to the benefits of this Trust Agreement,
notwithstanding that such individuals or any of them shall have ceased to be so
authorized prior to the delivery of such Trust Securities Certificates or did
not hold such offices at the date of delivery of such Trust Securities
Certificates. A transferee of a Trust Securities Certificate shall become a
Holder, and shall be entitled to the rights and subject to the obligations of a
Holder hereunder, upon due registration of such Trust Securities Certificate in
such transferee's name pursuant to Section 5.5.
(b) Upon their original issuance, Capital Securities Certificates shall be
issued in the form of one or more fully registered Global Capital Securities
Certificates which will be deposited with or on behalf of the Depositary and
registered in the name of the Depositary's nominee. Unless and until it is
exchangeable in whole or in part for the Capital Securities in definitive form,
a global security may not be transferred except as a whole by the Depositary to
a nominee of the Depositary or by a nominee of the Depositary to the Depositary
or another nominee of the Depositary or by the Depositary or any such nominee to
a successor of such Depositary or a nominee of such successor.
(c) A single Common Securities Certificate representing the Common
Securities shall be issued to the Depositor in the form of a definitive Common
Securities Certificate.
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SECTION 5.3. Execution and Delivery of Trust Securities Certificates.
At the Closing Date, and on the date, if any, on which the Underwriters
exercise their option to purchase additional Capital Securities pursuant to the
terms of the Underwriting Agreement, as applicable, at least one of the
Administrators shall cause Trust Securities Certificates, in an aggregate
Liquidation Amount as provided in Sections 2.4 and 2.5, to be executed on behalf
of the Issuer Trust by manual or facsimile signature. The Capital Securities so
executed shall be delivered to the Property Trustee and upon such delivery the
Property Trustee shall manually authenticate upon the written order of the
Depositor such Capital Securities Certificates and deliver such Capital
Securities Certificates upon the written order of the Depositor, executed by an
authorized officer thereof, without further corporate action by the Depositor,
in authorized denominations.
SECTION 5.4. Global Capital Security.
(a) Any Global Capital Security issued under this Trust Agreement shall be
registered in the name of the nominee of the Clearing Agency and delivered to
such custodian therefor, and such Global Capital Security shall constitute a
single Capital Security for all purposes of this Trust Agreement.
(b) Notwithstanding any other provision in this Trust Agreement, a Global
Capital Security may not be exchanged in whole or in part for Capital Securities
registered, and no transfer of the Global Capital Security in whole or in part
may be registered, in the name of any Person other than the Clearing Agency for
such Global Capital Security, or its nominee thereof unless (i) such Clearing
Agency advises the Property Trustee in writing that such Clearing Agency is no
longer willing or able to properly discharge its responsibilities as Clearing
Agency with respect to such Global Capital Security or if it ceases to be a
Clearing Agency under the Exchange Act, and the Depositor is unable to locate a
qualified successor within 90 days after receiving such notice or becoming aware
that the Depositary is no longer so registered, (ii) the Issuer Trust at its
option advises the Depositary in writing that it elects to terminate the book-
entry system through the Clearing Agency, or (iii) there shall have occurred and
be continuing an Event of Default.
(c) If a Capital Security is to be exchanged in whole or in part for a
beneficial interest in a Global Capital Security, then either (i) such Global
Capital Security shall be so surrendered for exchange or cancellation as
provided in this Article V or (ii) the aggregate Liquidation Amount thereof
shall be reduced or increased by an amount equal to the portion thereof to be so
exchanged or cancelled or equal to the Liquidation Amount of such other Capital
Security to be so exchanged for a beneficial interest therein, as the case may
be, by means of an appropriate adjustment made on the records of the Security
Registrar, whereupon the Property Trustee, in accordance with the Applicable
Procedures, shall instruct the Clearing Agency or its authorized representative
to make a corresponding adjustment to its records. Upon any such surrender or
adjustment of a Global Capital Security by the Clearing Agency, accompanied by
registration instructions, the Property Trustee shall, subject to Section 5.4(b)
and as otherwise provided in this Article V, authenticate and deliver any
Capital Securities issuable in exchange for such Global Capital Security (or any
portion thereof) in accordance with the instructions of the Clearing Agency.
The Property Trustee shall not be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be fully protected in
relying on, such instructions.
(d) Every Capital Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Capital Security or any
portion thereof, whether pursuant to this Article V or Article IV or otherwise,
shall be authenticated and delivered in the form of, and shall be, a Global
Capital Security, unless such Global Capital Security is registered in the name
of a Person other than the Clearing Agency for such Global Capital Security or a
nominee thereof.
(e) The Clearing Agency or its nominee, as the registered owner of a Global
Capital Security, shall be considered the Holder of the Capital Securities
represented by such Global Capital Security for all purposes under this Trust
Agreement and the Capital Securities, and owners of beneficial interests in such
Global Capital Security shall hold such interests pursuant to the Applicable
Procedures and, except as otherwise
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provided herein, shall not be entitled to receive physical delivery of any such
Capital Securities in definitive form and shall not be considered the Holders
thereof under this Trust Agreement. Accordingly, any such owner's beneficial
interest in the Global Capital Security shall be shown only on, and the transfer
of such interest shall be effected only through, records maintained by the
Clearing Agency or its nominee. Neither the Property Trustee nor the Securities
Registrar shall have any liability in respect of any transfers effected by the
Clearing Agency.
(f) The rights of owners of beneficial interests in a Global Capital
Security shall be exercised only through the Clearing Agency and shall be
limited to those established by law and agreements between such owners and the
Clearing Agency.
SECTION 5.5. Registration of Transfer and Exchange Generally; Certain
Transfers and Exchanges; Capital Securities Certificates.
(a) The Property Trustee shall keep or cause to be kept at its Corporate
Trust Office a register or registers for the purpose of registering Capital
Securities Certificates and transfers and exchanges of Capital Securities
Certificates in which the registrar and transfer agent with respect to the
Capital Securities (the "Securities Registrar"), subject to such reasonable
regulations as it may prescribe, shall provide for the registration of Capital
Securities Certificates and Common Securities Certificates (subject to Section
5.11 in the case of Common Securities Certificates) and registration of
transfers and exchanges of Capital Securities Certificates as herein provided.
Such register is herein sometimes referred to as the "Securities Register." The
Property Trustee is hereby appointed "Securities Registrar" for the purpose of
registering Capital Securities and transfers of Capital Securities as herein
provided.
Upon surrender for registration of transfer of any Capital Security at the
offices or agencies of the Property Trustee designated for that purpose an
Administrator shall execute, and the Property Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Capital Securities of the same series of any authorized denominations of
like tenor and aggregate Liquidation Amount and bearing such legends as may be
required by this Trust Agreement.
At the option of the Holder, Capital Securities may be exchanged for other
Capital Securities of any authorized denominations, of like tenor and aggregate
Liquidation Amount and bearing such legends as may be required by this Trust
Agreement, upon surrender of the Capital Securities to be exchanged as such
office or agency. Whenever any securities are so surrendered for exchange, an
Administrator shall execute and the Property Trustee shall authenticate and
deliver the Capital Securities that the Holder making the exchange is entitled
to receive.
All Capital Securities issued upon any transfer or exchange of Capital
Securities shall be the valid obligations of the Issuer Trust, evidencing the
same debt, and entitled to the same benefits under this Trust Agreement, as the
Capital Securities surrendered upon such transfer or exchange.
Every Capital Security presented or surrendered for transfer or exchange
shall (if so required by the Property Trustee) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Property Trustee and the Securities Registrar, duly executed by the Holder
thereof or such Holder's attorney duly authorized in writing.
No service charge shall be made to a Holder for any transfer or exchange of
Capital Securities, but the Property Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Capital Securities.
Neither the Issuer Trust nor the Property Trustee shall be required,
pursuant to the provisions of this Section, (i) to issue, register the transfer
of or exchange any Capital Security during a period beginning at the
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opening of business 15 days before the first mailing of the notice of
redemption, or (ii) to register the transfer of or exchange any Capital Security
so selected for redemption in whole or in part, except, in the case of any such
Capital Security to be redeemed in part, any portion thereof not to be redeemed.
(b) Certain Transfers and Exchanges. Trust Securities may only be
transferred, in whole or in part, in accordance with the terms and conditions
set forth in this Trust Agreement. To the fullest extent permitted by law, any
transfer or purported transfer of any Trust Security not made in accordance with
this Trust Agreement shall be null and void.
(i) Non Global Security to Non Global Security. A Capital Security
that is not a Global Capital Security may be transferred, in whole or in
part, to a Person who takes delivery in the form of another Trust Security
that is not a Global Security as provided in Section 5.5(a).
(ii) Free Transferability. Subject to this Section 5.5, Capital
Securities shall be freely transferable.
(iii) Exchanges Between Global Capital Security and Non-Global
Capital Security. A beneficial interest in a Global Capital Security may
be exchanged for a Capital Security that is not a Global Capital Security
as provided in Section 5.4.
SECTION 5.6. Mutilated, Destroyed, Lost or Stolen Trust Securities
Certificates.
If (a) any mutilated Trust Securities Certificate shall be surrendered to
the Securities Registrar, or if the Securities Registrar shall receive evidence
to its satisfaction of the destruction, loss or theft of any Trust Securities
Certificate and (b) there shall be delivered to the Securities Registrar and the
Administrators such security or indemnity as may be required by them to save
each of them harmless, then in the absence of notice that such Trust Securities
Certificate shall have been acquired by a bona fide purchaser, the
Administrators, or any one of them, on behalf of the Issuer Trust shall execute
and make available for delivery, and the Property Trustee shall authenticate, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen Trust
Securities Certificate, a new Trust Securities Certificate of like class, tenor
and denomination. In connection with the issuance of any new Trust Securities
Certificate under this Section, the Administrators or the Securities Registrar
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Trust Securities Certificate issued pursuant to this Section shall constitute
conclusive evidence of an undivided beneficial interest in the assets of the
Issuer Trust corresponding to that evidenced by the lost, stolen or destroyed
Trust Certificate, as if originally issued, whether or not the lost, stolen or
destroyed Trust Securities Certificate shall be found at any time.
SECTION 5.7. Persons Deemed Holders.
The Issuer Trustees or the Securities Registrar shall treat the Person in
whose name any Trust Securities are issued as the owner of such Trust Securities
for the purpose of receiving Distributions and for all other purposes
whatsoever, and none of the Issuer Trustees, the Administrators nor the
Securities Registrar shall be bound by any notice to the contrary.
SECTION 5.8. Access to List of Holders' Names and Addresses.
Each Holder and each Owner shall be deemed to have agreed not to hold the
Depositor, the Property Trustee, or the Administrators accountable by reason of
the disclosure of its name and address, regardless of the source from which such
information was derived.
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SECTION 5.9. Maintenance of Office or Agency.
The Property Trustee shall designate, with the consent of the
Administrators, which consent shall not be unreasonably withheld, an office or
offices or agency or agencies where Capital Securities Certificates may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Issuer Trustees in respect of the Trust Securities
Certificates may be served. The Property Trustee initially designates its
Corporate Trust Office at 101 Barclay Street, Floor 21 West, New York, NY
10286, Attention: Corporate Trust Administration, as its corporate trust office
for such purposes. The Property Trustee shall give prompt written notice to the
Depositor, the Administrators and to the Holders of any change in the location
of the Securities Register or any such office or agency.
SECTION 5.10. Appointment of Paying Agent.
The Paying Agent shall make Distributions to Holders from the Payment
Account and shall report the amounts of such Distributions to the Property
Trustee and the Administrators. Any Paying Agent shall have the revocable power
to withdraw funds from the Payment Account solely for the purpose of making the
Distributions referred to above. The Property Trustee may revoke such power and
remove any Paying Agent in its sole discretion. The Paying Agent shall
initially be the Property Trustee. Any Person acting as Paying Agent shall be
permitted to resign as Paying Agent upon 30 days' written notice to the
Administrators and the Property Trustee. In the event that the Property Trustee
shall no longer be the Paying Agent or a successor Paying Agent shall resign or
its authority to act be revoked, the Property Trustee shall appoint a successor
(which shall be a bank or trust company) that is reasonably acceptable to the
Administrators to act as Paying Agent. Such successor Paying Agent or any
additional Paying Agent appointed by the Property Trustee shall execute and
deliver to the Issuer Trustees an instrument in which such successor Paying
Agent or additional Paying Agent shall agree with the Issuer Trustees that as
Paying Agent, such successor Paying Agent or additional Paying Agent will hold
all sums, if any, held by it for payment to the Holders in trust for the benefit
of the Holders entitled thereto until such sums shall be paid to such Holders.
The Paying Agent shall return all unclaimed funds to the Property Trustee and
upon removal of a Paying Agent such Paying Agent shall also return all funds in
its possession to the Property Trustee. The provisions of Sections 8.1, 8.3 and
8.6 herein shall apply to the Bank also in its role as Paying Agent, for so long
as the Bank shall act as Paying Agent and, to the extent applicable, to any
other paying agent appointed hereunder. Any reference in this Trust Agreement
to the Paying Agent shall include any co-paying agent chosen by the Property
Trustee unless the context requires otherwise.
SECTION 5.11. Ownership of Common Securities by Depositor.
At the Closing Date, the Depositor shall acquire and retain beneficial and
record ownership of the Common Securities. Neither the Depositor nor any
successor Holder of the Common Securities may transfer less than all the Common
Securities, and the Depositor or any such successor Holder may transfer the
Common Securities only (i) in connection with a consolidation or merger of the
Depositor into another Person or any conveyance, transfer or lease by the
Depositor of its properties and assets substantially as an entirety to any
Person, pursuant to Section 8.1 of the Indenture, or (ii) to an Affiliate of the
Depositor in compliance with applicable law (including the Securities Act and
applicable state securities and blue sky laws). To the fullest extent permitted
by law, any attempted transfer of the Common Securities, other than as set forth
in the immediately preceding sentence, shall be void. The Administrators shall
cause each Common Securities Certificate issued to the Depositor to contain a
legend stating "THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT TO THE DEPOSITOR OR
AN AFFILIATE OF THE DEPOSITOR IN COMPLIANCE WITH APPLICABLE LAW AND SECTION 5.11
OF THE TRUST AGREEMENT."
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SECTION 5.12. Notices to Clearing Agency.
To the extent that a notice or other communication to the Holders is
required under this Trust Agreement, for so long as Capital Securities are
represented by a Global Capital Securities Certificate, the Administrators and
the Issuer Trustees shall give all such notices and communications specified
herein to be given to the Clearing Agency, and shall have no obligations to the
Owners.
SECTION 5.13. Rights of Holders.
(a) The legal title to the Trust Property is vested exclusively in the
Property Trustee (in its capacity as such) in accordance with Section 2.9, and
the Holders shall not have any right or title therein other than the undivided
beneficial ownership interest in the assets of the Issuer Trust conferred by
their Trust Securities and they shall have no right to call for any partition or
division of property, profits or rights of the Issuer Trust except as described
below. The Trust Securities shall be personal property giving only the rights
specifically set forth therein and in this Trust Agreement. The Trust
Securities shall have no preemptive or similar rights and when issued and
delivered to Holders against payment of the purchase price therefor, as provided
herein, will be fully paid and nonassessable by the Issuer Trust. Except as
otherwise provided in Section 4.8, the Holders of the Trust Securities, in their
capacities as such, shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.
(b) For so long as any Capital Securities remain Outstanding, if, upon a
Debenture Event of Default, the Debt Securities Trustee fails or the holders of
not less than 25% in principal amount of the outstanding Junior Subordinated
Debentures fail to declare the principal of all of the Junior Subordinated
Debentures to be immediately due and payable, the Holders of at least 25% in
Liquidation Amount of the Capital Securities then Outstanding shall have such
right to make such declaration by a notice in writing to the Property Trustee,
the Depositor and the Debt Securities Trustee.
At any time after such a declaration of acceleration with respect to the
Junior Subordinated Debentures has been made and before a judgment or decree for
payment of the money due has been obtained by the Debt Securities Trustee as
provided in the Indenture, the Holders of a Majority in Liquidation Amount of
the Capital Securities, by written notice to the Property Trustee, the Depositor
and the Debt Securities Trustee, may rescind and annul such declaration and its
consequences if:
(i) the Depositor has paid or deposited with the Debt Securities
Trustee a sum sufficient to pay
(A) all overdue installments of interest on all of the Junior
Subordinated Debentures,
(B) any accrued Additional Interest on all of the Junior
Subordinated Debentures,
(C) the principal of (and premium, if any, on) any Junior
Subordinated Debentures which have become due otherwise than by such
declaration of acceleration and interest and Additional Interest
thereon at the rate borne by the Junior Subordinated Debentures, and
(D) all sums paid or advanced by the Debt Securities Trustee
under the Indenture and the reasonable compensation, expenses,
disbursements and advances of the Debt Securities Trustee and the
Property Trustee, their agents and counsel; and
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(ii) all Events of Default with respect to the Junior Subordinated
Debentures, other than the non-payment of the principal of the Junior
Subordinated Debentures which has become due solely by such acceleration,
have been cured or waived as provided in Section 5.13 of the Indenture.
If the Property Trustee fails to annul any such declaration and waive such
default, the Holders of at least a Majority in Liquidation Amount of the Capital
Securities shall also have the right to rescind and annul such declaration and
its consequences by written notice to the Depositor, the Property Trustee and
the Debt Securities Trustee, subject to the satisfaction of the conditions set
forth in Clause (i) and (ii) of this Section 5.13(b).
The Holders of at least a Majority in Liquidation Amount of the Capital
Securities may, on behalf of the Holders of all the Capital Securities, waive
any past default under the Indenture, except a default in the payment of
principal or interest (unless such default has been cured and a sum sufficient
to pay all matured installments of interest and principal due otherwise than by
acceleration has been deposited with the Debt Securities Trustee) or a default
in respect of a covenant or provision which under the Indenture cannot be
modified or amended without the consent of the holder of each outstanding Junior
Subordinated Debentures. No such rescission shall affect any subsequent default
or impair any right consequent thereon.
Upon receipt by the Property Trustee of written notice declaring such an
acceleration, or rescission and annulment thereof, by Holders of the Capital
Securities all or part of which is represented by Global Capital Securities, a
record date shall be established for determining Holders of Outstanding Capital
Securities entitled to join in such notice, which record date shall be at the
close of business on the day the Property Trustee receives such notice. The
Holders on such record date, or their duly designated proxies, and only such
Persons, shall be entitled to join in such notice, whether or not such Holders
remain Holders after such record date; provided, that, unless such declaration
of acceleration, or rescission and annulment, as the case may be, shall have
become effective by virtue of the requisite percentage having joined in such
notice prior to the day which is 90 days after such record date, such notice of
declaration of acceleration, or rescission and annulment, as the case may be,
shall automatically and without further action by any Holder be canceled and of
no further effect. Nothing in this paragraph shall prevent a Holder, or a proxy
of a Holder, from giving, after expiration of such 90-day period, a new written
notice of declaration of acceleration, or rescission and annulment thereof, as
the case may be, that is identical to a written notice which has been canceled
pursuant to the proviso to the preceding sentence, in which event a new record
date shall be established pursuant to the provisions of this Section 5.13(b).
(c) For so long as any Capital Securities remain Outstanding, to the
fullest extent permitted by law and subject to the terms of this Trust Agreement
and the Indenture, upon a Debenture Event of Default specified in Section
5.01(a) or 5.01(b) of the Indenture, any Holder of Capital Securities shall have
the right to institute a proceeding directly against the Depositor, pursuant to
Section 5.01 of the Indenture, for enforcement of payment to such Holder of the
principal amount of or interest on Junior Subordinated Debentures having an
aggregate principal amount equal to the aggregate Liquidation Amount of the
Capital Securities of such Holder (a "Direct Action"). Except as set forth in
Sections 5.13(b) and 5.13(c), the Holders of Capital Securities shall have no
right to exercise directly any right or remedy available to the holders of, or
in respect of, the Junior Subordinated Debentures.
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ARTICLE VI
ACTS OF HOLDERS; MEETINGS; VOTING
SECTION 6.1. Limitations on Holder's Voting Rights.
(a) Except as provided in this Trust Agreement and in the Indenture
and as otherwise required by law, no Holder of Capital Securities shall have any
right to vote or in any manner otherwise control the administration, operation
and management of the Issuer Trust or the obligations of the parties hereto, nor
shall anything herein set forth or contained in the terms of the Trust
Securities Certificates be construed so as to constitute the Holders from time
to time as members of an association.
(b) So long as any Junior Subordinated Debentures are held by the
Property Trustee on behalf of the Issuer Trust, the Property Trustee shall not
(i) direct the time, method and place of conducting any proceeding for any
remedy available to the Debt Securities Trustee, or executing any trust or power
conferred on the Property Trustee with respect to such Junior Subordinated
Debentures, (ii) waive any past default that may be waived under Section 5.10 of
the Indenture, (iii) exercise any right to rescind or annul a declaration that
the principal of all the Junior Subordinated Debentures shall be due and payable
or (iv) consent to any amendment, modification or termination of the Indenture
or the Junior Subordinated Debentures, where such consent shall be required,
without, in each case, obtaining the prior approval of the Holders of at least a
Majority in Liquidation Amount of the Capital Securities, provided, however,
that where a consent under the Indenture would require the consent of each
Holder of Junior Subordinated Debentures affected thereby, no such consent shall
be given by the Property Trustee without the prior written consent of each
Holder of Capital Securities. The Property Trustee shall not revoke any action
previously authorized or approved by a vote of the Holders of Capital
Securities, except by a subsequent vote of the Holders of Capital Securities.
The Property Trustee shall notify all Holders of the Capital Securities of any
notice of default received with respect to the Junior Subordinated Debentures.
In addition to obtaining the foregoing approvals of the Holders of the Capital
Securities, prior to taking any of the foregoing actions, the Property Trustee
shall, at the expense of the Depositor, obtain an Opinion of Counsel experienced
in such matters to the effect that such action will not cause the Issuer Trust
to be taxable as a corporation for United States Federal income tax purposes.
(c) If any proposed amendment to the Trust Agreement provides for, or
the Issuer Trust otherwise proposes to effect, (i) any action that would
adversely affect in any material respect the interests, powers, preferences or
special rights of the Capital Securities, whether by way of amendment to the
Trust Agreement or otherwise, or (ii) the dissolution, winding-up or termination
of the Issuer Trust, other than pursuant to the terms of this Trust Agreement,
then the Holders of Outstanding Capital Securities as a class will be entitled
to vote on such amendment or proposal and such amendment or proposal shall not
be effective except with the approval of the Holders of at least a Majority in
Liquidation Amount of the Capital Securities.
SECTION 6.2. Notice of Meetings.
Notice of all meetings of the Holders, stating the time, place and
purpose of the meeting, shall be given by the Property Trustee pursuant to
Section 10.8 to each Holder of record, at his registered address, at least 15
days and not more than 90 days before the meeting. At any such meeting, any
business properly before the meeting may be so considered whether or not stated
in the notice of the meeting. Any adjourned meeting may be held as adjourned
without further notice.
SECTION 6.3. Meetings of Holders.
No annual meeting of Holders is required to be held. The Property
Trustee, however, shall call a meeting of Holders to vote on any matter upon the
written request of the Holders of record of 25% of the aggregate Liquidation
Amount of the Capital Securities and the Administrators or the Property Trustee
may, at
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any time in their discretion, call a meeting of Holders of Capital Securities to
vote on any matters as to which Holders are entitled to vote.
Holders of at least a Majority in Liquidation Amount of the Capital
Securities, present in person or represented by proxy, shall constitute a quorum
at any meeting of Holders of the Capital Securities.
If a quorum is present at a meeting, an affirmative vote by the
Holders of record present, in person or by proxy, holding Capital Securities
representing at least a Majority in Liquidation Amount of the Capital Securities
held by the Holders present, either in person or by proxy, at such meeting shall
constitute the action of the Holders of Capital Securities, unless this Trust
Agreement requires a greater number of affirmative votes.
SECTION 6.4. Voting Rights.
Holders shall be entitled to one vote for each $25 of Liquidation
Amount represented by their Outstanding Trust Securities in respect of any
matter as to which such Holders are entitled to vote.
SECTION 6.5. Proxies, etc.
At any meeting of Holders, any Holder entitled to vote thereat may
vote by proxy, provided that no proxy shall be voted at any meeting unless it
shall have been placed on file with the Property Trustee, or with such other
officer or agent of the Issuer Trust as the Property Trustee may direct, for
verification prior to the time at which such vote shall be taken. Pursuant to a
resolution of the Property Trustee, proxies may be solicited in the name of the
Property Trustee or one or more officers of the Property Trustee. Only Holders
of record shall be entitled to vote. When Trust Securities are held jointly by
several Persons, any one of them may vote at any meeting in person or by proxy
in respect of such Trust Securities, but if more than one of them shall be
present at such meeting in person or by proxy, and such joint owners or their
proxies so present disagree as to any vote to be cast, such vote shall not be
received in respect of such Trust Securities. A proxy purporting to be executed
by or on behalf of a Holder shall be deemed valid unless challenged at or prior
to its exercise, and the burden of proving invalidity shall rest on the
challenger. No proxy shall be valid more than three years after its date of
execution.
SECTION 6.6. Holder Action by Written Consent.
Any action which may be taken by Holders at a meeting may be taken
without a meeting if Holders holding at least a Majority in Liquidation Amount
of all Trust Securities entitled to vote in respect of such action (or such
larger proportion thereof as shall be required by any other provision of this
Trust Agreement) shall consent to the action in writing.
SECTION 6.7. Record Date for Voting and Other Purposes.
For the purposes of determining the Holders who are entitled to notice
of and to vote at any meeting or by written consent, or to participate in any
distribution on the Trust Securities in respect of which a record date is not
otherwise provided for in this Trust Agreement, or for the purpose of any other
action, the Administrators or Property Trustee may from time to time fix a date,
not more than 90 days prior to the date of any meeting of Holders or the payment
of a distribution or other action, as the case may be, as a record date for the
determination of the identity of the Holders of record for such purposes.
SECTION 6.8. Acts of Holders.
Any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Trust Agreement to be given, made
or taken by Holders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Holders in person or by an agent
duly
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appointed in writing; and, except as otherwise expressly provided herein, such
action shall become effective when such instrument or instruments are delivered
to the Property Trustee. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the
"Act" of the Holders signing such instrument or instruments. Proof of execution
of any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Trust Agreement and (subject to Section 8.1)
conclusive in favor of the Issuer Trustees, if made in the manner provided in
this Section.
The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which any Issuer Trustee or Administrator receiving the same
deems sufficient.
The ownership of Trust Securities shall be proved by the Securities
Register.
Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Trust Security shall bind every future Holder
of the same Trust Security and the Holder of every Trust Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Issuer
Trustees, the Administrators or the Issuer Trust in reliance thereon, whether or
not notation of such action is made upon such Trust Security.
Without limiting the foregoing, a Holder entitled hereunder to take
any action hereunder with regard to any particular Trust Security may do so with
regard to all or any part of the Liquidation Amount of such Trust Security or by
one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such Liquidation Amount.
If any dispute shall arise among the Holders, the Administrators or
the Issuer Trustees with respect to the authenticity, validity or binding nature
of any request, demand, authorization, direction, consent, waiver or other Act
of such Holder or Issuer Trustee under this Article VI, then the determination
of such matter by the Property Trustee shall be conclusive with respect to such
matter.
SECTION 6.9. Inspection of Records.
Upon reasonable notice to the Administrators and the Property Trustee,
the records of the Issuer Trust shall be open to inspection by Holders during
normal business hours for any purpose reasonably related to such Holder's
interest as a Holder.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
SECTION 7.1. Representations and Warranties of the Property Trustee
and the Delaware Trustee.
The Property Trustee and the Delaware Trustee, each severally on
behalf of and as to itself, hereby represents and warrants for the benefit of
the Depositor and the Holders that:
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(a) The Property Trustee is a banking corporation with trust powers,
duly organized, validly existing and in good standing under the laws of New
York,with trust power and authority to execute and deliver, and to carry out and
perform its obligations under the terms of this Trust Agreement.
(b) The execution, delivery and performance by the Property Trustee of
this Trust Agreement have been duly authorized by all necessary corporate action
on the part of the Property Trustee; and this Trust Agreement has been duly
executed and delivered by the Property Trustee, and constitutes a legal, valid
and binding obligation of the Property Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law).
(c) The Delaware Trustee is duly organized, validly existing and in
good standing as a banking corporation under the laws of the State of Delaware,
with trust power and authority to execute and deliver, and to carry out and
perform its obligations under the terms of, the Trust Agreement.
(d) The execution, delivery and performance by the Delaware Trustee of
this Trust Agreement have been duly authorized by all necessary corporate action
on the part of the Delaware Trustee; and this Trust Agreement has been duly
executed and delivered by the Delaware Trustee, and constitutes a legal, valid
and binding obligation of the Delaware Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' right
generally and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law).
(e) The Delaware Trustee is an entity which has its principal place of
business in the State of Delaware.
(f) The Property Trustee is a national- or state-chartered bank and
has capital and surplus of at least $50,000,000.
SECTION 7.2. Representations and Warranties of Depositor.
The Depositor hereby represents and warrants for the benefit of the
Holders that:
(a) the Trust Securities Certificates issued at the Closing Date on
behalf of the Issuer Trust have been duly authorized and will have been duly and
validly executed, issued and delivered by the Issuer Trustees pursuant to the
terms and provisions of, and in accordance with the requirements of, this Trust
Agreement, and the Holders will be, as of each such date, entitled to the
benefits of this Trust Agreement; and
(b) there are no taxes, fees or other governmental charges payable by
the Issuer Trust (or the Issuer Trustees on behalf of the Issuer Trust) under
the laws of the State of Delaware or any political subdivision thereof in
connection with the execution, delivery and performance by either the Property
Trustee or the Delaware Trustee, as the case may be, of this Trust Agreement.
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ARTICLE VIII
THE ISSUER TRUSTEES; THE ADMINISTRATORS
SECTION 8.1. Certain Duties and Responsibilities.
(a) The duties and responsibilities of the Issuer Trustees and the
Administrators shall be as provided by this Trust Agreement and, in the case of
the Property Trustee, by the Trust Indenture Act. Notwithstanding the
foregoing, no provision of this Trust Agreement shall require the Issuer
Trustees or the Administrators to expend or risk their own funds or otherwise
incur any financial liability in the performance of any of their duties
hereunder, or in the exercise of any of their rights or powers, if they shall
have reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
Whether or not therein expressly so provided, every provision of this Trust
Agreement relating to the conduct or affecting the liability of or affording
protection to the Issuer Trustees or the Administrators shall be subject to the
provisions of this Section. Nothing in this Trust Agreement shall be construed
to release an Administrator from liability for its own grossly negligent action,
its own grossly negligent failure to act, or its own willful misconduct. To the
extent that, at law or in equity, an Issuer Trustee or Administrator has duties
and liabilities relating to the Issuer Trust or to the Holders, such Issuer
Trustee or Administrator shall not be liable to the Issuer Trust or to any
Holder for such Issuer Trustee's or Administrator's good faith reliance on the
provisions of this Trust Agreement. The provisions of this Trust Agreement, to
the extent that they restrict the duties and liabilities of the Issuer Trustees
and Administrators otherwise existing at law or in equity, are agreed by the
Depositor and the Holders to replace such other duties and liabilities of the
Issuer Trustees and Administrators.
(b) All payments made by the Property Trustee or a Paying Agent in
respect of the Trust Securities shall be made only from the revenue and proceeds
from the Trust Property and only to the extent that there shall be sufficient
revenue or proceeds from the Trust Property to enable the Property Trustee or a
Paying Agent to make payments in accordance with the terms hereof. Each Holder,
by its acceptance of a Trust Security, agrees that it will look solely to the
revenue and proceeds from the Trust Property to the extent legally available for
distribution to it as herein provided and that neither the Issuer Trustees nor
the Administrators are personally liable to it for any amount distributable in
respect of any Trust Security or for any other liability in respect of any Trust
Security. This Section 8.1(b) does not limit the liability of the Issuer
Trustees expressly set forth elsewhere in this Trust Agreement or, in the case
of the Property Trustee, in the Trust Indenture Act.
(c) The Property Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Trust Agreement (including pursuant to Section 10.10), and no implied
covenants shall be read into this Trust Agreement against the Property Trustee.
If an Event of Default has occurred (that has not been cured or waived pursuant
to Article V of the Indenture), the Property Trustee shall enforce this Trust
Agreement for the benefit of the Holders and shall exercise such of the rights
and powers vested in it by this Trust Agreement, and use the same degree of care
and skill in its exercise thereof, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs.
(d) No provision of this Trust Agreement shall be construed to relieve
the Property Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Property Trustee shall be
determined solely by the express provisions of this Trust Agreement
(including pursuant to Section 10.10), and the Property Trustee shall
not be liable except for the performance of such duties and
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obligations as are specifically set forth in this Trust Agreement
(including pursuant to Section 10.10); and
(B) in the absence of bad faith on the part of the Property
Trustee, the Property Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Property
Trustee and conforming to the requirements of this Trust Agreement;
but in the case of any such certificates or opinions that by any
provision hereof or of the Trust Indenture Act are specifically
required to be furnished to the Property Trustee, the Property Trustee
shall be under a duty to examine the same to determine whether or not
they conform to the requirements of this Trust Agreement;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by an authorized officer of the Property
Trustee, unless it shall be proved that the Property Trustee was negligent
in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of at least a Majority in Liquidation Amount
of the Capital Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee,
or exercising any trust or power conferred upon the Property Trustee under
this Trust Agreement;
(iv) the Property Trustee's sole duty with respect to the custody,
safe keeping and physical preservation of the Junior Subordinated
Debentures and the Payment Account shall be to deal with such property in a
similar manner as the Property Trustee deals with similar property for its
own account, subject to the protections and limitations on liability
afforded to the Property Trustee under this Trust Agreement and the Trust
Indenture Act;
(v) the Property Trustee shall not be liable for any interest on any
money received by it except as it may otherwise agree with the Depositor;
and money held by the Property Trustee need not be segregated from other
funds held by it except in relation to the Payment Account maintained by
the Property Trustee pursuant to Section 3.1 and except to the extent
otherwise required by law;
(vi) the Property Trustee shall not be responsible for monitoring the
compliance by the Administrators or the Depositor with their respective
duties under this Trust Agreement, nor shall the Property Trustee be liable
for the default or misconduct of any other Issuer Trustee, the
Administrators or the Depositor; and
(vii) no provision of this Trust Agreement shall require the Property
Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if the Property Trustee shall have
reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this Trust
Agreement or adequate indemnity against such risk or liability is not
reasonably assured to it.
(e) The Administrators shall not be responsible for monitoring the
compliance by the Issuer Trustees or the Depositor with their respective duties
under this Trust Agreement, nor shall either Administrator be liable for the
default or misconduct of any other Administrator, the Issuer Trustees or the
Depositor.
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SECTION 8.2. Certain Notices.
Within ten Business Days after the occurrence of any Event of Default
actually known to a Responsible Officer of the Property Trustee, the Property
Trustee shall transmit, in the manner and to the extent provided in Section
10.8, notice of such Event of Default to the Holders and the Administrators,
unless such Event of Default shall have been cured or waived.
Within ten Business Days after the receipt of notice of the Depositor's
exercise of its right to defer the payment of interest on the Junior
Subordinated Debentures pursuant to the Indenture, the Property Trustee shall
transmit, in the manner and to the extent provided in Section 10.8, notice of
such exercise to the Holders and the Administrators, unless such exercise shall
have been revoked.
SECTION 8.3. Certain Rights of Property Trustee.
Subject to the provisions of Section 8.1:
(a) the Property Trustee may conclusively rely and shall be fully protected
in acting or refraining from acting in good faith upon any resolution, Opinion
of Counsel, certificate, written representation of a Holder or transferee,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) any direction or act of the Depositor contemplated by this Trust
Agreement shall be sufficiently evidenced by an Officer's Certificate;
(c) the Property Trustee shall have no duty to see to any recording, filing
or registration of any instrument (including any financing or continuation
statement or any filing under tax or securities laws) or any re-recording,
refiling or registration thereof;
(d) the Property Trustee may consult with counsel of its own choosing
(which counsel may be counsel to the Depositor or any of its Affiliates, and may
include any of its employees) and the advice of such counsel shall be full and
complete authorization and protection in respect of any action taken suffered or
omitted by it hereunder in good faith and in reliance thereon and in accordance
with such advice, such counsel may be counsel to the Depositor or any of its
Affiliates, and may include any of its employees; the Property Trustee shall
have the right at any time to seek instructions concerning the administration of
this Trust Agreement from any court of competent jurisdiction;
(e) the Property Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Trust Agreement at the request or
direction of any of the Holders pursuant to this Trust Agreement, unless such
Holders shall have offered to the Property Trustee security or indemnity
satisfactory to it against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction; provided, that
nothing contained in this Section 8.3(e) shall be taken to relieve the Property
Trustee, upon the occurrence of an Event of Default, of its obligation to
exercise the rights and powers vested in it by this Trust Agreement;
(f) the Property Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, note or other evidence of indebtedness or other paper or document,
unless requested in writing to do so by one or more Holders, but the Property
Trustee may make such further inquiry or investigation into such facts or
matters as it may see fit;
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(g) the Property Trustee may execute any of the trusts or powers hereunder
or perform any of its duties hereunder either directly or by or through its
agents or attorneys, provided that the Property Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder;
(h) whenever in the administration of this Trust Agreement the Property
Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder, the Property
Trustee (i) may request instructions from the Holders (which instructions may
only be given by the Holders of the same proportion in Liquidation Amount of the
Trust Securities as would be entitled to direct the Property Trustee under the
terms of the Trust Securities in respect of such remedy, right or action), (ii)
may refrain from enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be fully protected in
acting in accordance with such instructions;
(i) except as otherwise expressly provided by this Trust Agreement, the
Property Trustee shall not be under any obligation to take any action that is
discretionary under the provisions of this Trust Agreement. No provision of
this Trust Agreement shall be deemed to impose any duty or obligation on any
Issuer Trustee or Administrator to perform any act or acts or exercise any
right, power, duty or obligation conferred or imposed on it, in any jurisdiction
in which it shall be illegal, or in which the Property Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts, or to exercise any such right, power, duty or obligation. No
permissive power or authority available to any Issuer Trustee or Administrator
shall be construed to be a duty;
(j) if (i) in performing its duties under this Trust Agreement the Property
Trustee is required to decide between alternative courses of action or (ii) in
construing any of the provisions of this Trust Agreement the Property Trustee
finds the same ambiguous or inconsistent with any other provisions contained
herein or (iii) the Property Trustee is unsure of the application of any
provision of this Trust Agreement, then, except as to any matter as to which the
Holders are entitled to vote under the terms of this Trust Agreement, the
Property Trustee shall deliver a notice to the Depositor requesting written
instructions of the Depositor as to the course of action to be taken and the
Property Trustee shall take such action, or refrain from taking such action, as
the Property Trustee shall be instructed in writing to take, or to refrain from
taking, by the Depositor; provided, however, that if the Property Trustee does
not receive such instructions of the Depositor within ten Business Days after it
has delivered such notice, or such reasonably shorter period of time set forth
in such notice (which to the extent practicable shall not be less than two
Business Days), it may, but shall be under no duty to, take or refrain from
taking such action not inconsistent with this Trust Agreement as it shall deem
advisable and in the best interests of the Holders, in which event the Property
Trustee shall have no liability except for its own bad faith, negligence or
willful misconduct;
(k) whenever in the administration of this Trust Agreement, the Property
Trustee shall deem it desirable that a matter be established before undertaking,
suffering or omitting any action hereunder, the Property Trustee (unless other
evidence is herein specifically prescribed) may, in the absence of bad faith on
its part, request and conclusively rely upon an Officer's Certificate which,
upon receipt of such request, shall be promptly delivered by the Depositor or
the Administrator;
(l) when the Property Trustee incurs expenses or renders services in
connection with a Bankruptcy Event, such expenses (including the fees and
expenses of its counsel) and the compensation for such services are intended to
constitute expenses of administration under any bankruptcy law or law relating
to creditors rights generally; and
(m) the Property Trustee shall not be charged with knowledge of an Event of
Default unless such Event of Default has occurred as a result of the act or
failure to act of the Property Trustee, a Responsible Officer of the Property
Trustee obtains actual knowledge of such event or the Property Trustee receives
written
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notice of such event from Securityholders at least 25% of the outstanding Trust
Securities (based upon Liquidation Amount).
SECTION 8.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Trust Securities Certificates
shall be taken as the statements of the Issuer Trust, and the Issuer Trustees
and the Administrators do not assume any responsibility for their correctness.
The Issuer Trustees and the Administrators shall not be accountable for the use
or application by the Depositor of the proceeds of the Junior Subordinated
Debentures.
SECTION 8.5. May Hold Securities.
The Administrators, any Issuer Trustee or any other agent of any Issuer
Trustee or the Issuer Trust, in its individual or any other capacity, may become
the owner or pledgee of Trust Securities and, subject to Sections 8.8 and 8.13,
and except as provided in the definition of the term "Outstanding" in Article I,
may otherwise deal with the Issuer Trust with the same rights it would have if
it were not an Administrator, Issuer Trustee or such other agent.
SECTION 8.6. Compensation; Indemnity; Fees.
The Depositor, as borrower, agrees:
(a) to pay to the Issuer Trustees from time to time such reasonable
compensation for all services rendered by them hereunder as the parties shall
agree from time to time (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);
(b) to reimburse the Issuer Trustees upon request for all reasonable
expenses, disbursements and advances incurred or made by the Issuer Trustees in
accordance with any provision of this Trust Agreement (including the reasonable
compensation and the expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be attributable to their
negligence or willful misconduct; and
(c) to the fullest extent permitted by applicable law, to indemnify and
hold harmless (i) each Issuer Trustee, (ii) each Administrator, (iii) any
Affiliate of any Issuer Trustee, (iv) any officer, director, shareholder,
employee, representative or agent of any Issuer Trustee, and (v) any employee or
agent of the Issuer Trust, (referred to herein as an "Indemnified Person") from
and against any loss, damage, liability, tax, penalty, expense or claim of any
kind or nature whatsoever incurred by such Indemnified Person arising out of or
in connection with the creation, operation or dissolution of the Issuer Trust or
any act or omission performed or omitted by such Indemnified Person in good
faith on behalf of the Issuer Trust and in a manner such Indemnified Person
reasonably believed to be within the scope of authority conferred on such
Indemnified Person by this Trust Agreement, except that no Indemnified Person
(other than an Administrator) shall be entitled to be indemnified in respect of
any loss, damage or claim incurred by such Indemnified Person by reason of
negligence or willful misconduct with respect to such acts or omissions, and
further provided that no Administrator shall be entitled to be indemnified in
respect of any loss, damage or claim incurred by such Administrator by reason of
gross negligence or willful misconduct with respect to such acts or omissions.
The provisions of this Section 8.6 shall survive the termination of this
Trust Agreement or the earlier resignation or removal of any Issuer Trustee.
No Issuer Trustee may claim any lien or charge on any Trust Property as a
result of any amount due pursuant to this Section 8.6.
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The Depositor, any Administrator and any Issuer Trustee (subject to Section
8.8) may engage in or possess an interest in other business ventures of any
nature or description, independently or with others, similar or dissimilar to
the business of the Issuer Trust, and the Issuer Trust and the Holders of Trust
Securities shall have no rights by virtue of this Trust Agreement in and to such
independent ventures or the income or profits derived therefrom, and the pursuit
of any such venture, even if competitive with the business of the Issuer Trust,
shall not be deemed wrongful or improper. Neither the Depositor, any
Administrator, nor any Issuer Trustee shall be obligated to present any
particular investment or other opportunity to the Issuer Trust even if such
opportunity is of a character that, if presented to the Issuer Trust, could be
taken by the Issuer Trust, and the Depositor, any Administrator or any Issuer
Trustee shall have the right to take for its own account (individually or as a
partner or fiduciary) or to recommend to others any such particular investment
or other opportunity. Any Issuer Trustee may engage or be interested in any
financial or other transaction with the Depositor or any Affiliate of the
Depositor, or may act as depository for, trustee or agent for, or act on any
committee or body of holders of, securities or other obligations of the
Depositor or its Affiliates.
In the event that the Property Trustee is also acting as Paying Agent or
Securities Registrar hereunder, the rights and protections afforded to the
Property Trustee pursuant to this Article VIII shall also be afforded to such
Paying Agent or Securities Registrar.
SECTION 8.7. Corporate Property Trustee Required; Eligibility of Trustees
and Administrators.
(a) There shall at all times be a Property Trustee hereunder with respect
to the Trust Securities. The Property Trustee shall be a Person that is a
national- or state-chartered bank and eligible pursuant to the Trust Indenture
Act to act as such and has a combined capital and surplus of at least
$50,000,000. If any such Person publishes reports of condition at least
annually, pursuant to law or to the requirements of its supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such Person shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
the Property Trustee with respect to the Trust Securities shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
(b) There shall at all times be one or more Administrators hereunder. Each
Administrator shall be either a natural person who is at least 21 years of age
or a legal entity that shall act through one or more persons authorized to bind
that entity. An employee, officer or Affiliate of the Depositor may serve as an
Administrator.
(c) There shall at all times be a Delaware Trustee. The Delaware Trustee
shall either be (i) a natural person who is at least 21 years of age and a
resident of the State of Delaware or (ii) a legal entity with its principal
place of business in the State of Delaware and that otherwise meets the
requirements of applicable Delaware law that shall act through one or more
persons authorized to bind such entity.
SECTION 8.8. Conflicting Interests.
(a) If the Property Trustee has or shall acquire a conflicting interest
within the meaning of the Trust Indenture Act, the Property Trustee shall either
eliminate such interest or resign, to the extent and in the manner provided by,
and subject to the provisions of, the Trust Indenture Act and this Trust
Agreement.
(b) The Guarantee Agreement and the Indenture shall be deemed to be
sufficiently described in this Trust Agreement for the purposes of clause (i) of
the first proviso contained in Section 310(b) of the Trust Indenture Act.
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SECTION 8.9. Co-Trustees and Separate Trustee.
Unless an Event of Default shall have occurred and be continuing, at
anytime or times, for the purpose of meeting the legal requirements of the Trust
Indenture Act or of any jurisdiction in which any part of the Trust Property may
at the time be located, the Property Trustee shall have power to appoint, and
upon the written request of the Property Trustee, the Depositor and the
Administrators shall for such purpose join with the Property Trustee in the
execution, delivery, and performance of all instruments and agreements necessary
or proper to appoint, one or more Persons approved by the Property Trustee
either to act as co-trustee, jointly with the Property Trustee, of all or any
part of such Trust Property, or to the extent required by law to act as separate
trustee of any such property, in either case with such powers as may be provided
in the instrument of appointment, and to vest in such Person or Persons in the
capacity aforesaid, any property, title, right or power deemed necessary or
desirable, subject to the other provisions of this Section. Any co-trustee or
separate trustee appointed pursuant to this Section shall either be (i) a
natural person who is at least 21 years of age and a resident of the United
States or (ii) a legal entity with its principal place of business in the United
States that shall act through one or more persons authorized to bind such
entity.
Should any written instrument from the Depositor be required by any co-
trustee or separate trustee so appointed for more fully confirming to such co-
trustee or separate trustee such property, title, right, or power, any and all
such instruments shall, on request, be executed, acknowledged and delivered by
the Depositor.
Every co-trustee or separate trustee shall, to the extent permitted bylaw,
but to such extent only, be appointed subject to the following terms, namely:
(a) The Trust Securities shall be executed by one or more Administrators,
and the Trust Securities shall be authenticated by the manual signature of the
Property Trustee and delivered and all rights, powers, duties, and obligations
hereunder in respect of the custody of securities, cash and other personal
property held by, or required to be deposited or pledged with, the Property
Trustees specified hereunder, shall be exercised, solely by the Property Trustee
and not by such co-trustee or separate trustee.
(b) The rights, powers, duties, and obligations hereby conferred or imposed
upon the Property Trustee in respect of any property covered by such appointment
shall be conferred or imposed upon and exercised or performed by the Property
Trustee and such co-trustee or separate trustee jointly, as shall be provided in
the instrument appointing such co-trustee or separate trustee, except to the
extent that under any law of any jurisdiction in which any particular act is to
be performed, the Property Trustee shall be incompetent or unqualified to
perform such act, in which event such rights, powers, duties and obligations
shall be exercised and performed by such co-trustee or separate trustee.
(c) The Property Trustee at any time, by an instrument in writing executed
by it, with the written concurrence of the Depositor, may accept the resignation
of or remove any co-trustee or separate trustee appointed under this Section,
and, in case a Debenture Event of Default has occurred and is continuing, the
Property Trustee shall have power to accept the resignation of, or remove, any
such co-trustee or separate trustee without the concurrence of the Depositor.
Upon the written request of the Property Trustee, the Depositor shall join with
the Property Trustee in the execution, delivery and performance of all
instruments and agreements necessary or proper to effectuate such resignation or
removal. A successor to any co-trustee or separate trustee so resigned or
removed may be appointed in the manner provided in this Section.
(d) No co-trustee or separate trustee hereunder shall be personally liable
by reason of any act or omission of the Property Trustee or any other trustee
hereunder.
(e) The Property Trustee shall not be liable by reason of any act of a co-
trustee or separate trustee or any employees or agents of a co-trustee and
separate trustee nor shall it be liable for the supervision of a co-trustee or
separate trustee or employees or agents of a co-trustee and separate trustee.
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(f) Any Act of Holders delivered to the Property Trustee shall be deemed to
have been delivered to each such co-trustee and separate trustee.
SECTION 8.10. Resignation and Removal; Appointment of Successor.
No resignation or removal of any Issuer Trustee (the "Relevant Trustee")
and no appointment of a successor Issuer Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the successor Issuer
Trustee in accordance with the applicable requirements of Section 8.11.
Subject to the immediately preceding paragraph, a Relevant Trustee may
resign at any time by giving written notice thereof to the Holders. The
Relevant Trustee shall appoint a successor by requesting from at least three
Persons meeting the eligibility requirements its expenses and charges to serve
as the Relevant Trustee on a form provided by the Administrators, and selecting
the Person who agrees to the lowest expenses and charges. If the instrument of
acceptance by the successor Issuer Trustee required by Section 8.11 shall not
have been delivered to the Relevant Trustee within 60 days after the giving of
such notice of resignation, the Relevant Trustee may petition, at the expense of
the Issuer Trust, any court of competent jurisdiction for the appointment of a
successor Relevant Trustee.
The Property Trustee or the Delaware Trustee may be removed at any time by
Act of the Holders of at least a Majority in Liquidation Amount of the Capital
Securities, delivered to the Relevant Trustee (in its individual capacity and on
behalf of the Issuer Trust) (i) for cause, or (ii) if a Debenture Event of
Default shall have occurred and be continuing at any time. If the instrument of
such removal shall not have been delivered to the Relevant Trustee within 60
days after such Act, the Relevant Trustee may petition, at the expense of the
Issuer Trust, any court of competent jurisdiction for appointment of a successor
Relevant Trustee.
If any Issuer Trustee shall resign, it shall appoint its successor. If a
resigning Issuer Trustee shall fail to appoint a successor, or if an Issuer
Trustee shall be removed or become incapable of acting as Issuer Trustee, or if
any vacancy shall occur in the office of any Issuer Trustee for any cause, the
Holders of the Capital Securities, by Act of the Holders of record of not less
than 25% in aggregate Liquidation Amount of the Capital Securities then
Outstanding delivered to such Relevant Trustee, shall promptly appoint a
successor Relevant Trustee or Trustees, and such successor Issuer Trustee shall
comply with the applicable requirements of Section 8.11. If no successor
Relevant Trustee shall have been so appointed by the Holders of the Capital
Securities and accepted appointment in the manner required by Section 8.11, any
Holder, on behalf of himself and all others similarly situated, or any other
Issuer Trustee, may petition any court of competent jurisdiction for the
appointment of a successor Relevant Trustee.
The Property Trustee shall give notice of each resignation and each removal
of an Issuer Trustee and each appointment of a successor Issuer Trustee to all
Holders in the manner provided in Section 10.8 and shall give notice to the
Depositor and to the Administrators. Each notice shall include the name of the
successor Relevant Trustee and the address of its Corporate Trust Office if it
is the Property Trustee.
Notwithstanding the foregoing or any other provision of this Trust
Agreement, in the event any Delaware Trustee who is a natural person dies or
becomes, in the opinion of the Holders of the Common Securities, incompetent or
incapacitated, the vacancy created by such death, incompetence or incapacity may
be filled by the Property Trustee following the procedures regarding expenses
and charges set forth above (with the successor in each case being a Person who
satisfies the eligibility requirements for Administrators or Delaware Trustee,
as the case may be, set forth in Section 8.7).
SECTION 8.11. Acceptance of Appointment by Successor.
In case of the appointment hereunder of a successor Relevant Trustee, the
retiring Relevant Trustee and each such successor Relevant Trustee with respect
to the Trust Securities shall execute, acknowledge and deliver
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an amendment hereto wherein each successor Relevant Trustee shall accept such
appointment and which (a) shall contain such provisions as shall be necessary or
desirable to transfer and confirm to, and to vest in, each successor Relevant
Trustee all the rights, powers, trusts and duties of the retiring Relevant
Trustee with respect to the Trust Securities and the Issuer Trust, and (b) shall
add to or change any of the provisions of this Trust Agreement as shall be
necessary to provide for or facilitate the administration of the Issuer Trust by
more than one Relevant Trustee and upon the execution and delivery of such
amendment the resignation or removal of the retiring Relevant Trustee shall
become effective to the extent provided therein and each such successor Relevant
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Relevant Trustee; but,
on request of the Issuer Trust or any successor Relevant Trustee such retiring
Relevant Trustee shall, upon payment of its charges, duly assign, transfer and
deliver to such successor Relevant Trustee all Trust Property, all proceeds
thereof and money held by such retiring Relevant Trustee hereunder with respect
to the Trust Securities and the Issuer Trust.
Upon request of any such successor Relevant Trustee, the Issuer Trust shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Relevant Trustee all such rights, powers and trusts
referred to in the first or second preceding paragraph, as the case maybe.
No successor Relevant Trustee shall accept its appointment unless at the
time of such acceptance such successor Relevant Trustee shall be qualified and
eligible under this Article.
SECTION 8.12. Merger, Conversion, Consolidation or Succession to Business.
Any Person into which an Issuer Trustee may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which such Issuer Trustee shall be a party, or
any Person succeeding to all or substantially all the corporate trust business
of such Issuer Trustee, shall be the successor of such Issuer Trustee hereunder,
provided that such Person shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto.
SECTION 8.13. Preferential Collection of Claims Against Depositor or
Issuer Trust.
If and when the Property Trustee shall be or become a creditor of the
Depositor (or any other obligor upon the Trust Securities), the Property Trustee
shall be subject to the provisions of the Trust Indenture Act regarding the
collection of claims against the Depositor (or any such other obligor) as is
required by the Trust Indenture Act.
SECTION 8.14. Trustee May File Proofs of Claim.
In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other similar judicial
proceeding relative to the Issuer Trust or any other obligor upon the Trust
Securities or the property of the Issuer Trust or of such other obligor, the
Property Trustee (irrespective of whether any Distributions on the Trust
Securities shall then be due and payable and irrespective of whether the
Property Trustee shall have made any demand on the Issuer Trust for the payment
of any past due Distributions) shall be entitled and empowered, to the fullest
extent permitted by law, by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of any Distributions
owing and unpaid in respect of the Trust Securities and to file such other
papers or documents as may be necessary or advisable in order to have the claims
of the Property Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Property Trustee, its agents and
counsel) and of the Holders allowed in such judicial proceeding, and
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(b) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Holder to make such
payments to the Property Trustee and, in the event the Property Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Property Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Property Trustee, its agents and counsel, and
any other amounts due the Property Trustee.
Nothing herein contained shall be deemed to authorize the Property Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or compensation affecting the Trust
Securities or the rights of any Holder thereof or to authorize the Property
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 8.15. Reports by Property Trustee.
(a) Not later than May 15 of each year commencing with May 15, 1998, the
Property Trustee shall provide to the Holders of the Trust Securities such
reports as are required by Section 313 of the Trust Indenture Act, if any, in
the form, in the manner and at the times provided by Section 313 of the Trust
Indenture Act. The Property Trustee shall also comply with the requirements of
Section 313(d) of the Trust Indenture Act.
(b) A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Property Trustee with the Depositor.
SECTION 8.16. Reports to the Property Trustee.
Each of the Depositor and the Administrators on behalf of the Issuer Trust
shall provide to the Property Trustee, the Commission and the Holders of the
Trust Securities, as applicable, such documents, reports and information as
required by Section 314(a)(1) - (3) (if any) of the Trust Indenture Act and the
compliance certificates required by Section 314(a)(4) and (c) of the Trust
Indenture Act (provided that any certificate to be provided pursuant to Section
314(a)(4) of the Trust Indenture Act shall be provided within 120 days of the
end of each fiscal year of the Issuer Trust).
SECTION 8.17. Evidence of Compliance with Conditions Precedent.
Each of the Depositor and the Administrators on behalf of the Issuer Trust
shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Trust Agreement which relate
to any of the matters set forth in Section 314(c) of the Trust Indenture Act.
Any certificate or opinion required to be given pursuant to Section 314(c) shall
comply with Section 314(e) of the Trust Indenture Act.
SECTION 8.18. Number of Issuer Trustees.
(a) The number of Issuer Trustees shall be two. The Property Trustee and
the Delaware Trustee may be the same Person, in which case the number of Issuer
Trustees may be one.
(b) If an Issuer Trustee ceases to hold office for any reason, a vacancy
shall occur. The vacancy shall be filled with an Issuer Trustee appointed in
accordance with Section 8.10.
(c) The death, resignation, retirement, removal, bankruptcy, dissolution,
termination, incompetence or incapacity to perform the duties of an Issuer
Trustee shall not operate to dissolve, terminate or annul the Issuer Trust or
terminate this Trust Agreement.
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SECTION 8.19. Delegation of Power.
(a) Any Administrator may, by power of attorney consistent with applicable
law, delegate to any other natural person over the age of 21 his or her power
for the purpose of executing any documents contemplated in Section 2.7(a) or
making any governmental filing; and
(b) The Administrators shall have power to delegate from time to time to
such of their number the doing of such things and the execution of such
instruments either in the name of the Issuer Trust or the names of the
Administrators or otherwise as the Administrators may deem expedient, to the
extent such delegation is not prohibited by applicable law or contrary to the
provisions of this Trust Agreement.
SECTION 8.20. Appointment of Administrators.
(a) The Administrators shall be appointed by the Holders of a Majority in
Liquidation Amount of the Common Securities and may be removed by the Holders of
a Majority in Liquidation Amount of the Common Securities or may resign at
anytime. Upon any resignation or removal, the Depositor shall appoint a
successor Administrator. Each Administrator shall execute this Trust Agreement
thereby agreeing to comply with, and be legally bound by, all of the terms,
conditions and provisions of this Trust Agreement. If at any time there is no
Administrator, the Property Trustee or any Holder who has been a Holder of Trust
Securities for at least six months may petition any court of competent
jurisdiction for the appointment of one or more Administrators.
(b) Whenever a vacancy in the number of Administrators shall occur, until
such vacancy is filled by the appointment of an Administrator in accordance with
this Section 8.20, the Administrators in office, regardless of their number (and
notwithstanding any other provision of this Trust Agreement), shall have all the
powers granted to the Administrators and shall discharge all the duties imposed
upon the Administrators by this Trust Agreement.
(c) Notwithstanding the foregoing, or any other provision of this Trust
Agreement, in the event any Administrator or a Delaware Trustee who is a natural
person dies or becomes, in the opinion of the Holders of a Majority in
Liquidation Amount of the Common Securities, incompetent, or incapacitated, the
vacancy created by such death, incompetence or incapacity may be filled by the
remaining Administrators, if there were at least two of them prior to such
vacancy, and by the Depositor, if there were not two such Administrators
immediately prior to such vacancy (with the successor in each case being a
Person who satisfies the eligibility requirement for Administrators or Delaware
Trustee, as the case may be, set forth in Section 8.7).
ARTICLE IX
DISSOLUTION, LIQUIDATION AND MERGER
SECTION 9.1. Dissolution Upon Expiration Date.
Unless earlier dissolved, the Issuer Trust shall automatically dissolve on
March 12, 2039 (the "Expiration Date"), and thereafter the Trust Property shall
be distributed in accordance with Section 9.4.
SECTION 9.2. Early Termination.
The first to occur of any of the following events is an "Early Termination
Event" and the occurrence of which shall cause the dissolution of the Issuer
Trust:
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(a) the occurrence of the appointment of a receiver or other similar
official in any liquidation, insolvency or similar proceeding with respect to
the Depositor or all or substantially all of its property, or a court or other
governmental agency shall enter a decree or order and such decree or order shall
remain unstayed and undischarged for a period of 60 days, unless the Depositor
shall transfer the Common Securities as provided by Section 5.11, in which case
this provision shall refer instead to any such successor Holder of the Common
Securities;
(b) the written direction to the Property Trustee from the Holder of the
Common Securities at any time to dissolve the Issuer Trust and to distribute a
Like Amount of the Junior Subordinated Debentures to Holders in exchange for the
Capital Securities (which direction, subject to Section 9.4(a), is optional and
wholly within the discretion of the Holders of the Common Securities);
(c) the redemption of all of the Capital Securities in connection with the
redemption of all the Junior Subordinated Debentures; and
(d) the entry of an order for dissolution of the Issuer Trust by a court of
competent jurisdiction.
SECTION 9.3. Termination.
As soon as is practicable after the occurrence of an event referred to in
Section 9.1 or 9.2, and upon the completion of the winding up and liquidation of
the Issuer Trust, the Administrators and the Issuer Trustees (each of whom is
hereby authorized to take such action) shall file a certificate of cancellation
with the Secretary of State of the State of Delaware terminating the Trust and,
upon such filing, the respective obligations and responsibilities of the Issuer
Trustees, the Administrators and the Issuer Trust shall terminate.
SECTION 9.4. Liquidation.
(a) If an Early Termination Event specified in clause (a), (b) or (d) of
Section 9.2 occurs or upon the Expiration Date, the Issuer Trust shall be wound
up and liquidated by the Property Trustee as expeditiously as the Property
Trustee determines to be possible by distributing, after paying or making
reasonable provision to pay all claims and obligations of the Issuer Trust in
accordance with Section 3808(e) of the Delaware Business Trust Act, to each
Holder a Like Amount of Junior Subordinated Debentures, subject to Section
9.4(d). Notice of liquidation shall be given by the Property Trustee by first-
class mail, postage prepaid, mailed not later than 15 nor more than 45 days
prior to the Liquidation Date to each Holder of Trust Securities at such
Holder's address appearing in the Securities Register. All notices of
liquidation shall:
(i) state the Liquidation Date;
(ii) state that, from and after the Liquidation Date, the Trust
Securities will no longer be deemed to be Outstanding and any Trust
Securities Certificates not surrendered for exchange will be deemed to
represent a Like Amount of Junior Subordinated Debentures; and
(iii) provide such information with respect to the mechanics by which
Holders may exchange Trust Securities Certificates for Junior Subordinated
Debentures, or if Section 9.4(d) applies receive a Liquidation
Distribution, as the Administrators or the Property Trustee shall deem
appropriate.
(b) Except where Section 9.2(c) or 9.4(d) applies, in order to effect the
liquidation of the Issuer Trust and distribution of the Junior Subordinated
Debentures to Holders, the Property Trustee shall establish a record date for
such distribution (which shall be not more than 30 days prior to the Liquidation
Date) and, either itself acting as exchange agent or through the appointment of
a separate exchange agent, shall establish
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such procedures as it shall deem appropriate to effect the distribution of
Junior Subordinated Debentures in exchange for the Outstanding Trust Securities
Certificates.
(c) Except where Section 9.2(c) or 9.4(d) applies, after the Liquidation
Date, (i) the Capital Securities will no longer be deemed to be Outstanding,
(ii) the Clearing Agency for the Capital Securities or its nominee, as the
registered holder of the Global Capital Securities Certificate, shall receive a
registered global certificate or certificates representing the Junior
Subordinated Debentures to be delivered upon such distribution with respect to
Capital Securities held by the Clearing Agency or its nominee, and, (iii) any
Capital Securities Certificates not held by the Clearing Agency for the Capital
Securities or its nominee as specified in clause (ii) above will be deemed to
represent Junior Subordinated Debentures having a principal amount equal to the
stated Liquidation Amount of the Capital Securities represented thereby and
bearing accrued and unpaid interest in an amount equal to the accumulated and
unpaid Distributions on such Capital Securities until such certificates are
presented to the Securities Registrar for transfer or reissuance.
(d) If, notwithstanding the other provisions of this Section 9.4, whether
because of an order for dissolution entered by a court of competent jurisdiction
or otherwise, distribution of the Junior Subordinated Debentures is not
practical, or if any Early Termination Event specified in clause (c) of Section
9.2 occurs, the Issuer Trust shall be dissolved and wound up and the Trust
Property shall be liquidated by the Property Trustee in such manner as the
Property Trustee determines. In such event, on the date of the dissolution of
the Issuer Trust, unless the Trust Securities have been redeemed or are to be
redeemed on such date pursuant to Article IV, Holders will be entitled to
receive out of the assets of the Issuer Trust available for distribution to
Holders, after paying or making reasonable provision to pay all claims and
obligations of the Issuer Trust in accordance with Section 3808(e) of the
Delaware Business Trust Act, an amount equal to the aggregate of Liquidation
Amount per Trust Security plus accumulated and unpaid Distributions thereon to
the date of payment (such amount being the "Liquidation Distribution"). If,
upon any such dissolution, the Liquidation Distribution can be paid only in part
because the Issuer Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then, subject to the next succeeding
sentence, the amounts payable by the Issuer Trust on the Trust Securities shall
be paid on a pro rata basis (based upon Liquidation Amounts). The Holders of
the Common Securities will be entitled to receive Liquidation Distributions upon
any such dissolution pro rata (determined as aforesaid) with Holders of Capital
Securities, except that, if a Debenture Event of Default has occurred and is
continuing as a result of any failure by the Company to pay any amounts in
respect of Junior Subordinated Debentures when due, the Capital Securities shall
have a priority over the Common Securities as provided in Section 4.3.
SECTION 9.5. Mergers, Consolidations, Amalgamations or Replacements of the
Issuer Trust.
The Issuer Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any entity, except pursuant to this Section 9.5
or Section 9.4. At the request of the Holders of the Common Securities, and
with the consent of the Holders of at least a Majority in Liquidation Amount of
the Capital Securities, the Issuer Trust may merge with or into, consolidate,
amalgamate, or be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to a trust organized as such under the laws
of any State; provided, however, that (i) such successor entity either (a)
expressly assumes all of the obligations of the Issuer Trust with respect to the
Capital Securities or (b) substitutes for the Capital Securities other
securities having substantially the same terms as the Capital Securities
(the"Successor Securities") so long as the Successor Securities have the same
priority as the Capital Securities with respect to distributions and payments
upon liquidation, redemption and otherwise, (ii) a trustee of such successor
entity possessing the same powers and duties as the Property Trustee is
appointed to hold the Junior Subordinated Debentures, (iii) such merger,
consolidation, amalgamation,replacement, conveyance, transfer or lease does not
cause the Capital Securities (including any Successor Securities) to be
downgraded by any nationally recognized statistical rating organization, (iv)
such merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease does not adversely affect the rights, preferences and privileges of the
holders of the Capital Securities (including any Successor Securities) in any
material respect,
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<PAGE>
(v) such successor entity has a purpose substantially identical to that of the
Issuer Trust, (vi) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Issuer Trustee has received an
Opinion of Counsel from independent counsel experienced in such matters to the
effect that (a) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights preferences
and privileges of the holders of the Capital Securities (including any Successor
Securities) in any material respect, and (b) following such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease, neither
the Issuer Trust nor such successor entity will be required to register as
an"investment company" under the Investment Company Act and (vii) the Depositor
or any permitted transferee to whom it has transferred the Common Securities
hereunder own all of the common securities of such successor entity and
guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the Guarantee Agreement.
Notwithstanding the foregoing, the Issuer Trust shall not, except with the
consent of holders of 100% in Liquidation Amount of the Capital Securities,
consolidate, amalgamate, merge with or into, or be replaced by or convey,
transfer or lease its properties and assets substantially as an entirety to any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease would cause the Issuer Trust or the successor
entity to be taxable as a corporation for United States Federal income tax
purposes.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Limitation of Rights of Holders.
Except as set forth in Section 9.2, the death, incapacity, dissolution,
termination or bankruptcy of any Person having an interest, beneficial or
otherwise, in Trust Securities shall not operate to terminate this Trust
Agreement, nor dissolve or terminate the Issuer Trust, nor entitle the legal
representatives, successors or heirs of such Person or any Holder for such
Person, to claim an accounting, take any action or bring any proceeding in any
court for a partition or winding-up of the arrangements contemplated hereby, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them. Any merger or similar agreement authorized in accordance with
this Trust Agreement shall be executed by one or more of the Administrators on
behalf of the Issuer Trust.
SECTION 10.2. Amendment.
(a) This Trust Agreement may be amended from time to time by the Property
Trustee and the Holders of a Majority in Liquidation Amount of the Common
Securities, without the consent of any Holder of the Capital Securities (i) to
cure any ambiguity, correct or supplement any provision herein which may be
inconsistent with any other provision herein, or to make any other provisions
with respect to matters or questions arising under this Trust Agreement,
provided, however, that such amendment shall not adversely affect in any
material respect the interests of any Holder or (ii) to modify, eliminate or add
to any provisions of this Trust Agreement to such extent as shall be necessary
to ensure that the Issuer Trust will not be taxable as a corporation for United
States Federal income tax purposes at any time that any Trust Securities are
Outstanding or to ensure that the Issuer Trust will not be required to register
as an investment company under the Investment Company Act.
(b) Except as provided in Section 10.2(c) hereof, any provision of this
Trust Agreement may be amended by the Property Trustee and the Holders of a
Majority in Liquidation Amount of the Common Securities with (i) the consent of
Holders of at least a Majority in Liquidation Amount of the Capital Securities
and (ii) receipt by the Issuer Trustees of an Opinion of Counsel to the effect
that such amendment or the exercise of any power granted to the Issuer Trustees
in accordance with such amendment will not cause the
42
<PAGE>
Issuer Trust to be taxable as a corporation for United States federal income tax
purposes or affect the Issuer Trust's exemption from status of an "investment
company" under the Investment Company Act.
(c) In addition to and notwithstanding any other provision in this Trust
Agreement, without the consent of each affected Holder, this Trust Agreement may
not be amended to (i) change the amount or timing of any Distribution on the
Trust Securities or otherwise adversely affect the amount of any Distribution
required to be made in respect of the Trust Securities as of a specified date or
(ii) restrict the right of a Holder to institute suit for the enforcement of any
such payment on or after such date.
(d) Notwithstanding any other provisions of this Trust Agreement, no Issuer
Trustee shall enter into or consent to any amendment to this Trust Agreement
which would cause the Issuer Trust to fail or cease to qualify for the exemption
from status as an "investment company" under the Investment Company Act or be
taxable as a corporation for United States Federal income tax purposes.
(e) Notwithstanding anything in this Trust Agreement to the contrary,
without the consent of the Depositor and the Administrators, this Trust
Agreement may not be amended in a manner which imposes any additional obligation
on the Depositor or the Administrators.
(f) In the event that any amendment to this Trust Agreement is made, the
Administrators or the Property Trustee shall promptly provide to the Depositor a
copy of such amendment.
(g) Neither the Property Trustee nor the Delaware Trustee shall be required
to enter into any amendment to this Trust Agreement which affects its own
rights, duties or immunities under this Trust Agreement. The Property Trustee
shall be entitled to receive an Opinion of Counsel and an Officer's Certificate
stating that any amendment to this Trust Agreement is in compliance with this
Trust Agreement.
(h) Any amendments to this Trust Agreement, pursuant to Section 10.2(a),
shall become effective when notice of such amendment is given to the Holders of
the Trust Securities.
(i) Notwithstanding any other provision of this Trust Agreement, no
amendment to this Trust Agreement may be made if, as a result of such amendment,
it would cause the Issuer Trust to be taxable as a corporation for United States
Federal income tax purposes.
SECTION 10.3. Separability.
In case any provision in this Trust Agreement or in the Trust Securities
Certificates shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 10.4. Governing Law.
THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE HOLDERS,
THE ISSUER TRUST, THE DEPOSITOR, THE ISSUER TRUSTEES AND THE ADMINISTRATORS
SHALL GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY SUCH LAWS WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS OF THE STATE OF DELAWARE OR ANY
OTHER JURISDICTION THAT WOULD CALL FOR THE APPLICATION OF THE LAW OF ANY
JURISDICTION OTHER THAN THE STATE OF DELAWARE; PROVIDED, HOWEVER, THAT THERE
SHALL NOT BE APPLICABLE TO THE HOLDERS, THE ISSUER TRUST, THE DEPOSITOR, THE
ISSUER TRUSTEES, THE ADMINISTRATORS OR THIS TRUST AGREEMENT ANY PROVISION OF THE
LAWS (STATUTORY OR COMMON) OF THE STATE OF DELAWARE PERTAINING TO TRUSTS THAT
RELATE TO OR REGULATE, IN A MANNER INCONSISTENT WITH
43
<PAGE>
THE TERMS HEREOF (A) THE FILING WITH ANY COURT OR GOVERNMENTAL BODY OR AGENCY OF
TRUSTEE ACCOUNTS OR SCHEDULES OF TRUSTEE FEES AND CHARGES, (B) AFFIRMATIVE
REQUIREMENTS TO POST BONDS FOR TRUSTEES, OFFICERS, AGENTS OR EMPLOYEES OF A
TRUST, (C) THE NECESSITY FOR OBTAINING COURT OR OTHER GOVERNMENTAL APPROVAL
CONCERNING THE ACQUISITION, HOLDING OR DISPOSITION OF REAL OR PERSONAL PROPERTY,
(D) FEES OR OTHER SUMS PAYABLE TO TRUSTEES, OFFICERS, AGENTS OR EMPLOYEES OF A
TRUST, (E) THE ALLOCATION OF RECEIPTS AND EXPENDITURES TO INCOME OR PRINCIPAL,
(F) RESTRICTIONS OR LIMITATIONS ON THE PERMISSIBLE NATURE, AMOUNT OR
CONCENTRATION OF TRUST INVESTMENTS OR REQUIREMENTS RELATING TO THE TITLING,
STORAGE OR OTHER MANNER OF HOLDING OR INVESTING TRUST ASSETS OR (G) THE
ESTABLISHMENT OF FIDUCIARY OR OTHER STANDARDS OF RESPONSIBILITY OR LIMITATIONS
ON THE ACTS OR POWERS OF TRUSTEES THAT ARE INCONSISTENT WITH THE LIMITATIONS OR
LIABILITIES OR AUTHORITIES AND POWERS OF THE ISSUER TRUSTEES OR THE
ADMINISTRATORS AS SET FORTH OR REFERENCED IN THIS TRUST AGREEMENT. SECTION 3540
OF TITLE 12 OF THE DELAWARE CODE SHALL NOT APPLY TO THE ISSUER TRUST.
SECTION 10.5. Payments Due on Non-Business Day.
If the date fixed for any payment on any Trust Security shall be a day that
is not a Business Day, then such payment need not be made on such date but may
be made on the next succeeding day that is a Business Day, with the same force
and effect as though made on the date fixed for such payment, and no
Distributions shall accumulate on such unpaid amount for the period after such
date.
SECTION 10.6. Successors.
This Trust Agreement shall be binding upon and shall inure to the benefit
of any successor to the Depositor, the Issuer Trust, the Administrators and any
Issuer Trustee, including any successor by operation of law. Except in
connection with a consolidation, merger or sale involving the Depositor that is
permitted under Article VIII of the Indenture and pursuant to which the assignee
agrees in writing to perform the Depositor's obligations hereunder, the
Depositor shall not assign its obligations hereunder.
SECTION 10.7. Headings.
The Article and Section headings are for convenience only and shall not
affect the construction of this Trust Agreement.
SECTION 10.8. Reports, Notices and Demands.
Any report, notice, demand or other communication that by any provision of
this Trust Agreement is required or permitted to be given or served to or upon
any Holder or the Depositor may be given or served in writing by deposit
thereof, first class postage prepaid, in the United States mail, hand delivery
or facsimile transmission, in each case, addressed, (a) in the case of a Holder
of Capital Securities, to such Holder as such Holder's name and address may
appear on the Securities Register; and (b) in the case of the Holder of Common
Securities or the Depositor, to Morgan Stanley, Dean Witter, Discover & Co.,
1585 Broadway, New York, NY 10036, Attention: Office of the Secretary, facsimile
no.:(212) 761-0331 or to such other address as may be specified in a written
notice by the Depositor to the Property Trustee. Such notice, demand or other
communication to or upon a Holder shall be deemed to have been sufficiently
given or made, for all purposes, upon hand delivery, mailing or transmission.
Such notice, demand or other communication to or upon the Depositor shall be
deemed to have been sufficiently given or made only upon actual receipt of the
writing by the Depositor.
44
<PAGE>
Any notice, demand or other communication which by any provision of this
Trust Agreement is required or permitted to be given or served to or upon the
Property Trustee, the Delaware Trustee, the Administrators, or the Issuer Trust
shall be given in writing addressed (until another address is published by the
Issuer Trust) as follows: (a) with respect to the Property Trustee to The Bank
of New York, 101 Barclay Street, Floor 21 West, New York, NY 10286, Attention:
Corporate Trust Administration; (b) with respect to the Delaware Trustee to The
Bank of New York (Delaware), 101 Barclay Street, Floor 21 West, New York, NY
10286, Attention: Corporate Trust Administration; and (c) with respect to the
Administrators, to them at the address above for notices to the Depositor,
marked "Attention: Office of the Secretary". Such notice, demand or other
communication to or upon the Issuer Trust, the Property Trustee or the
Administrators shall be deemed to have been sufficiently given or made only upon
actual receipt of the writing by the Issuer Trust, the Property Trustee, or such
Administrator.
SECTION 10.9. Agreement Not to Petition.
Each of the Issuer Trustees, the Administrators and the Depositor agree for
the benefit of the Holders that, until at least one year and one day after the
Issuer Trust has been terminated in accordance with Article IX, they shall not
file, or join in the filing of, a petition against the Issuer Trust under any
bankruptcy, insolvency, reorganization or other similar law (including, without
limitation, the United States Bankruptcy Code) (collectively, "Bankruptcy Laws")
or otherwise join in the commencement of any proceeding against the Issuer Trust
under any Bankruptcy Law. In the event the Depositor takes action in violation
of this Section 10.9, the Property Trustee agrees, for the benefit of Holders,
that at the expense of the Depositor, it shall file an answer with the
bankruptcy court or otherwise properly contest the filing of such petition by
the Depositor against the Issuer Trust or the commencement of such action and
raise the defense that the Depositor has agreed in writing not to take such
action and should be estopped and precluded therefrom and such other defenses,
if any, as counsel for the Issuer Trustee or the Issuer Trust may assert. If
any Issuer Trustee or Administrator takes action in violation of this Section
10.9, the Depositor agrees, for the benefit of the Holders, that at the expense
of the Depositor, it shall file an answer with the bankruptcy court or otherwise
properly contest the filing of such petition by such Person against the
Depositor or the commencement of such action and raise the defense that such
Person has agreed in writing not to take such action and should be estopped and
precluded therefrom and such other defenses, if any, as counsel for the Issuer
Trustee or the Issuer Trust may assert. The provisions of this Section 10.9
shall survive the termination of this Trust Agreement.
SECTION 10.10. Trust Indenture Act; Conflict with Trust Indenture Act.
(a) Trust Indenture Act; Application. (i) This Trust Agreement is subject
to the provisions of the Trust Indenture Act that are required to be a part of
this Trust Agreement and shall, to the extent applicable, be governed by such
provisions; (ii) if and to the extent that any provision of this Trust Agreement
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control; (iii)
for purposes of this Trust Agreement, the Property Trustee, to the extent
permitted by applicable law and/or the rules and regulations of the Commission,
shall be the only Issuer Trustee which is a trustee for the purposes of the
Trust Indenture Act; and (iv) the application of the Trust Indenture Act to this
Trust Agreement shall not affect the nature of the Capital Securities and the
Common Securities as equity securities representing undivided beneficial
interests in the assets of the Issuer Trust.
(b) Lists of Holders of Capital Securities. (i) Each of the Depositor and
the Administrators on behalf of the Trust shall provide the Property Trustee
with such information as is required under Section 312(a) of the Trust Indenture
Act at the times and in the manner provided in Section 312(a) and (ii) the
Property Trustee shall comply with its obligations under Sections 310(b), 311
and 312(b)of the Trust Indenture Act.
(c) Disclosure of Information. The disclosure of information as to the
names and addresses of the Holders of Trust Securities in accordance with
Section 312 of the Trust Indenture Act, regardless of the source from which such
information was derived, shall not be deemed to be a violation of any existing
law or any law
45
<PAGE>
hereafter enacted which does not specifically refer to Section 312 of the Trust
Indenture Act, nor shall the Property Trustee be held accountable by reason of
mailing any material pursuant to a request made under Section 312(b) of the
Trust Indenture Act.
SECTION 10.11. Acceptance of Terms of Trust Agreement, Guarantee and
Indenture.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN BY
OR ON BEHALF OF A HOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE OR
FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE
BY THE HOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN SUCH TRUST SECURITY
OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT, THE GUARANTEE AGREEMENT
AND THE INDENTURE, AND THE AGREEMENT TO THE SUBORDINA TION PROVISIONS AND OTHER
TERMS OF THE GUARANTEE AGREEMENT AND THE INDENTURE, AND SHALL CONSTITUTE THE
AGREEMENT OF THE ISSUER TRUST, SUCH HOLDER AND SUCH OTHERS THAT THE TERMS AND
PROVISIONS OF THIS TRUST AGREEMENT SHALL BE BINDING,OPERATIVE AND EFFECTIVE AS
BETWEEN THE ISSUER TRUST AND SUCH HOLDER AND SUCH OTHERS.
SECTION 10.12. Counterparts.
This instrument may be executed in any number or counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
46
<PAGE>
MORGAN STANLEY, DEAN WITTER,
DISCOVER & CO.
as Depositor
By:______________________________________________
Name: Alexander C. Frank
Title:Assistant Treasurer
THE BANK OF NEW YORK,
as Property Trustee, and
not in its individual capacity
By:_____________________________________________
Name:
Title:
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee, and not
in its individual capacity
By:______________________________________________
Name:
Title:
__________________________________________________
Name:Alexander C. Frank
Title: Administrator
__________________________________________________
Name: Debra M. Aaron
Title: Administrator
47
<PAGE>
Exhibit A
CERTIFICATE OF TRUST
A-1
<PAGE>
Exhibit B
FORM OF CERTIFICATE DEPOSITARY AGREEMENT
B-1
<PAGE>
Exhibit C
THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT TO THE
DEPOSITOR OR AN AFFILIATE OF THE DEPOSITOR IN COMPLIANCE
WITH APPLICABLE LAW AND SECTION 5.11 OF THE TRUST AGREEMENT
Certificate Number: C-___
Number of Common Securities:
CERTIFICATE EVIDENCING COMMON SECURITIES
OF
MSDW CAPITAL TRUST I
7.10% COMMON SECURITIES
(LIQUIDATION AMOUNT $25 PER COMMON SECURITY)
MSDW Capital Trust I, a statutory business trust created under the laws of
the State of Delaware (the "Issuer Trust"), hereby certifies that Morgan
Stanley, Dean Witter, Discover & Co. (the "Holder") is the registered owner of
( ) common securities of the Issuer Trust representing undivided
beneficial interests in assets of the Issuer Trust and designated the 7.10%
Common Securities (liquidation amount $25 per Common Security) (the "Common
Securities"). Except in accordance with Section 5.11 of the Trust Agreement (as
defined below) the Common Securities are not transferable and any attempted
transfer hereof other than in accordance therewith shall be void. The
designations, rights, privileges, restrictions, preferences and other terms and
provisions of the Common Securities are set forth in, and this certificate and
the Common Securities represented hereby are issued and shall in all respects be
subject to the terms and provisions of, the Amended and Restated Trust Agreement
of the Issuer Trust, dated as of March 12, 1998, as the same may be amended from
time to time (the "Trust Agreement") among Morgan Stanley, Dean Witter, Discover
& Co., as Depositor, The Bank of New York, as Property Trustee, The Bank of New
York (Delaware), as Delaware Trustee, two individuals selected by the holders of
the Common Securities to act as administrators with respect to the Issuer Trust
(the "Administrators") and the holders of Trust Securities, including the
designation of the terms of the Common Securities as set forth therein. The
Holder is entitled to the benefits of a Guarantee Agreement entered into by
Morgan Stanley, Dean Witter, Discover & Co., dated as of March 12, 1998 (the
"Guarantee Agreement"), to the extent provided therein. The Issuer Trust will
furnish a copy of the Trust Agreement and the Guarantee Agreement to the Holder
without charge upon written request to the Issuer Trust at its principal place
of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
Terms used but not defined herein have the meanings set forth in the Trust
Agreement.
IN WITNESS WHEREOF, one of the Administrators of the Issuer Trust has
executed this certificate this day of , 1998.
MSDW CAPITAL TRUST I
By:______________________________________________
Name:
Administrator
C-1
<PAGE>
Exhibit D
[IF THE CAPITAL SECURITIES CERTIFICATE IS TO BE A GLOBAL CAPITAL SECURITIES
CERTIFICATE, INSERT -- THIS CAPITAL SECURITIES CERTIFICATE IS A GLOBAL CAPITAL
SECURITIES CERTIFICATE WITHIN THE MEANING OF THE TRUST AGREEMENT HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A
DEPOSITARY. THIS CAPITAL SECURITY CERTIFICATE IS EXCHANGEABLE FOR CAPITAL
SECURITIES CERTIFICATES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
TRUST AGREEMENT AND MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY
TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE
DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE TRUST AGREEMENT.
UNLESS THIS CAPITAL SECURITY CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
TO MSDW CAPITAL TRUST I OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CAPITAL SECURITY CERTIFICATE ISSUED IS REGISTERED IN THE NAME
OF SUCH NOMINEE AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO SUCH ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO A PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, HAS AN INTEREST
HEREIN.]
NO EMPLOYEE BENEFIT OR OTHER PLAN OR INDIVIDUAL RETIREMENT ACCOUNT SUBJECT
TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE") (EACH, A "PLAN"), NO ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN
ASSETS" BY REASON OF ANY PLAN'S INVESTMENT IN THE ENTITY (A "PLAN ASSET
ENTITY"), AND NO PERSON INVESTING "PLAN ASSETS" OF ANY PLAN, MAY ACQUIRE OR HOLD
THIS CAPITAL SECURITIES CERTIFICATE OR ANY INTEREST HEREIN, UNLESS SUCH PURCHASE
AND HOLDING IS COVERED BY THE EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT
OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 96-23, 95-60, 91-38,
90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION WITH RESPECT TO SUCH PURCHASE AND
HOLDING AND, IN THE CASE OF ANY PURCHASER OR HOLDER RELYING ON ANY EXEMPTION
OTHER THAN PTCE 96-23, 95-60, 91-38, 90-1 OR 84-14, HAS COMPLIED WITH ANY
REQUEST BY THE DEPOSITOR OR THE ISSUER TRUST FOR AN OPINION OF COUNSEL OR OTHER
EVIDENCE WITH RESPECT TO THE APPLICABILITY OF SUCH EXEMPTION. ANY PURCHASER OR
HOLDER OF THE CAPITAL SECURITIES CERTIFICATE OR ANY INTEREST THEREIN WILL BE
DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING HEREOF THAT EITHER (A)
THE PURCHASER AND HOLDER ARE NOT A PLAN OR A PLAN ASSET ENTITY AND IS NOT
PURCHASING SUCH SECURITIES ON BEHALF OF OR WITH "PLAN ASSETS" OF ANY PLAN, OR
(B) THE PURCHASE AND HOLDING OF THE CAPITAL SECURITIES IS COVERED BY THE
EXEMPTIVE RELIEF PROVIDED BY PTCE 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER
APPLICABLE EXEMPTION.
D-1
<PAGE>
CERTIFICATE NUMBER: C-___ CUSIP NO. 553538208
______ Capital Securities
CERTIFICATE EVIDENCING CAPITAL SECURITIES OF
MSDW CAPITAL TRUST I
7.10% CAPITAL SECURITIES
(LIQUIDATION AMOUNT $25 PER CAPITAL SECURITY)
MSDW Capital Trust I, a statutory business trust created under the laws of
the State of Delaware (the "Issuer Trust"), hereby certifies that
(the "Holder") is the registered owner of $ in aggregate liquidation
amount of capital securities of the Issuer Trust representing a preferred
undivided beneficial interest in the assets of the Issuer Trust and designated
the MSDW Capital Trust I 7.10% Capital Securities (liquidation amount $25 per
Capital Security) (the "Capital Securities"). The Capital Securities are
transferable on the books and records of the Issuer Trust, in person or by a
duly authorized attorney, upon surrender of this certificate duly endorsed and
in proper form for transfer as provided in Section 5.5 of the Trust Agreement
(as defined below). The designations, rights, privileges, restrictions,
preferences and other terms and provisions of the Capital Securities are set
forth in, and this certificate and the Capital Securities represented hereby are
issued and shall in all respects be subject to the terms and provisions of, the
Amended and Restated Trust Agreement of the Issuer Trust, dated as of March 12,
1998, as the same may be amended from time to time (the "Trust Agreement"),
among Morgan Stanley, Dean Witter, Discover & Co., as Depositor, The Bank of New
York, as Property Trustee, The Bank of New York (Delaware), as Delaware Trustee,
two individuals selected by the holders of the Common Securities to act as
administrators with respect to the Issuer Trust (the "Administrators") and the
Holders of Trust Securities, including the designation of the terms of the
Capital Securities as set forth therein. The Holder is entitled to the benefits
of the Guarantee Agreement entered into by Morgan Stanley, Dean Witter, Discover
& Co., a Delaware corporation, and The Bank of New York, as Guarantee Trustee,
dated as of March 12, 1998 (the "Guarantee Agreement"), to the extent provided
therein. The Issuer Trust will furnish a copy of the Trust Agreement and the
Guarantee Agreement to the Holder without charge upon written request to the
Issuer Trust at its principal place of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
Terms used but not defined herein have the meanings set forth in the Trust
Agreement.
IN WITNESS WHEREOF, one of the Administrators of the Issuer Trust has
executed this certificate this day of , 1998.
MSDW CAPITAL TRUST I
By:_______________________________
Name:
Administrator
AUTHENTICATED, COUNTERSIGNED AND REGISTERED:
The Bank of New York, as Property Trustee
By:______________________________________________
Name:
Title:
Date:
D-2
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital
Security to:
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints ______________________________________________________
agent to transfer this Capital Security Certificate on the books of the Issuer
Trust. The agent may substitute another to act for him or her.
Date:__________________ Signature:_____________________________________
(Sign exactly as your name appears on the other
side of this Capital Security Certificate)
Signature Guarantee:___________________________
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Property Trustee, which requirements include membership or
participation in the Security Transfer Agent medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Property Trustee
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
D-3
<PAGE>
Exhibit E
[FORM OF EXPENSE AGREEMENT]
AGREEMENT AS TO EXPENSES AND LIABILITIES
AGREEMENT AS TO EXPENSES AND LIABILITIES, dated as of March 12, 1998,
between Morgan Stanley, Dean Witter, Discover & Co., a Delaware corporation, as
Depositor (the "Depositor"), and MSDW Capital Trust I, a Delaware business trust
(the "Issuer Trust").
WHEREAS, the Issuer Trust intends to issue its Common Securities (the
"Common Securities") to and acquire Debentures from the Depositor, and to issue
and sell 7.10% Capital Securities, (the "Capital Securities") with such powers,
preferences and special rights and restrictions as are set forth in the Amended
and Restated Trust Agreement of the Issuer Trust, dated as of March 12, 1998,
among Morgan Stanley, Dean Witter, Discover & Co., as Depositor, The Bank of New
York, as Property Trustee, The Bank of New York (Delaware), as Delaware Trustee,
two individuals selected by the holders of the Common Securities to act as
administrators with respect to the Issuer Trust (the "Administrators") and the
holders of Trust Securities, as the same may be amended from time to time (the
"Trust Agreement");
WHEREAS, the
Depositor will own all of the Common Securities of the Trust;
WHEREAS, capitalized
terms used but not defined herein have the meanings set forth in the Trust
Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I
SECTION 1.1. Guarantee by the Depositor. Subject to the terms and
conditions hereof, the Depositor hereby irrevocably and unconditionally
guarantees to each person or entity to whom the Issuer Trust is now or hereafter
becomes indebted or liable (the "Beneficiaries") the full payment, when and as
due, of any and all Obligations (as hereinafter defined) to such Beneficiaries.
As used herein, "Obligations" means any costs, expenses or liabilities of the
Issuer Trust, other than obligations of the Issuer Trust to pay to holders of
any Trust Securities the amounts due such holders pursuant to the terms of the
Trust Securities. This Agreement is intended to be for the benefit of, and to
be enforceable by, all such Beneficiaries, whether or not such Beneficiaries
have received notice hereof.
SECTION 1.2. Subordination of Guarantee. The guarantee and other
liabilities and obligations of the Depositor under this Agreement shall
constitute unsecured obligations of the Depositor and shall rank subordinate and
junior in right of payment to all Senior Indebtedness (as defined in the
Indenture) of the Depositor to the extent and in the manner set forth in the
Indenture with respect to the Debentures, and the provisions of Article XIII of
the Indenture will apply, mutatis mutandis, to the obligations of the Depositor
hereunder. The obligations of the Depositor hereunder do not constitute Senior
Indebtedness (as defined in the Indenture) of the Depositor.
SECTION 1.3. Term of Agreement. This Agreement shall terminate and
be of no further force and effect upon the dissolution of the Issuer Trust,
provided, however, that this Agreement shall continue to be effective or shall
be reinstated, as the case may be, if at any time any holder of Capital
Securities or any Beneficiary must restore payment of any sums paid under the
Capital Securities, under any Obligation, under the Guarantee Agreement dated
the date hereof by the Depositor and The Bank of New York, as guarantee
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trustee, or under this Agreement for any reason whatsoever. This Agreement is
continuing, irrevocable, unconditional and absolute.
SECTION 1.4. Waiver of Notice. The Depositor hereby waives notice of
acceptance of this Agreement and of any Obligation to which it applies or may
apply, and the Depositor hereby waives presentment, demand for payment, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
SECTION 1.5. No Impairment. The obligations, covenants, agreements
and duties of the Depositor under this Agreement shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the extension of time for the payment by the Issuer Trust of all
or any portion of the Obligations or for the performance of any other obligation
under, arising out of, or in connection with, the Obligations;
(b) any failure, omission, delay or lack of diligence on the part of
the Beneficiaries to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Beneficiaries with respect to the Obligations or any
action on the part of the Issuer Trust granting indulgence or extension of any
kind; or
(c) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Issuer Trust or any of the assets of
the Issuer Trust (other than the dissolution of the Issuer Trust in accordance
with the terms thereof).
There shall be no obligation of the Beneficiaries to give notice to, or obtain
the consent of, the Depositor with respect to the happening or any of the
foregoing.
SECTION 1.6. Enforcement. A Beneficiary may enforce this Agreement
directly against the Depositor and the Depositor waives any right or remedy to
require that any action be brought against the Issuer Trust or any other person
or entity before proceeding against the Depositor.
SECTION 1.7. Subrogation. The Depositor shall be subrogated to all
rights (if any) of any Beneficiary against the Issuer Trust in respect of any
amounts paid to the Beneficiaries by the Depositor under this Agreement;
provided, however, that the Depositor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any rights
that it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Agreement, if,
at the time of any such payment, any amounts are due and unpaid under this
Agreement or any payments are due to the holders of Capital Securities under the
Trust Agreement.
ARTICLE II
SECTION 2.1. Assignment. This Agreement may not be assigned by
either party hereto without the consent of the other, and any purported
assignment without such consent shall be void; except that upon any transfer of
the Common Securities, this Agreement shall be assigned and delegated by the
Depositor to its successor with such transfer without any action by either party
hereto.
SECTION 2.2. Binding Effect. All guarantees and agreements contained
in this Agreement shall bind the successors, assigns, receivers, trustees and
representatives of the Depositor and shall inure to the benefit of the
Beneficiaries.
SECTION 2.3. Amendment. So long as there remains any Beneficiary or
any Capital Securities are outstanding, this Agreement shall not be modified or
amended in any manner adverse to such Beneficiary or to
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<PAGE>
the holders of the Capital Securities without the consent of such Beneficiary or
the holders of the Capital Securities, as the case may be.
SECTION 2.4. Notices. Any notice, request or other communication
required or permitted to be given hereunder shall be given in writing by
delivering the same against receipt therefor by facsimile transmission
(confirmed by mail), telex or by registered or certified mail, addressed as
follows (and if so given, shall be deemed given when mailed or upon receipt of
an answer-back, if sent by telex):
MSDW Capital Trust I
c/o The Bank of New York
101 Barclay Street, Floor 21 West
New York, NY 10286
Attention: Corporate Trust Administration
With a copy to:
Morgan Stanley, Dean Witter,
Discover & Co.
1585 Broadway
New York, NY 10036
Attention: Secretary
SECTION 2.5 THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
THIS AGREEMENT is executed as of the day and year first above written.
MORGAN STANLEY, DEAN WITTER,
DISCOVER & CO.
By:________________________________
Name: Alexander C. Frank
Title: Assistant Treasurer
MSDW CAPITAL TRUST I
By:________________________________
Name: Alexander C. Frank
Administrator
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EXHIBIT 4.4
________________________________________________________________________________
MSDW CAPITAL TRUST I
CAPITAL SECURITIES GUARANTEE AGREEMENT
Between
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
(as Guarantor)
and
THE BANK OF NEW YORK
(as Guarantee Trustee)
March 12, 1998
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I.
DEFINITIONS
SECTION 1.1. Definitions.......................................... 1
ARTICLE II.
TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application..................... 4
SECTION 2.2. List of Holders...................................... 4
SECTION 2.3. Reports by the Guarantee Trustee..................... 4
SECTION 2.4. Periodic Reports to the Guarantee Trustee............ 4
SECTION 2.5. Evidence of Compliance with Conditions Precedent..... 5
SECTION 2.6. Events of Default; Waiver............................ 5
SECTION 2.7. Event of Default; Notice............................. 5
SECTION 2.8. Conflicting Interests................................ 5
ARTICLE III.
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 3.1. Powers and Duties of the Guarantee Trustee........... 5
SECTION 3.2. Certain Rights of Guarantee Trustee.................. 6
SECTION 3.3. Indemnity............................................ 8
SECTION 3.4. Expenses............................................. 8
ARTICLE IV.
GUARANTEE TRUSTEE
SECTION 4.1. Guarantee Trustee; Eligibility....................... 8
SECTION 4.2. Appointment, Removal and Resignation of
the Guarantee Trustee................................ 8
ARTICLE V.
GUARANTEE
SECTION 5.1. Guarantee............................................ 9
SECTION 5.2. Waiver of Notice and Demand.......................... 9
SECTION 5.3. Obligations Not Affected............................. 9
SECTION 5.4. Rights of Holders.................................... 10
SECTION 5.5. Guarantee of Payment................................. 10
SECTION 5.6. Subrogation.......................................... 10
SECTION 5.7. Independent Obligations.............................. 11
<PAGE>
ARTICLE VI.
COVENANTS AND SUBORDINATION
SECTION 6.1. Subordination........................................ 11
SECTION 6.2. Pari Passu Guarantees................................ 11
ARTICLE VII.
TERMINATION
SECTION 7.1. Termination.......................................... 11
ARTICLE VIII.
MISCELLANEOUS
SECTION 8.1. Successors and Assigns............................... 12
SECTION 8.2. Amendments........................................... 12
SECTION 8.3. Notices.............................................. 12
SECTION 8.4. Benefit.............................................. 13
SECTION 8.5. Interpretation....................................... 13
SECTION 8.6. Governing Law........................................ 14
SECTION 8.7. Counterparts......................................... 14
ii
<PAGE>
Certain Sections of this Guarantee Agreement relating
to Sections 310 through 318 of the
Trust Indenture Act of 1939 Trust Indenture
Guarantee Agreement
Act Section
- --- -------
Section
(ss.) 310(a)(1) .........................................................4.1(a)
(a)(2) ..................................................................4.1(a)
(a)(3) ..........................................................Not Applicable
(a)(4) ..........................................................Not Applicable
(b) ................................................................2.8, 4.1(c)
(ss.) 311(a) ....................................................Not Applicable
(b) .............................................................Not Applicable
(ss.) 312(a) ............................................................2.2(a)
(b) .....................................................................2.2(b)
(c) .............................................................Not Applicable
(ss.) 313(a) ...............................................................2.3
(a)(4) .....................................................................2.3
(b) ........................................................................2.3
(c) ........................................................................2.3
(d) ........................................................................2.3
(ss.) 314(a) ...............................................................2.4
(b) ........................................................................2.4
(c)(1) .....................................................................2.5
(c)(2) .....................................................................2.5
(c)(3) .....................................................................2.5
(e) ..............................................................1.1, 2.5, 3.2
(ss.) 315(a) ............................................................3.1(d)
(b) ........................................................................2.7
(c) .....................................................................3.1(c)
(d) .....................................................................3.1(d)
(e) .............................................................Not Applicable
(ss.) 316(a) ......................................................1.1,2.6, 5.4
(a)(1)(A) ..................................................................5.4
(a)(1)(B) ..................................................................5.4
(a)(2) ..........................................................Not Applicable
(b) ........................................................................5.3
(c) .............................................................Not Applicable
(ss.) 317(a)(1) .................................................Not Applicable
(a)(2) ..........................................................Not Applicable
(b) .............................................................Not Applicable
(ss.) 318(a) ...............................................................2.1
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Guarantee Agreement.
iii
<PAGE>
This GUARANTEE AGREEMENT, dated as of March 12, 1998 is executed and
delivered by MORGAN STANLEY, DEAN WITTER, DISCOVER & CO., a Delaware corporation
(the"Guarantor") having its principal office at 1585 Broadway, New York, New
York 10036 and The Bank of New York, a New York banking corporation, as trustee
(the"Guarantee Trustee"), for the benefit of the Holders (as defined herein)
from time to time of the Capital Securities (as defined herein) of MSDW Capital
Trust I, a Delaware statutory business trust (the "Issuer Trust").
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the"Trust
Agreement"), dated as of March 12, 1998, among Morgan Stanley, Dean Witter,
Discover & Co., as Depositor, The Bank of New York, as Property Trustee
(the"Property Trustee"), The Bank of New York (Delaware), as Delaware Trustee
(the "Delaware Trustee") (collectively, the "Issuer Trustees"), two individuals
selected by the holders of the Common Securities to act as administrators with
respect to the Issuer Trust (the "Administrators") and the Holders from time to
time of preferred undivided beneficial ownership interests in the assets of the
Issuer Trust, the Issuer Trust is issuing $400,000,000 aggregate Liquidation
Amount (as defined herein) of its 7.10% Capital Securities, Liquidation Amount
$25 per capital security (the "Capital Securities"), representing preferred
undivided beneficial ownership interests in the assets of the Issuer Trust and
having the terms set forth in the Trust Agreement;
WHEREAS, the Capital Securities will be issued by the Issuer Trust and the
proceeds thereof, together with the proceeds from the issuance of the Issuer
Trust's Common Securities (as defined herein), will be used to purchase the
Junior Subordinated Debentures (as defined in the Trust Agreement) of the
Guarantor which will be deposited with The Bank of New York, as Property Trustee
under the Trust Agreement, as trust assets; and
WHEREAS, as incentive for the Holders to purchase the Capital Securities,
the Guarantor desires irrevocably and unconditionally to agree, to the extent
set forth herein, to pay to the Holders of the Capital Securities the Guarantee
Payments (as defined herein) and to make certain other payments on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase of the Capital Securities
by each Holder, which purchase the Guarantor hereby acknowledges shall benefit
the Guarantor, and intending to be legally bound hereby, the Guarantor executes
and delivers this Guarantee Agreement for the benefit of the Holders from time
to time of the Capital Securities.
ARTICLE I.
DEFINITIONS
SECTION 1.1. Definitions.
As used in this Guarantee Agreement, the terms set forth below shall,
unless the context otherwise requires, have the following meanings. Capitalized
terms used but not otherwise defined herein shall have the meanings assigned to
such terms in the Trust Agreement as in effect on the date hereof.
"Additional Amounts" has the meaning specified in the Trust Agreement.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this
definition,"control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly,whether through the ownership of voting securities, by contract or
otherwise;and the terms "controlling" and "controlled" have meanings correlative
to the foregoing.
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"Capital Securities" shall have the meaning specified in the first recital
of this Guarantee Agreement.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer Trust.
"Distributions" means preferential cumulative cash distributions
accumulating from and including March 12, 1998 and payable quarterly in arrears
on February 28, May 30, August 30, and November 30 of each year, commencing May
30, 1998, at the annual rate of 7.10% of the Liquidation Amount.
"Event of Default" means (i) a default by the Guarantor in any of its
payment obligations under this Guarantee Agreement, or (ii) a default by the
Guarantor in any other obligation hereunder that remains unremedied for 30 days.
"Guarantee Agreement" means this Guarantee Agreement, as modified,amended
or supplemented from time to time.
"Guarantee Payments" means the following payments or distributions,without
duplication, with respect to the Capital Securities, to the extent not paid or
made by or on behalf of the Issuer Trust: (i) any accumulated and unpaid
Distributions required to be paid on the Capital Securities, to the extent the
Issuer Trust shall have funds on hand available therefor at such time, (ii) the
Redemption Price, with respect to the Capital Securities called for redemption
by the Issuer Trust to the extent that the Issuer Trust shall have funds on hand
available therefor at such time, and (iii) upon a voluntary or involuntary
dissolution, winding-up or liquidation of the Issuer Trust, unless Junior
Subordinated Debentures are distributed to the Holders, the lesser of (a) the
aggregate of the Liquidation Amount and all accumulated and unpaid Distributions
to the date of payment and (b) the amount of assets of the Issuer Trust
remaining available for distribution to Holders on liquidation of the Issuer
Trust (in either case, the"Liquidation Distribution").
"Guarantee Trustee" means The Bank of New York, until a Successor Guarantee
Trustee has been appointed and has accepted such appointment pursuant to the
terms of this Guarantee Agreement and thereafter means each such Successor
Guarantee Trustee.
"Guarantor" shall have the meaning specified in the first paragraph of this
Guarantee Agreement.
"Holder" means any holder, as registered on the books and records of the
Issuer Trust, of any Capital Securities; provided, however, that, in determining
whether the holders of the requisite percentage of Capital Securities have given
any request, notice, consent or waiver hereunder, "Holder"shall not include the
Guarantor, the Guarantee Trustee, or any Affiliate of the Guarantor or the
Guarantee Trustee.
"Indenture" means the Junior Subordinated Debt Indenture dated as of March
1, 1998, between Morgan Stanley, Dean Witter, Discover & Co. and The Bank of New
York, as trustee, as may be modified, amended or supplemented from time to time.
"Issuer Trust" shall have the meaning specified in the first paragraph of
this Guarantee Agreement.
"Liquidation Amount" means the stated amount of $25 per Capital Security.
"Majority in Liquidation Amount of the Capital Securities" means, except as
provided by the Trust Indenture Act, Capital Securities representing more than
50% of the aggregate Liquidation Amount of all then outstanding Capital
Securities issued by the Issuer Trust.
"Like Amount" means (i) with respect to a redemption of Trust Securities,
Trust Securities having a Liquidation Amount equal to that portion of the
principal amount of Junior Subordinated Debentures to be
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<PAGE>
contemporaneously redeemed in accordance with the Junior Subordinated Indenture,
allocated to the Common Securities and to the Capital Securities based upon the
relative Liquidation Amounts of such classes and (ii) with respect to a
distribution of Junior Subordinated Debentures to Holders of Trust Securities in
connection with a dissolution or liquidation of the Issuer Trust, Junior
Subordinated Debentures having a principal amount equal to the Liquidation
Amount of the Trust Securities of the Holder to whom such Junior Subordinated
Debentures are distributed.
"Officer's Certificate" means a certificate signed by any one of the
following: the Chairman of the Board, the President, the Chief Financial
Officer, the Chief Strategic and Administrative Officer, the Chief Legal
Officer, the Treasurer, any Assistant Treasurer of the Company or any other
person authorized by the Board of Directors to execute any such certificate, and
delivered to the Guarantee Trustee. Any Officer's Certificate delivered with
respect to compliance with a condition or covenant provided for in this
Guarantee Agreement shall include:
(a) a statement by the officer signing the Officer's Certificate that such
officer has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by such officer in rendering the Officer's Certificate;
(c) a statement that such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of such officer, such
condition or covenant has been complied with.
"Person" means a legal person, including any individual,corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Redemption Date" means, with respect to any Capital Security to be
redeemed, the date fixed for such redemption by or pursuant to the Trust
Agreement; provided that each Junior Subordinated Debenture Redemption Date and
the stated maturity of the Junior Subordinated Debentures shall be a Redemption
Date for a Like Amount of Capital Securities.
"Redemption Price" shall have the meaning specified in the Trust Agreement.
"Responsible Officer" means, when used with respect to the Guarantee
Trustee, any officer assigned to the Corporate Trust Office, including any
managing director, vice president, assistant vice president, assistant
treasurer, assistant secretary or any other officer of the Guarantee Trustee
customarily performing functions similar to those performed by any of the above
designated officers and having direct responsibility for the administration of
this Indenture, and also, with respect to a particular matter, any other officer
to whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"Senior Indebtedness" shall have the meaning specified in the Indenture.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.1.
3
<PAGE>
"Trust Agreement" means the Amended and Restated Trust Agreement, dated
March 12, 1998, executed by Morgan Stanley, Dean Witter, Discover & Co., as
Depositor, The Bank of New York (Delaware), as Delaware Trustee, and The Bank of
New York, as Property Trustee.
"Trust Indenture Act" means the Trust Indenture Act of 1939 (15 U.S.C.
ss.ss. 77aaa-77bbbb), as amended.
"Trust Securities" means the Common Securities and the Capital Securities.
ARTICLE II.
TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application.
If any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act that is required under such Act to be apart of and
govern this Guarantee Agreement, the provision of the Trust Indenture Act shall
control. If any provision of this Guarantee Agreement modifies or excludes any
provision of the Trust Indenture Act that may be so modified or excluded, the
latter provision shall be deemed to apply to this Indenture as so modified or to
be excluded, as the case may be.
SECTION 2.2. List of Holders.
(a) The Guarantor will furnish or cause to be furnished to the Guarantee
Trustee a list of Holders at the following times:
(i) quarterly, not more than 15 days after February 28, May 30, August
30 and November 30 in each year, a list, in such form as the Guarantee
Trustee may reasonably require, of the names and addresses of the Holders
as of such February 28, May 30, August 30 and November 30; and
(ii) at such other times as the Guarantee Trustee may request in
writing, within 30 days after the receipt by the Guarantor of any such
request, a list of similar form and content as of a date not more than 15
days prior to the time such list is furnished.
(b) The Guarantee Trustee shall comply with the requirements of Section
312(b) of the Trust Indenture Act.
SECTION 2.3. Reports by the Guarantee Trustee.
Not later than January 31 of each year, commencing January 31, 1999, the
Guarantee Trustee shall provide to the Holders such reports, if any, as are
required by Section 313 of the Trust Indenture Act in the form and in the manner
provided by Section 313 of the Trust Indenture Act. The Guarantee Trustee shall
also comply with the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4. Periodic Reports to the Guarantee Trustee.
The Guarantor shall provide to the Guarantee Trustee, and the Holders such
documents, reports and information, if any, as required by Section 314 of the
Trust Indenture Act and the compliance certificate required by Section 314 of
the Trust Indenture Act, in the form, in the manner and at the times required by
Section 314 of the Trust Indenture Act.
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<PAGE>
SECTION 2.5. Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide to the Guarantee Trustee such evidence of
compliance with such conditions precedent, if any, provided for in this
Guarantee Agreement that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer pursuant to Section 314(c)(1) may be given in the form of an
Officer's Certificate.
SECTION 2.6. Events of Default; Waiver.
The Holders of a Majority in Liquidation Amount of the Capital Securities
may, by vote, on behalf of the Holders, waive any past Event of Default and its
consequences. Upon such waiver, any such Event of Default shall cease to exist,
and any Event of Default arising therefrom shall be deemed to have been cured,
for every purpose of this Guarantee Agreement, but no such waiver shall extend
to any subsequent or other default or Event of Default or impair any right
consequent therefrom.
SECTION 2.7. Event of Default; Notice.
(a) The Guarantee Trustee shall, within 90 days after the occurrence of an
Event of Default, transmit by mail, first class postage prepaid, to the Holders,
notices of all Events of Default known to the Guarantee Trustee, unless such
Events of Default have been cured before the giving of such notice; provided
that, except in the case of a default in the payment of a Guarantee Payment, the
Guarantee Trustee shall be protected in withholding such notice if and so long
as the Board of Directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Guarantee Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders.
(b) The Guarantee Trustee shall not be deemed to have knowledge of any
Event of Default unless a Responsible Officer charged with the administration of
this Guarantee Agreement shall have received written notice of such Event of
Default.
SECTION 2.8. Conflicting Interests.
The Trust Agreement shall be deemed to be specifically described in this
Guarantee Agreement for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III.
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 3.1. Powers and Duties of the Guarantee Trustee.
(a) This Guarantee Agreement shall be held by the Guarantee Trustee for the
benefit of the Holders, and the Guarantee Trustee shall not transfer this
Guarantee Agreement to any Person except a Holder exercising his or her rights
pursuant to Section 5.4(iv) or to a Successor Guarantee Trustee on acceptance by
such Successor Guarantee Trustee of its appointment to act as Successor
Guarantee Trustee hereunder. The right, title and interest of the Guarantee
Trustee, as such, hereunder shall automatically vest in any Successor Guarantee
Trustee, upon acceptance by such Successor Guarantee Trustee of its appointment
hereunder, and such vesting and cessation of title shall be effective whether or
not conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing, the Guarantee
Trustee shall enforce this Guarantee Agreement for the benefit of the Holders.
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<PAGE>
(c) The Guarantee Trustee, before the occurrence of any Event of Default
and after the curing of all Events of Default that may have occurred, shall be
obligated to perform only such duties as are specifically set forth in this
Guarantee Agreement (including pursuant to Section 2.1), and no implied
covenants shall be read into this Guarantee Agreement against the Guarantee
Trustee. If an Event of Default has occurred (that has not been cured or waived
pursuant to Section 2.6), the Guarantee Trustee shall exercise such of the
rights and powers vested in it by this Guarantee Agreement, and use the same
degree of care and skill in its exercise thereof, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
(d) No provision of this Guarantee Agreement shall be construed to relieve
the Guarantee Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that:
(i) Prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Guarantee Trustee shall be
determined solely by the express provisions of this Guarantee
Agreement (including pursuant to Section 2.1), and the Guarantee
Trustee shall not be liable except for the performance of such duties
and obligations as are specifically set forth in this Guarantee
Agreement (including pursuant to Section 2.1); and
(B) in the absence of bad faith on the part of the Guarantee
Trustee, the Guarantee Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Guarantee
Trustee and conforming to the requirements of this Guarantee
Agreement; but in the case of any such certificates or opinions that
by any provision hereof or of the Trust Indenture Act are specifically
required to be furnished to the Guarantee Trustee, the Guarantee
Trustee shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Guarantee Agreement;
(ii) The Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Guarantee
Trustee, unless it shall be proved that the Guarantee Trustee was negligent
in ascertaining the pertinent facts upon which such judgment was made;
(iii) The Guarantee Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of not less than a Majority in Liquidation
Amount of the Capital Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the Guarantee
Trustee, or exercising any trust or power conferred upon the Guarantee
Trustee under this Guarantee Agreement; and
(iv) No provision of this Guarantee Agreement shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in
the exercise of any of its rights or powers if the Guarantee Trustee shall
have reasonable grounds for believing that the repayment of such funds or
liability is not assured to it under the terms of this Guarantee Agreement
or adequate indemnity against such risk or liability is not reasonably
assured to it.
SECTION 3.2. Certain Rights of Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
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(i) The Guarantee Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution,certificate,
statement, instrument, opinion, report, notice, request, direction,consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document reasonably believed by it to be genuine and to have been signed, sent
or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this
Guarantee Agreement shall be sufficiently evidenced by an Officer's Certificate
unless otherwise prescribed herein.
(iii) Whenever, in the administration of this Guarantee Agreement,
the Guarantee Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting to take any action hereunder,
the Guarantee Trustee (unless other evidence is herein specifically prescribed)
may, in the absence of bad faith on its part, request and conclusively rely upon
an Officer's Certificate which, upon receipt of such request from the Guarantee
Trustee, shall be promptly delivered by the Guarantor.
(iv) The Guarantee Trustee may consult with legal counsel, and the
advice or written opinion of such legal counsel with respect to legal matters
shall be full and complete authorization and protection in respect of any action
taken, suffered or omitted to be taken by it hereunder in good faith and in
accordance with such advice or opinion. Such legal counsel may be legal counsel
to the Guarantor or any of its Affiliates and may be one of its employees. The
Guarantee Trustee shall have the right at any time to seek instructions
concerning the administration of this Guarantee Agreement from any court of
competent jurisdiction.
(v) The Guarantee Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Guarantee Agreement at the request
or direction of any Holder, unless such Holder shall have provided to the
Guarantee Trustee such security and indemnity as would satisfy a reasonable
person in the position of the Guarantee Trustee, against the costs,expenses
(including attorneys' fees and expenses) and liabilities that might be incurred
by it in complying with such request or direction, including such reasonable
advances as may be requested by the Guarantee Trustee.
(vi) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate,statement, instrument, opinion, report, notice, request, direction,
consent,order, bond, debenture, note, other evidence of indebtedness or other
paper or document, but the Guarantee Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may see fit.
(vii) The Guarantee Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through its
agents or attorneys, and the Guarantee Trustee shall not be responsible for any
negligence or wilful misconduct on the part of any such agent or attorney
appointed with due care by it hereunder.
(viii) Whenever in the administration of this Guarantee Agreement the
Guarantee Trustee shall deem it desirable to receive instructions with respect
to enforcing any remedy or right or taking any other action hereunder, the
Guarantee Trustee (A) may request instructions from the Holders,(B) may refrain
from enforcing such remedy or right or taking such other action until such
instructions are received and (C) shall be fully protected in acting in
accordance with such instructions.
(b) No provision of this Guarantee Agreement shall be deemed to impose any
duty or obligation on the Guarantee Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it in any
jurisdiction in which it shall be illegal, or in which the Guarantee Trustee
shall be unqualified or incompetent in accordance with applicable law,to perform
any such act or acts or to exercise any
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such right, power, duty or obligation. No permissive power or authority
available to the Guarantee Trustee shall be construed to be a duty to act in
accordance with such power and authority.
SECTION 3.3. Indemnity.
The Guarantor agrees to indemnify the Guarantee Trustee for, and to hold it
harmless against, any loss, liability or expense incurred without negligence,
wilful misconduct or bad faith on the part of the Guarantee Trustee,arising out
of or in connection with the acceptance or administration of this Guarantee
Agreement, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder. The Guarantee Trustee will not claim or exact any
lien or charge on any Guarantee Payments as a result of any amount due to it
under this Guarantee Agreement.
SECTION 3.4. Expenses.
The Guarantor shall from time to time reimburse the Guarantee Trustee for
its expenses and costs (including reasonable attorneys' or agents' fees)
incurred in connection with the performance of its duties hereunder.
ARTICLE IV.
GUARANTEE TRUSTEE
SECTION 4.1. Guarantee Trustee; Eligibility.
(a) There shall at all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a Person that is eligible pursuant to the Trust Indenture Act
to act as such and has a combined capital and surplus of at least
$50,000,000, and shall be a corporation meeting the requirements of Section
310(c) of the Trust Indenture Act. If such corporation publishes reports
of condition at least annually,pursuant to law or to the requirements of
the supervising or examining authority, then, for the purposes of this
Section and to the extent permitted by the Trust Indenture Act, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published.
(b) If at any time the Guarantee Trustee shall cease to be eligible to so
act under Section 4.1(a), the Guarantee Trustee shall immediately resign in the
manner and with the effect set out in Section 4.2.
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee and Guarantor shall in all respects comply with the provisions
of Section 310(b) of the Trust Indenture Act.
SECTION 4.2. Appointment, Removal and Resignation of the Guarantee
Trustee.
(a) No resignation or removal of the Guarantee Trustee and no appointment
of a Successor Guarantee Trustee pursuant to this Article shall become effective
until the acceptance of appointment by the Successor Guarantee Trustee by
written instrument executed by the Successor Guarantee Trustee and delivered to
the Holders and the Guarantee Trustee.
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(b) Subject to the immediately preceding paragraph, a Guarantee Trustee may
resign at any time by giving written notice thereof to the Holders.The Guarantee
Trustee shall appoint a successor by requesting from at least three Persons
meeting the eligibility requirements such Person's expenses and charges to serve
as the Guarantee Trustee, and selecting the Person who agrees to the lowest
expenses and charges. If the instrument of acceptance by the Successor
Guarantee Trustee shall not have been delivered to the Guarantee Trustee within
60 days after the giving of such notice of resignation, the Guarantee Trustee
may petition, at the expense of the Guarantor, any court of competent
jurisdiction for the appointment of a Successor Guarantee Trustee.
(c) The Guarantee Trustee may be removed for cause at any time by Act
(within the meaning of Section 6.8 of the Trust Agreement) of the Holders of at
least a Majority in Liquidation Amount of the Capital Securities, delivered to
the Guarantee Trustee.
(d) If a resigning Guarantee Trustee shall fail to appoint a successor, or
if a Guarantee Trustee shall be removed or become incapable of acting as
Guarantee Trustee, or if any vacancy shall occur in the office of any Guarantee
Trustee for any cause, the Holders of the Capital Securities, by Act of the
Holders of record of not less than 25% in aggregate Liquidation Amount of the
Capital Securities then outstanding delivered to such Guarantee Trustee, shall
promptly appoint a successor Guarantee Trustee. If no Successor Guarantee
Trustee shall have been so appointed by the Holders of the Capital Securities
and such appointment accepted by the Successor Guarantee Trustee, any Holder, on
behalf of himself and all others similarly situated, may petition any court of
competent jurisdiction for the appointment of a Successor Guarantee Trustee.
ARTICLE V.
GUARANTEE
SECTION 5.1. Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in full, on a
subordinated basis as set forth in Article VI, to the Holders the Guarantee
Payments (without duplication of amounts theretofore paid by or on behalf of the
Issuer Trust), as and when due, regardless of any defense, right of set-off or
counterclaim which the Issuer Trust may have or assert, except the defense of
payment. The Guarantor's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Guarantor to the
Holders or by causing the Issuer Trust to pay such amounts to the Holders. The
Guarantor shall give prompt written notice to the Guarantee Trustee in the event
it makes any direct payment hereunder.
SECTION 5.2. Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of the Guarantee Agreement
and of any liability to which it applies or may apply, presentment, demand for
payment, any right to require a proceeding first against the Guarantee Trustee,
the Issuer Trust or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 5.3. Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor under
this Guarantee Agreement shall in no way be affected or impaired by reason of
the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer Trust of any express or implied
agreement, covenant, term or condition relating to the Capital Securities to be
performed or observed by the Issuer Trust;
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(b) the extension of time for the payment by the Issuer Trust of all or any
portion of the Distributions (other than an extension of time for payment of
Distributions that results from the extension of any interest payment period on
the Junior Subordinated Debentures as so provided in the Indenture), Redemption
Price, Liquidation Distribution or any other sums payable under the terms of the
Capital Securities or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the Capital Securities;
(c) any failure, omission, delay or lack of diligence on the part of the
Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Capital Securities, or any
action on the part of the Issuer Trust granting indulgence or extension of any
kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Issuer Trust or any of the assets of
the Issuer Trust;
(e) any invalidity of, or defect or deficiency in, the Capital Securities;
(f) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor (other than payment of
the underlying obligation), it being the intent of this Section 5.3 that the
obligations of the Guarantor hereunder shall be absolute and unconditional under
any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain
the consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4. Rights of Holders.
The Guarantor expressly acknowledges that: (i) this Guarantee Agreement
will be deposited with the Guarantee Trustee to be held for the benefit of the
Holders; (ii) the Guarantee Trustee has the right to enforce this Guarantee
Agreement on behalf of the Holders; (iii) the Holders of a Majority in
Liquidation Amount of the Capital Securities have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee in respect of this Guarantee Agreement or exercising any trust
or power conferred upon the Guarantee Trustee under this Guarantee Agreement;
and (iv) any Holder may institute a legal proceeding directly against the
Guarantor to enforce its rights under this Guarantee Agreement, without first
instituting a legal proceeding against the Guarantee Trustee, the Issuer Trust
or any other Person.
SECTION 5.5. Guarantee of Payment.
This Guarantee Agreement creates a guarantee of payment and not of
collection. This Guarantee Agreement will not be discharged except by payment
of the Guarantee Payments in full (without duplication of amounts theretofore
paid by the Issuer Trust) or upon the distribution of Junior Subordinated
Debentures to Holders as provided in the Trust Agreement.
SECTION 5.6. Subrogation.
The Guarantor shall be subrogated to all rights (if any) of the Holders
against the Issuer Trust in respect of any amounts paid to the Holders by the
Guarantor under this Guarantee Agreement; provided, however, that the Guarantor
shall not (except to the extent required by mandatory provisions of law) be
entitled to enforce or exercise any rights which it may acquire by way of
subrogation or any indemnity, reimbursement
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or other agreement, in all cases as a result of payment under this Guarantee
Agreement, at the time of any such payment, any amounts are due and unpaid under
this Guarantee Agreement or any payments are due to the holders of Capital
Securities under the Trust Agreement. If any amount shall be paid to the
Guarantor in violation of the preceding sentence, the Guarantor agrees to hold
such amount in trust for the Holders and to pay over such amount to the Holders.
SECTION 5.7. Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are independent
of the obligations of the Issuer Trust with respect to the Capital Securities
and that the Guarantor shall be liable as principal and as debtor hereunder to
make Guarantee Payments pursuant to the terms of this Guarantee Agreement
notwithstanding the occurrence of any event referred to in subsections(a)
through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI.
COVENANTS AND SUBORDINATION
SECTION 6.1. Subordination.
This Guarantee Agreement will constitute an unsecured obligation of the
Guarantor and will rank subordinate and junior in right of payment to all Senior
Indebtedness of the Guarantor to the extent and in the manner set forth in the
Indenture with respect to the Junior Subordinated Debentures, and the provisions
of Article XIII of the Indenture will apply, mutatis mutandis, to the
obligations of the Guarantor hereunder. The obligations of the Guarantor
hereunder do not constitute Senior Indebtedness of the Guarantor.
SECTION 6.2. Pari Passu Guarantees.
The obligations of the Guarantor under this Guarantee Agreement shall rank
pari passu with any similar guarantee agreements issued by the Guarantor on
behalf of the holders of preferred or capital securities issued by the Issuer
Trust and with any other security, guarantee or other obligation that is
expressly stated to rank pari passu with the obligations of the Guarantor under
this Guarantee Agreement.
ARTICLE VII.
TERMINATION
SECTION 7.1. Termination.
This Guarantee Agreement shall terminate and be of no further force and
effect upon (i) full payment of the Redemption Price of all Capital Securities,
(ii) the distribution of Junior Subordinated Debentures to the Holders in
exchange for all of the Capital Securities or (iii) full payment of the amounts
payable in accordance with Article IX of the Trust Agreement upon liquidation of
the Issuer Trust. Notwithstanding the foregoing, this Guarantee Agreement will
continue to be effective or will be reinstated, as the case maybe, if at any
time any Holder is required to repay any sums paid with respect to Capital
Securities or this Guarantee Agreement.
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ARTICLE VIII.
MISCELLANEOUS
SECTION 8.1. Successors and Assigns.
All guarantees and agreements contained in this Guarantee Agreement
shall bind the successors, assigns, receivers, trustees and representatives of
the Guarantor and shall inure to the benefit of the Holders of the Capital
Securities then outstanding. Except in connection with a consolidation, merger
or sale involving the Guarantor that is permitted under Article IX of the
Indenture and pursuant to which the assignee agrees in writing to perform the
Guarantor's obligations hereunder, the Guarantor shall not assign its
obligations hereunder, and any purported assignment that is not in accordance
with these provisions shall be void.
SECTION 8.2. Amendments.
Except with respect to any changes that do not materially adversely
affect the rights of the Holders (in which case no consent of the Holders will
be required), this Guarantee Agreement may only be amended with the prior
approval of the Holders of not less than a Majority in Liquidation Amount of the
Capital Securities. The provisions of Article VI of the Trust Agreement
concerning meetings of the Holders shall apply to the giving of such approval.
SECTION 8.3. Notices.
Any notice, request or other communication required or permitted to be
given hereunder shall be in writing, duly signed by the party giving such
notice, and delivered, telecopied (confirmed by delivery of the original) or
mailed by first class mail as follows:
(a) if given to the Guarantor, to the address or telecopy number set
forth below or such other address or telecopy number or to the attention of such
other Person as the Guarantor may give notice to the Holders:
Morgan Stanley, Dean Witter,
Discover & Co.
1585 Broadway
New York, NY 10036
Facsimile No.: (212) 761-0331
Attention: Office of the Secretary
(b) if given to the Issuer Trust, in care of the Guarantee Trustee,at
the Issuer Trust's (and the Guarantee Trustee's) address set forth below or such
other address or telecopy number or to the attention of such other Personas the
Guarantee Trustee on behalf of the Issuer Trust may give notice to the Holders:
c/o The Bank of New York
101 Barclay Street, Floor 21 West
New York, NY 10286
Facsimile No.: (212) 815-5915
Attention: Corporate Trust Administration
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with a copy to:
Morgan Stanley, Dean Witter,
Discover & Co.
1585 Broadway
New York, NY 10036
Facsimile No.: (212) 761-0331
Attention: Office of the Secretary
(c) if given to the Guarantee Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, NY 10286
Facsimile No.: (212) 815-5915
Attention: Corporate Trust Administration
(d) if given to any Holder, at the address set
forth on the books and records of the Issuer Trust.
All notices hereunder shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 8.4. Benefit.
This Guarantee Agreement is solely for the benefit of the Holders and
is not separately transferable from the Capital Securities.
SECTION 8.5. Interpretation.
In this Guarantee Agreement, unless the context
otherwise requires:
(a) capitalized terms used in this Guarantee Agreement but not defined
in the preamble hereto have the respective meanings assigned to them in Section
1.1;
(b) a term defined anywhere in this Guarantee
Agreement has the same meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or amended
from time to time;
(d) all references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Guarantee Agreement unless otherwise defined in this Guarantee
Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the
plural and vice versa; and
(g) the masculine, feminine or neuter genders
used herein shall include the masculine, feminine and neuter genders.
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SECTION 8.6. Governing Law.
THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
SECTION 8.7. Counterparts.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.
MORGAN STANLEY, DEAN WITTER,
DISCOVER & CO.
as Guarantor
By:__________________________________________
Name: Alexander C. Frank
Title: Assistant Treasurer
The Bank of New York,
as Guarantee Trustee, and not
in its individual capacity
By:___________________________________________
Name:
Title:
15
<PAGE>
Exhibit 4.5
THIS CAPITAL SECURITIES CERTIFICATE IS A GLOBAL CAPITAL SECURITIES
CERTIFICATE WITHIN THE MEANING OF THE TRUST AGREEMENT HEREINAFTER REFERRED TO
AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY.
THIS CAPITAL SECURITY CERTIFICATE IS EXCHANGEABLE FOR CAPITAL SECURITIES
CERTIFICATES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS
NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE TRUST AGREEMENT AND
MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
TRUST AGREEMENT.
UNLESS THIS CAPITAL SECURITY CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
TO MSDW CAPITAL TRUST I OR ITS AGENT FOR REGISTRATION OF TRANSFER,EXCHANGE OR
PAYMENT, AND ANY CAPITAL SECURITY CERTIFICATE ISSUED IS REGISTERED IN THE NAME
OF SUCH NOMINEE AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO SUCH ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO A PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, HAS AN INTEREST
HEREIN.
NO EMPLOYEE BENEFIT OR OTHER PLAN OR INDIVIDUAL RETIREMENT ACCOUNT SUBJECT
TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE") (EACH, A "PLAN"), NO ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN
ASSETS" BY REASON OF ANY PLAN'S INVESTMENT IN THE ENTITY (A "PLAN ASSET
ENTITY"), AND NO PERSON INVESTING "PLAN ASSETS" OF ANY PLAN, MAY ACQUIRE OR HOLD
THIS CAPITAL SECURITIES CERTIFICATE OR ANY INTEREST HEREIN, UNLESS SUCH PURCHASE
AND HOLDING IS COVERED BY THE EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT
OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 96-23, 95-60, 91-38,
90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION WITH RESPECT TO SUCH PURCHASE AND
HOLDING AND, IN THE CASE OF ANY PURCHASER OR HOLDER RELYING ON ANY EXEMPTION
OTHER THAN PTCE 96-23, 95-60, 91-38, 90-1 OR 84-14, HAS COMPLIED WITH ANY
REQUEST BY THE DEPOSITOR OR THE ISSUER TRUST FOR AN OPINION OF COUNSEL OR OTHER
EVIDENCE WITH RESPECT TO THE APPLICABILITY OF SUCH EXEMPTION. ANY PURCHASER OR
HOLDER OF THE CAPITAL SECURITIES CERTIFICATE OR ANY INTEREST THEREIN WILL BE
DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING HEREOF THAT EITHER (A)
THE PURCHASER AND HOLDER ARE NOT A PLAN OR A PLAN ASSET ENTITY AND IS NOT
PURCHASING SUCH SECURITIES ON BEHALF OF OR WITH "PLAN ASSETS" OF ANY PLAN, OR
(B) THE PURCHASE AND HOLDING OF THE CAPITAL SECURITIES IS COVERED BY THE
EXEMPTIVE RELIEF PROVIDED BY PTCE 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER
APPLICABLE EXEMPTION.
<PAGE>
CERTIFICATE NUMBER: C-1 CUSIP NO. 553538208
8,000,000 CAPITAL SECURITIES
CERTIFICATE EVIDENCING CAPITAL SECURITIES OF
MSDW CAPITAL TRUST I
7.10% CAPITAL SECURITIES
(LIQUIDATION AMOUNT $25 PER CAPITAL SECURITY)
MSDW Capital Trust I, a statutory business trust created under the laws of
the State of Delaware (the "Issuer Trust"), hereby certifies that Cede & Co.
(the "Holder") is the registered owner of $200,000,000 in aggregate liquidation
amount of capital securities of the Issuer Trust representing a preferred
undivided beneficial interest in the assets of the Issuer Trust and designated
the MSDW Capital Trust I 7.10% Capital Securities (liquidation amount $25 per
Capital Security) (the "Capital Securities"). The Capital Securities are
transferable on the books and records of the Issuer Trust, in person or by a
duly authorized attorney, upon surrender of this certificate duly endorsed and
in proper form for transfer as provided in Section 5.5 of the Trust Agreement
(as defined below). The designations, rights, privileges, restrictions,
preferences and other terms and provisions of the Capital Securities are set
forth in, and this certificate and the Capital Securities represented hereby are
issued and shall in all respects be subject to the terms and provisions of, the
Amended and Restated Trust Agreement of the Issuer Trust, dated as of March 12,
1998, as the same may be amended from time to time (the "Trust Agreement"),
among Morgan Stanley, Dean Witter, Discover & Co., as Depositor, The Bank of New
York, as Property Trustee, The Bank of New York (Delaware), as Delaware Trustee,
two individuals selected by the holders of the Common Securities to act as
administrators with respect to the Issuer Trust (the "Administrators") and the
Holders of Trust Securities, including the designation of the terms of the
Capital Securities as set forth therein. The Holder is entitled to the benefits
of the Guarantee Agreement entered into by Morgan Stanley, Dean Witter, Discover
& Co., a Delaware corporation, and The Bank of New York, as Guarantee Trustee,
dated as of March 12, 1998 (the "Guarantee Agreement"), to the extent provided
therein. The Issuer Trust will furnish a copy of the Trust Agreement and the
Guarantee Agreement to the Holder without charge upon written request to the
Issuer Trust at its principal place of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
<PAGE>
Terms used but not defined herein have the meanings set forth in the Trust
Agreement.
IN WITNESS WHEREOF, one of the Administrators of the Issuer Trust has
executed this certificate this 12th day of March, 1998.
MSDW CAPITAL TRUST I
By:_____________________________________
Name: Alexander C. Frank
Administrator
AUTHENTICATED, COUNTERSIGNED AND REGISTERED:
The Bank of New York, as Property Trustee
By:______________________________________
Name:
Title:
Dated: __________________________________
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital
Security to:
______________________________________________________________________________
(Insert assignee's social security or tax identification number)
______________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints ______________________________________________________
agent to transfer this Capital Security Certificate on the books of the Issuer
Trust. The agent may substitute another to act for him or her.
Date:______________ Signature:_____________________________________________
(Sign exactly as your name appears on the
other side of this Capital Security Certificate)
Signature Guarantee:__________________________________
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Property Trustee, which requirements include membership or
participation in the Security Transfer Agent medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Property Trustee
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
<PAGE>
THIS CAPITAL SECURITIES CERTIFICATE IS A GLOBAL CAPITAL SECURITIES
CERTIFICATE WITHIN THE MEANING OF THE TRUST AGREEMENT HEREINAFTER REFERRED TO
AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY.
THIS CAPITAL SECURITY CERTIFICATE IS EXCHANGEABLE FOR CAPITAL SECURITIES
CERTIFICATES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS
NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE TRUST AGREEMENT AND
MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
TRUST AGREEMENT.
UNLESS THIS CAPITAL SECURITY CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
TO MSDW CAPITAL TRUST I OR ITS AGENT FOR REGISTRATION OF TRANSFER,EXCHANGE OR
PAYMENT, AND ANY CAPITAL SECURITY CERTIFICATE ISSUED IS REGISTERED IN THE NAME
OF SUCH NOMINEE AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO SUCH ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO A PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, HAS AN INTEREST
HEREIN.
NO EMPLOYEE BENEFIT OR OTHER PLAN OR INDIVIDUAL RETIREMENT ACCOUNT SUBJECT
TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE") (EACH, A "PLAN"), NO ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN
ASSETS" BY REASON OF ANY PLAN'S INVESTMENT IN THE ENTITY (A "PLAN ASSET
ENTITY"), AND NO PERSON INVESTING "PLAN ASSETS" OF ANY PLAN, MAY ACQUIRE OR HOLD
THIS CAPITAL SECURITIES CERTIFICATE OR ANY INTEREST HEREIN, UNLESS SUCH PURCHASE
AND HOLDING IS COVERED BY THE EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT
OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 96-23, 95-60, 91-38,
90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION WITH RESPECT TO SUCH PURCHASE AND
HOLDING AND, IN THE CASE OF ANY PURCHASER OR HOLDER RELYING ON ANY EXEMPTION
OTHER THAN PTCE 96-23, 95-60, 91-38, 90-1 OR 84-14, HAS COMPLIED WITH ANY
REQUEST BY THE DEPOSITOR OR THE ISSUER TRUST FOR AN OPINION OF COUNSEL OR OTHER
EVIDENCE WITH RESPECT TO THE APPLICABILITY OF SUCH EXEMPTION. ANY PURCHASER OR
HOLDER OF THE CAPITAL SECURITIES CERTIFICATE OR ANY INTEREST THEREIN WILL BE
DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING HEREOF THAT EITHER (A)
THE PURCHASER AND HOLDER ARE NOT A PLAN OR A PLAN ASSET ENTITY AND IS NOT
PURCHASING SUCH SECURITIES ON BEHALF OF OR WITH "PLAN ASSETS" OF ANY PLAN, OR
(B) THE PURCHASE AND HOLDING OF THE CAPITAL SECURITIES IS COVERED BY THE
EXEMPTIVE RELIEF PROVIDED BY PTCE 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER
APPLICABLE EXEMPTION.
<PAGE>
CERTIFICATE NUMBER: C-2 CUSIP NO. 553538208
8,000,000 CAPITAL SECURITIES
CERTIFICATE EVIDENCING CAPITAL SECURITIES OF
MSDW CAPITAL TRUST I
7.10% CAPITAL SECURITIES
(LIQUIDATION AMOUNT $25 PER CAPITAL SECURITY)
MSDW Capital Trust I, a statutory business trust created under the laws of
the State of Delaware (the "Issuer Trust"), hereby certifies that Cede & Co.
(the "Holder") is the registered owner of $200,000,000 in aggregate liquidation
amount of capital securities of the Issuer Trust representing a preferred
undivided beneficial interest in the assets of the Issuer Trust and designated
the MSDW Capital Trust I 7.10% Capital Securities (liquidation amount $25 per
Capital Security) (the "Capital Securities"). The Capital Securities are
transferable on the books and records of the Issuer Trust, in person or by a
duly authorized attorney, upon surrender of this certificate duly endorsed and
in proper form for transfer as provided in Section 5.5 of the Trust Agreement
(as defined below). The designations, rights, privileges, restrictions,
preferences and other terms and provisions of the Capital Securities are set
forth in, and this certificate and the Capital Securities represented hereby are
issued and shall in all respects be subject to the terms and provisions of, the
Amended and Restated Trust Agreement of the Issuer Trust, dated as of March 12,
1998, as the same may be amended from time to time (the "Trust Agreement"),
among Morgan Stanley, Dean Witter, Discover & Co., as Depositor, The Bank of New
York, as Property Trustee, The Bank of New York (Delaware), as Delaware Trustee,
two individuals selected by the holders of the Common Securities to act as
administrators with respect to the Issuer Trust (the "Administrators") and the
Holders of Trust Securities, including the designation of the terms of the
Capital Securities as set forth therein. The Holder is entitled to the benefits
of the Guarantee Agreement entered into by Morgan Stanley, Dean Witter, Discover
& Co., a Delaware corporation, and The Bank of New York, as Guarantee Trustee,
dated as of March 12, 1998 (the "Guarantee Agreement"), to the extent provided
therein. The Issuer Trust will furnish a copy of the Trust Agreement and the
Guarantee Agreement to the Holder without charge upon written request to the
Issuer Trust at its principal place of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
<PAGE>
Terms used but not defined herein have the meanings set forth in the Trust
Agreement.
IN WITNESS WHEREOF, one of the Administrators of the Issuer Trust has
executed this certificate this 12th day of March, 1998.
MSDW CAPITAL TRUST I
By:_______________________________________
Name: Alexander C.Frank
Administrator
AUTHENTICATED, COUNTERSIGNED AND REGISTERED:
The Bank of New York, as Property Trustee
By:______________________________________
Name:
Title:
Dated: __________________________________
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital
Security to:
______________________________________________________________________________
(Insert assignee's social security or tax identification number)
______________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints __________________________________________________
agent to transfer this Capital Security Certificate on the books of the Issuer
Trust. The agent may substitute another to act for him or her.
Date:______________ Signature:______________________________________________
(Sign exactly as your name appears on the
other side of this Capital Security Certificate)
Signature Guarantee:____________________________________
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Property Trustee, which requirements include membership or
participation in the Security Transfer Agent medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Property Trustee
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
<PAGE>
EXHIBIT 11
Morgan Stanley Dean Witter & Co.
Computation of Earnings Per Share
(In millions, except share data)
<TABLE>
<CAPTION>
Three Months Ended
------------------------------------------------
February 28, 1998 February 28, 1997
-------------------- ---------------------
<S> <C> <C>
Basic EPS:
Net income $ 691 $ 571
Less: preferred stock dividend requirements (15) (19)
-------------------- ---------------------
Net income available to common shareholders $ 676 $ 552
==================== =====================
Weighted-average common shares outstanding 586,751,340 573,410,658
==================== =====================
Basic EPS $ 1.15 $ 0.96
==================== =====================
Diluted EPS
Net income $ 691 $ 571
Less: preferred stock dividend requirements
after assumed conversion of ESOP
preferred stock (13) (18)
-------------------- ---------------------
Net income available to common shareholders $ 678 $ 553
==================== =====================
Weighted-average common shares outstanding 586,751,340 573,410,658
Effect of dilutive securities:
Stock options 17,607,461 20,084,781
ESOP convertible preferred stock 12,018,761 12,195,627
-------------------- ---------------------
Weighted-average common shares outstanding
and common stock equivalents 616,377,562 605,691,066
==================== =====================
Diluted EPS $ 1.10 $ 0.91
==================== =====================
</TABLE>
<PAGE>
EXHIBIT 12
RATIO OF EARNINGS TO FIXED CHARGES
AND RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------
FEBRUARY 28, FEBRUARY 28,
1998 1997
----------- -----------
<S> <C> <C>
RATIO OF EARNINGS TO FIXED CHARGES
Earnings:
Income before income taxes $1,133 $928
Add: Fixed charges, net 3,168 2,733
Income before income taxes and ----------- -----------
fixed charges, net $4,301 $3,661
=========== ===========
Fixed charges:
Total interest expense $3,145 $2,709
Interest factor in rents 23 24
----------- -----------
Total fixed charges $3,168 $2,733
=========== ===========
Ratio of earnings to fixed charges 1.4 1.3
RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
Earnings:
Income before income taxes $1,133 $928
Add: Fixed charges, net 3,168 2,733
Income before income taxes and ----------- -----------
fixed charges, net $4,301 $3,661
=========== ===========
Fixed charges:
Total interest expense $3,145 $2,709
Interest factor in rents 23 24
Preferred stock dividends 24 31
----------- -----------
Total fixed charges and preferred $3,192 $2,764
stock dividends =========== ===========
Ratio of earnings to fixed charges and
preferred stock dividends 1.3 1.3
<CAPTION>
FISCAL YEAR
-------------------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
RATIO OF EARNINGS TO FIXED CHARGES
Earnings:
Income before income taxes $4,274 $3,117 $2,292
Add: Fixed charges, net 10,898 9,026 8,285
Income before income taxes and ----------- ----------- -----------
fixed charges, net $15,172 $12,143 10,577
=========== =========== ===========
Fixed charges:
Total interest expense $10,806 $8,934 $8,190
Interest factor in rents 92 92 95
----------- ----------- -----------
Total fixed charges $10,898 $9,026 $8,285
=========== =========== ===========
Ratio of earnings to fixed charges 1.4 1.3 1.3
RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
Earnings:
Income before income taxes $4,274 $3,117 $2,292
Add: Fixed charges, net 10,898 9,026 8,285
Income before income taxes and ----------- ----------- -----------
fixed charges, net $15,172 $12,143 $10,577
=========== =========== ===========
Fixed charges:
Total interest expense $10,806 $8,934 $8,190
Interest factor in rents 92 92 95
Preferred stock dividends 110 101 95
Total fixed charges and preferred ----------- ----------- -----------
stock dividends $11,008 $9,127 $8,380
=========== =========== ===========
Ratio of earnings to fixed charges and
preferred stock dividends 1.4 1.3 1.3
</TABLE>
"Earnings" consist of income before income taxes and fixed charges.
"Fixed charges" consist of interest costs, including interest on
deposits, and that portion of rent expense estimated to be
representative of the interest factor. The preferred stock dividend
amounts represent pre-tax earnings required to cover dividends on
preferred stock.
<PAGE>
EXHIBIT 15.1
To the Directors and Shareholders of Morgan Stanley Dean Witter & Co.:
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim condensed
consolidated financial information of Morgan Stanley Dean Witter & Co. and
subsidiaries as of February 28, 1998 and for the three month periods ended
February 28, 1998 and 1997, as indicated in our report dated April 9, 1998
(which makes reference to the review of Morgan Stanley Group Inc. and
subsidiaries for the quarter ended February 28, 1997 by other accountants);
because we did not perform an audit, we expressed no opinion on that
information.
We are aware that our report, which is included in your Quarterly Report on Form
10-Q for the quarter ended February 28, 1998, is incorporated by reference in
the following Registration Statements:
Filed on Form S-3:
Registration Statement No. 33-57202
Registration Statement No. 33-60734
Registration Statement No. 33-89748
Registration Statement No. 33-92172
Registration Statement No. 333-07947
Registration Statement No. 333-22409
Registration Statement No. 333-27881
Registration Statement No. 333-27893
Registration Statement No. 333-27919
Registration Statement No. 333-46403
Registration Statement No. 333-46935
Filed on Form S-4:
Registration Statement No. 333-25003
Filed on Form S-8:
Registration Statement No. 33-62374
Registration Statement No. 33-63024
Registration Statement No. 33-63026
Registration Statement No. 33-78038
Registration Statement No. 33-79516
Registration Statement No. 33-82240
Registration Statement No. 33-82242
Registration Statement No. 33-82244
Registration Statement No. 333-04212
Registration Statement No. 333-28141
Registration Statement No. 333-25003
Registration Statement No. 333-28263
We are also aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
/s/ Deloitte & Touche LLP
New York, New York
April 9, 1998
<PAGE>
Exhibit 15.2
The Stockholders and
Board of Directors of
Morgan Stanley Dean Witter & Co.
We are aware of the incorporation by reference in the Registration Statements
(Form S-4 No. 333-25003, Form S-3 No. 33-92172, Form S-3 No. 33-57202, Form S-3
No. 33-60734, Form S-3 No. 33-89748, Form S-3 No. 333-7947, Form S-3 No.
333-22409, Form S-3 No. 333-27919, Form S-3 No. 333-27881, Form S-3 No.
333-27893, Form S-3 No. 333-46935, Form S-8 No. 333-28141, Form S-8 No.
33-62374, Form S-8 No. 33-63024, Form S-8 No. 33-63026, Form S-8 No. 33-78038,
Form S-8 No. 33-79516, Form S-8 No. 33-82240, Form S-8 No. 33-82242, Form S-8
No. 33-82244, Form S-8 No. 333-4212, Form S-8 No. 333-28263, Amendment to Form
S-4 No. 333-25003 on Form S-8, and Form S-3 No. 333-46403) of Morgan Stanley
Dean Witter & Co. ("MSDW") of our report dated March 27, 1997 in MSDW's Form
10-Q filed on April 13, 1998, relating to the unaudited condensed consolidated
--------------
interim financial statements of Morgan Stanley Group Inc. (not presented
separately herein).
Pursuant to Rule 436(c) of the Securities Act of 1933 our report is not a part
of the registration statement prepared or certified by accountants within the
meaning of Section 7 or 11 of the Securities Act of 1933.
/s/ ERNST & YOUNG LLP
New York, New York
April 13, 1998
- --------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> BD
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION AT FEBRUARY 28, 1998
AND THE CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS
ENDED FEBRUARY 28, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-START> DEC-01-1997
<PERIOD-END> FEB-28-1998
<CASH> 11,249
<RECEIVABLES> 70,725
<SECURITIES-RESALE> 89,302
<SECURITIES-BORROWED> 61,655
<INSTRUMENTS-OWNED> 103,054
<PP&E> 1,718
<TOTAL-ASSETS> 345,534
<SHORT-TERM> 37,859
<PAYABLES> 61,278
<REPOS-SOLD> 121,660
<SECURITIES-LOANED> 19,901
<INSTRUMENTS-SOLD> 56,209
<LONG-TERM> 25,897
0
875
<COMMON> 6
<OTHER-SE> 13,643
<TOTAL-LIABILITY-AND-EQUITY> 345,534
<TRADING-REVENUE> 903
<INTEREST-DIVIDENDS> 3,933
<COMMISSIONS> 547
<INVESTMENT-BANKING-REVENUES> 800
<FEE-REVENUE> 1,275
<INTEREST-EXPENSE> 3,145
<COMPENSATION> 1,788
<INCOME-PRETAX> 1,133
<INCOME-PRE-EXTRAORDINARY> 1,133
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 691
<EPS-PRIMARY> 1.15
<EPS-DILUTED> 1.10
</TABLE>
<PAGE>
EXHIBIT 99
STATEMENT 128 DATA
RESTATED SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
FISCAL YEAR(1)
----------------------------------------------------------------
1997 1996 1995 1994 1993
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Earnings per common share(2)
Basic..................... $ 4.38 $ 3.34 $ 2.37 $ 2.01 $ 2.29
============ ============ ============ ============ ============
Diluted................... $ 4.16 $ 3.16 $ 2.26 $ 1.93 $ 2.20
============ ============ ============ ============ ============
Average common shares out-
standing(2)(3)............. 574,818,233 573,356,930 590,144,217 594,212,948 574,399,217
============ ============ ============ ============ ============
</TABLE>
- --------
(1) Fiscal 1993 through fiscal 1996 represents the combination of Morgan
Stanley's financial statements for the fiscal years ended November 30 with
Dean Witter Discover's financial statements for the years ended December
31.
(2) Per share and share data have been restated to reflect the Company's two-
for-one stock split.
(3) Amounts shown are used to calculate basic earnings per common share.
RESTATED CONSOLIDATED STATEMENTS OF INCOME DATA
<TABLE>
<CAPTION>
FISCAL YEAR(1)
--------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Earnings per common share(2)
Basic................................. $ 4.38 $ 3.34 $ 2.37
============ ============ ============
Diluted............................... $ 4.16 $ 3.16 $ 2.26
============ ============ ============
Average common shares outstanding(2)
Basic................................. 574,818,233 573,356,930 590,144,217
============ ============ ============
Diluted............................... 606,306,475 606,790,754 620,727,859
============ ============ ============
</TABLE>
- --------
(1) Fiscal 1996 and fiscal 1995 represent the combination of Morgan Stanley's
financial statements for the fiscal years ended November 30 with Dean
Witter Discover's financial statements for the years ended December 31.
(2) Per share and share data have been restated to reflect the Company's two-
for-one stock split.
RESTATED QUARTERLY RESULTS DATA (UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
--------------------------------------------------- ---------------------------------------------------
FIRST SECOND THIRD FOURTH FIRST SECOND THIRD FOURTH
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Earnings per common share(1)
Basic(2)........ $ 0.96 $ 0.88 $ 1.15 $ 1.37 $ 0.86 $ 0.90 $ 0.77 $ 0.79
============ ============ ============ ============ ============ ============ ============ ============
Diluted(2)...... $ 0.91 $ 0.84 $ 1.09 $ 1.30 $ 0.81 $ 0.86 $ 0.73 $ 0.75
============ ============ ============ ============ ============ ============ ============ ============
Average common shares outstanding(1)
Basic........... 573,410,658 577,985,371 578,082,806 580,985,871 585,742,817 578,521,459 572,410,977 564,994,461
============ ============ ============ ============ ============ ============ ============ ============
Diluted......... 605,691,066 610,430,898 610,019,122 612,092,405 618,976,609 612,559,140 604,169,070 599,349,235
============ ============ ============ ============ ============ ============ ============ ============
</TABLE>
- --------
(1) Per share and share data have been restated to reflect the Company's two-
for-one stock split.
(2) Summation of the quarters' earnings per common share may not equal the
annual amounts due to the averaging effect of the number of shares and
share equivalents throughout the year.
<PAGE>
COMPUTATION OF BASIC AND DILUTED EARNINGS PER SHARE
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL YEAR
----------------------
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
BASIC EPS:
Net income........................................... $2,586 $1,980 $1,465
Less: preferred stock dividend requirements.......... (66) (66) (65)
------ ------ ------
Net income available to common shareholders.......... $2,520 $1,914 $1,400
====== ====== ======
Weighted-average common shares outstanding........... 575 573 590
====== ====== ======
Basic EPS............................................ $ 4.38 $ 3.34 $ 2.37
====== ====== ======
DILUTED EPS:
Net income........................................... $2,586 $1,980 $1,465
Less: preferred stock dividend requirements after
assumed conversion of ESOP preferred stock.......... (61) (62) (62)
------ ------ ------
Net income available to common shareholders.......... $2,525 $1,918 $1,403
====== ====== ======
Weighted-average common shares outstanding........... 575 573 590
Effect of dilutive securities:
Stock options...................................... 19 21 18
ESOP convertible preferred stock................... 12 13 13
------ ------ ------
Weighted-average common shares outstanding and common
stock equivalents................................... 606 607 621
====== ====== ======
Diluted EPS.......................................... $ 4.16 $ 3.16 $ 2.26
====== ====== ======
</TABLE>
