EXHIBIT 2.1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
between
XXXX XXXXXX, DISCOVER & CO.
and
XXXXXX XXXXXXX GROUP INC.
Dated as of February 4, 1997
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TABLE OF CONTENTS
Page
ARTICLE I
The Merger
SECTION 1.01. The Merger.................................. 2
SECTION 1.02. Closing..................................... 2
SECTION 1.03. Effective Time.............................. 3
SECTION 1.04. Effects of the Merger....................... 3
SECTION 1.05. Certificate of Incorporation and
By-laws.................................. 3
SECTION 1.06. Boards, Committees and Officers............. 4
ARTICLE II
Effect of the Merger on the
Capital Stock of the Constituent
Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock..................... 4
SECTION 2.02. Exchange of Certificates.................... 7
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of
MS...................................... 13
SECTION 3.02. Representations and Warranties of
DWD..................................... 30
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business........................ 48
SECTION 4.02. No Solicitation by MS...................... 54
SECTION 4.03. No Solicitation by DWD..................... 57
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Form S-4 and the
Joint Proxy Statement; Stock
holders Meetings........................ 60
SECTION 5.02. Letters of MS's Accountants................ 62
SECTION 5.03. Letters of DWD's Accountants............... 63
SECTION 5.04. Access to Information;
Confidentiality.......................... 63
SECTION 5.05. Best Efforts............................... 64
SECTION 5.06. Stock Options and Restricted Stock
Units.................................... 65
SECTION 5.07. MS Stock Plans and Certain Employee
Matters.................................. 67
SECTION 5.08. Indemnification, Exculpation and
Insurance................................ 69
SECTION 5.09. Fees and Expenses.......................... 70
SECTION 5.10. Public Announcements....................... 72
SECTION 5.11. Affiliates................................. 73
SECTION 5.12. NYSE Listing............................... 73
SECTION 5.13. Stockholder Litigation..................... 73
SECTION 5.14. Tax Treatment.............................. 74
SECTION 5.15. Pooling of Interests....................... 74
SECTION 5.16. DWD Rights Agreement....................... 74
SECTION 5.17. DWD Preferred Stock........................ 74
SECTION 5.18. Standstill Agreements;
Confidentiality Agreements............... 75
SECTION 5.19. Compliance with 1940 Act
Section 15............................... 75
SECTION 5.20. Consent Procedure.......................... 77
SECTION 5.21. MS Capital Units, Etc...................... 77
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's
Obligation to Effect the Merger.......... 78
SECTION 6.02. Conditions to Obligations of DWD........... 79
SECTION 6.03. Conditions to Obligations of MS............ 80
SECTION 6.04. Frustration of Closing Conditions.......... 81
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination................................ 82
SECTION 7.02. Effect of Termination...................... 84
SECTION 7.03. Amendment.................................. 84
SECTION 7.04. Extension; Waiver.......................... 84
SECTION 7.05. Procedure for Termination,
Amendment, Extension or Waiver........... 85
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and
Warranties............................... 85
SECTION 8.02. Notices.................................... 85
SECTION 8.03. Definitions................................ 87
SECTION 8.04. Interpretation............................. 88
SECTION 8.05. Counterparts............................... 89
SECTION 8.06. Entire Agreement; No Third-Party
Beneficiaries............................ 89
SECTION 8.07. Governing Law.............................. 89
SECTION 8.08. Assignment................................. 89
SECTION 8.09. Enforcement................................ 89
SECTION 8.10. Headings................................... 90
SECTION 8.11. Severability............................... 90
Exhibit A-1 Certificate of Incorporation of Surviving
Corporation
Exhibit A-2 Amendments to By-laws of the Surviving
Corporation
Exhibit B Corporate Governance of Surviving
Corporation Following the Effective Time
Exhibit C Form of Affiliate Letter
Exhibit D DWD Tax Representations
Exhibit E MS Tax Representations
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER dated as of
February 4, 1997, between XXXX XXXXXX,
DISCOVER & CO., a Delaware corporation
("DWD"), and XXXXXX XXXXXXX GROUP INC., a
Delaware corporation ("MS").
WHEREAS, the respective Boards of Directors of DWD and MS
have approved the merger of MS with and into DWD (the "Merger"), upon
the terms and subject to the conditions set forth in this Agreement,
whereby (a) each issued and outstanding share of common stock, par
value $1.00 per share, of MS ("MS Common Stock"), other than shares
owned by DWD or MS, will be converted into the right to receive the
Merger Consideration (as defined in Section 2.01(b)) and (b) each
issued and outstanding share of MS Preferred Stock (as defined in
Section 3.01(c)), other than shares owned by DWD or MS, will be
converted into the right to receive one share of the corresponding
series of preferred stock, with a par value of $.01 per share, of DWD
pursuant to Article II (collectively, "DWD Preferred Stock");
WHEREAS, the respective Boards of Directors of DWD and MS
have each determined that the Merger and the other transactions
contemplated hereby are consistent with, and in furtherance of, their
respective business strategies and goals;
WHEREAS, DWD and XX xxxxxx to make certain representations,
warranties, covenants and agreements in connection with the Merger and
also to prescribe various conditions to the Merger;
WHEREAS, for federal income tax purposes, it is intended
that the Merger will qualify as a reorganization under the provisions
of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code");
WHEREAS, for financial accounting purposes, it is intended
that the Merger will be accounted for as a pooling of interests
transaction;
WHEREAS, immediately following the execution and delivery of
this Agreement, MS and DWD will enter into a stock option agreement
(the "MS Stock Option Agreement"), pursuant to which MS will grant DWD
the option (the "MS Option") to purchase shares of MS Common Stock,
upon the terms and subject to the conditions set forth therein; and
WHEREAS, immediately following the execution and delivery of
this Agreement, DWD and MS will enter into a stock option agreement
(the "DWD Stock Option Agreement" and, together with the MS Stock
Option Agreement, the "Option Agreements"), pursuant to which DWD will
grant MS the option (the "DWD Option") to purchase shares of common
stock, par value $.01 per share, of DWD ("DWD Common Stock") together
with the associated DWD Rights (as defined in Section 3.02(c)), upon
the terms and subject to the conditions set forth therein.
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained in this Agreement, the
parties agree as follows:
ARTICLE I
The Merger
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the
Delaware General Corporation Law (the "DGCL"), MS shall be merged with
and into DWD at the Effective Time (as defined in Section 1.03).
Following the Effective Time, DWD shall be the surviving corporation
(the "Surviving Corporation") and shall succeed to and assume all the
rights and obligations of MS in accordance with the DGCL.
SECTION 1.02. Closing. The closing of the Merger (the
"Closing") will take place at 10:00 a.m. on a date to be specified by
the parties (the "Closing Date"), which shall be no later than the
second business day after satisfaction or waiver of the conditions set
forth in Article VI, unless another time or date is agreed to by the
parties hereto; provided that each of DWD and MS by notice to the
other party shall have the right to delay the Closing by up to 90 days
following the date on which the Closing would otherwise have occurred
hereunder to the extent necessary in order to obtain any material
governmental, regulatory or other third-party approvals, consents,
orders or authorizations required in connection with or as a result of
the transactions contemplated hereby (including the Board of Governors
of the Federal Reserve System, the Federal Communications Commission,
applicable state insurance authorities and mutual funds) that have not
yet then been
obtained in connection with the Closing. The Closing will be held at
such location in the City of New York as is agreed to by the parties
hereto.
SECTION 1.03. Effective Time. Subject to the provisions of
this Agreement, as soon as practicable on or after the Closing Date,
the parties shall file a certificate of merger or other appropriate
documents (in any such case, the "Certificate of Merger") executed in
accordance with the relevant provisions of the DGCL and shall make all
other filings or recordings required under the DGCL. The Merger shall
become effective at such time as the Certificate of Merger is duly
filed with the Delaware Secretary of State, or at such subsequent date
or time as DWD and MS shall agree and specify in the Certificate of
Merger (the time the Merger becomes effective being hereinafter
referred to as the "Effective Time").
SECTION 1.04. Effects of the Merger. The Merger shall have
the effects set forth in Section 259 of the DGCL.
SECTION 1.05. Certificate of Incorporation and By-laws.
(a) The certificate of incorporation of DWD, as in effect immediately
prior to the Effective Time, shall be amended as of the Effective Time
as described in Exhibit A-1 and, as so amended, such certificate of
incorporation shall be the certificate of incorporation of the
Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law.
(b) The by-laws of DWD, as in effect immediately prior to
the Effective Time, shall be amended as of the Effective Time as
described in Exhibit A-2 and, as so amended, such by-laws shall be the
by-laws of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law.
SECTION 1.06. Boards, Committees and Officers. The Board of
Directors, committees of the Board of Directors, composition of such
committees (including chairmen thereof) and officers of the Surviving
Corporation shall be as set forth on or designated in accordance with
Exhibit B hereto until the earlier of the resignation or removal of
any individual set forth on or designated in accordance with Exhibit B
or until their respective successors are duly elected and qualified,
as the case may be, it being agreed that if any director shall be
unable to serve as a director (including as a member or chairman of
any committee) at the Effective Time the party which designated such
individual as indicated in Exhibit B shall designate another
individual to serve in such individual's place. If any officer set
forth on or designated in accordance with Exhibit B ceases to be a
full-time employee of either MS or DWD at or before the Effective
Time, the parties will agree upon another person to serve in such
person's stead.
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock. As of the Effective
Time, by virtue of the Merger and without any action on the part of
the holder of any shares of MS Common Stock, MS Preferred Stock or DWD
Common Stock:
(a) Cancellation of Treasury Stock and DWD-Owned Stock. Each
share of MS Common Stock and MS Preferred Stock that is owned by
MS or DWD shall automatically be cancelled and retired and shall
cease to exist, and no consideration shall be delivered in
exchange therefor; provided, however, that any shares of MS
Common Stock and MS Preferred Stock (i) held by MS or DWD in
connection with any market making or proprietary trading activity
or for the account of another person, (ii) as to which MS or DWD
is or may be required to act as a fiduciary or in a similar
capacity or (iii) the cancellation of which would violate any
legal duties or obligations of MS or DWD shall not be cancelled
but, instead, shall be treated as set forth in Section 2.01(b)
(in the case of MS Common Stock) or 2.01(c) (in the case of MS
Preferred Stock).
(b) Conversion of MS Common Stock. Subject to
Section 2.02(e), each issued and outstanding share of MS Common
Stock (other than shares to be cancelled in accordance with
Section 2.01(a)) shall be converted into the right to receive
1.65 (the "Exchange Ratio") fully paid and nonassessable shares
of DWD Common Stock (the "Merger Consideration"). As of the
Effective Time, all such shares of MS Common Stock shall no
longer be outstanding and shall automatically be cancelled and
retired and shall cease to exist, and each holder of a
certificate representing any such
shares of MS Common Stock shall cease to have any rights with
respect thereto, except the right to receive the Merger
Consideration and any cash in lieu of fractional shares of DWD
Common Stock to be issued or paid in consideration therefor upon
surrender of such certificate in accordance with Section 2.02,
without interest.
(c) Conversion of MS Preferred Stock. Each issued and
outstanding share of MS Preferred Stock (other than shares to be
cancelled in accordance with Section 2.01(a) and shares of MS
ESOP Preferred Stock (as defined in Section 3.01(c) of the MS
Disclosure Schedule), which shall be governed by Section 2.01(d))
shall be converted into the right to receive one fully paid and
nonassessable share of the corresponding series of DWD Preferred
Stock, which DWD Preferred Stock (i) shall have terms that are
identical to the MS Preferred Stock (provided that, as a result
of the Merger, the issuer thereof shall be DWD rather than MS)
and (ii) shall be issued pursuant to action taken by the Board of
Directors of DWD. In addition, each authorized series of MS
Preferred Stock as to which there are no shares outstanding as of
the Effective Time shall be replaced by the corresponding
authorized but unissued series of DWD Preferred Stock. As of the
Effective Time, all such shares of MS Preferred Stock shall no
longer be outstanding and shall automatically be cancelled and
retired and shall cease to exist, and each holder of a
certificate representing any such shares of MS Preferred Stock
shall cease to have any rights with respect thereto, except the
right to receive one share of the corresponding series of DWD
Preferred Stock to be issued in consideration therefor upon
surrender of such certificate in accordance with Section 2.02,
without interest.
(d) Conversion of ESOP Preferred Stock. Each issued and
outstanding share of MS ESOP Preferred Stock (other than shares
to be cancelled in accordance with Section 2.01(a)) shall be
converted into the right to receive one validly issued, fully
paid and nonassessable share of a new series of preferred stock
to be issued by DWD at the Effective Time (the "DWD ESOP
Preferred Stock"). Each share of DWD ESOP Preferred Stock shall
have terms that are identical to the MS ESOP Preferred Stock,
provided that, (x) as a result of the Merger the issuer thereof
shall be DWD
rather than MS, (y) the number of shares of DWD Common Stock into
which each share of DWD ESOP Preferred Stock shall be convertible
(at the same times and subject to the same terms and conditions
under which MS ESOP Preferred Stock is convertible into shares of
MS Common Stock immediately prior to the Effective Time) shall
equal two times the Exchange Ratio and (z) each share of DWD ESOP
Preferred Stock shall be entitled to a number of votes equal to
1.35 times the number of shares of DWD Common Stock into which
one share of DWD ESOP Preferred Stock will be convertible
immediately following the Merger.
SECTION 2.02. Exchange of Certificates. (a) Exchange Agent.
As of the Effective Time, DWD shall enter into an agreement with such
bank or trust company as may be designated by DWD and reasonably
satisfactory to MS (the "Exchange Agent"), which shall provide that
DWD shall deposit with the Exchange Agent as of the Effective Time,
for the benefit of the holders of shares of MS Common Stock and MS
Preferred Stock, for exchange in accordance with this Article II,
through the Exchange Agent, certificates representing the shares of
DWD Common Stock and DWD Preferred Stock (such shares of DWD Common
Stock and DWD Preferred Stock, together with any dividends or
distributions with respect thereto with a record date after the
Effective Time, any Excess Shares (as defined in Section 2.02(e)) and
any cash (including cash proceeds from the sale of the Excess Shares)
payable in lieu of any fractional shares of DWD Common Stock being
hereinafter referred to as the "Exchange Fund") issuable pursuant to
Section 2.01 in exchange for outstanding shares of MS Common Stock and
MS Preferred Stock.
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, the Exchange Agent shall mail to each holder
of record of a certificate or certificates which immediately prior to
the Effective Time represented outstanding shares of MS Common Stock
or MS Preferred Stock (the "Certificates") whose shares were converted
into the right to receive the Merger Consideration or shares of DWD
Preferred Stock, as applicable, pursuant to Section 2.01, (i) a letter
of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent and shall be in
such form and have such other provisions as DWD and MS may reasonably
specify) and (ii) instructions for use in
surrendering the Certificates in exchange for the Merger Consideration
or shares of DWD Preferred Stock, as applicable. Upon surrender of a
Certificate for cancellation to the Exchange Agent, together with such
letter of transmittal, duly executed, and such other documents as may
reasonably be required by the Exchange Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of whole shares of DWD Common
Stock or DWD Preferred Stock which such holder has the right to
receive pursuant to the provisions of this Article II, certain
dividends or other distributions in accordance with Section 2.02(c)
and cash in lieu of any fractional share of DWD Common Stock in
accordance with Section 2.02(e), and the Certificate so surrendered
shall forthwith be cancelled. In the event of a transfer of ownership
of MS Common Stock or MS Preferred Stock which is not registered in
the transfer records of MS, a certificate representing the proper
number of shares of DWD Common Stock or DWD Preferred Stock may be
issued to a person other than the person in whose name the Certificate
so surrendered is registered if such Certificate shall be properly
endorsed or otherwise be in proper form for transfer and the person
requesting such issuance shall pay any transfer or other taxes
required by reason of the issuance of shares of DWD Common Stock or
DWD Preferred Stock to a person other than the registered holder of
such Certificate or establish to the satisfaction of DWD that such tax
has been paid or is not applicable. Until surrendered as contemplated
by this Section 2.02, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive upon
such surrender the Merger Consideration or shares of DWD Preferred
Stock, as applicable, which the holder thereof has the right to
receive in respect of such Certificate pursuant to the provisions of
this Article II, certain dividends or other distributions in
accordance with Section 2.02(c) and cash in lieu of any fractional
share of DWD Common Stock in accordance with Section 2.02(e). No
interest shall be paid or will accrue on any cash payable to holders
of Certificates pursuant to the provisions of this Article II.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions with respect to DWD Common Stock or
DWD Preferred Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Certificate with respect to
the shares of DWD Common Stock or DWD Preferred Stock represented
thereby, and, in the case of Certificates representing MS Common
Stock, no cash payment in lieu of fractional shares shall be paid to
any such holder pursuant to Section 2.02(e), and all such dividends,
other distributions and cash in lieu of fractional shares of DWD
Common Stock shall be paid by DWD to the Exchange Agent and shall be
included in the Exchange Fund, in each case until the surrender of
such Certificate in accordance with this Article II. Subject to the
effect of applicable escheat or similar laws, following surrender of
any such Certificate there shall be paid to the holder of the
certificate representing whole shares of DWD Common Stock or DWD
Preferred Stock issued in exchange therefor, without interest, (i) at
the time of such surrender, the amount of dividends or other
distributions with a record date after the Effective Time theretofore
paid with respect to such whole shares of DWD Common Stock or DWD
Preferred Stock, and, in the case of Certificates representing MS
Common Stock, the amount of any cash payable in lieu of a fractional
share of DWD Common Stock to which such holder is entitled pursuant to
Section 2.02(e) and (ii) at the appropriate payment date, the amount
of dividends or other distributions with a record date after the
Effective Time but prior to such surrender and with a payment date
subsequent to such surrender payable with respect to such whole shares
of DWD Common Stock or DWD Preferred Stock.
(d) No Further Ownership Rights in MS Common Stock or MS
Preferred Stock. All shares of DWD Common Stock or DWD Preferred Stock
issued upon the surrender for exchange of Certificates in accordance
with the terms of this Article II (including any cash paid pursuant to
this Article II) shall be deemed to have been issued (and paid) in
full satisfaction of all rights pertaining to the shares of MS Common
Stock or MS Preferred Stock, as applicable, theretofore represented by
such Certificates, subject, however, to the Surviving Corporation's
obligation to pay any dividends or make any other distributions with a
record date prior to the Effective Time which may have been declared
or made by MS on such shares of MS Common Stock or MS Preferred Stock
which remain unpaid at the Effective Time, and there shall be no
further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of MS Common Stock or MS Preferred
Stock which were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Certificates are presented to the
Surviving Corporation or the Exchange Agent for any reason, they shall
be cancelled and exchanged as provided in this Article II, except as
otherwise provided by law.
(e) No Fractional Shares. (i) No certificates or scrip
representing fractional shares of DWD Common Stock shall be issued
upon the surrender for exchange of Certificates, no dividend or
distribution of DWD shall relate to such fractional share interests
and such fractional share interests will not entitle the owner thereof
to vote or to any rights of a stockholder of DWD.
(ii) As promptly as practicable following the Effective
Time, the Exchange Agent shall determine the excess of (A) the number
of whole shares of DWD Common Stock delivered to the Exchange Agent by
DWD pursuant to Section 2.02(a) over (B) the aggregate number of whole
shares of DWD Common Stock to be distributed to former holders of MS
Common Stock pursuant to Section 2.02(b) (such excess being herein
called the "Excess Shares"). Following the Effective Time, the
Exchange Agent shall, on behalf of former stockholders of MS, sell the
Excess Shares at then- prevailing prices on the New York Stock
Exchange, Inc. ("NYSE"), all in the manner provided in Section
2.02(e)(iii).
(iii) The sale of the Excess Shares by the Exchange Agent
shall be executed on the NYSE through one or more member firms of the
NYSE and shall be executed in round lots to the extent practicable.
The Exchange Agent shall use reasonable efforts to complete the sale
of the Excess Shares as promptly following the Effective Time as, in
the Exchange Agent's sole judgment, is practicable consistent with
obtaining the best execution of such sales in light of prevailing
market conditions. Until the net proceeds of such sale or sales have
been distributed to the holders of Certificates formerly representing
MS Common Stock, the Exchange Agent shall hold such proceeds in trust
for such holders (the "Common Shares Trust"). The Surviving
Corporation shall pay all commissions, transfer taxes and other
out-of-pocket transaction costs, including the expenses and
compensation of the Exchange Agent incurred in connection with such
sale of the Excess Shares. The Exchange Agent shall determine the
portion of the Common Shares Trust to which each former holder of MS
Common Stock is entitled, if any, by multiplying the amount of the
aggregate net proceeds comprising the Common Shares Trust by a
fraction, the numerator of which is the amount of the fractional share
interest to which such former holder of MS Common Stock is entitled
(after taking into account all shares of MS Common Stock held at the
Effective Time by such holder) and the denominator of which is the
aggregate amount
of fractional share interests to which all former holders of MS Common
Stock are entitled.
(iv) Notwithstanding the provisions of Section 2.02(e)(ii)
and (iii), the Surviving Corporation may elect at its option,
exercised prior to the Effective Time, in lieu of the issuance and
sale of Excess Shares and the making of the payments hereinabove
contemplated, to pay each former holder of MS Common Stock an amount
in cash equal to the product obtained by multiplying (A) the
fractional share interest to which such former holder (after taking
into account all shares of MS Common Stock held at the Effective Time
by such holder) would otherwise be entitled by (B) the closing price
for a share of DWD Common Stock as reported on the NYSE Composite
Transaction Tape (as reported in The Wall Street Journal, or, if not
reported thereby, any other authoritative source) on the Closing Date,
and, in such case, all references herein to the cash proceeds of the
sale of the Excess Shares and similar references shall be deemed to
mean and refer to the payments calculated as set forth in this Section
2.02(e)(iv).
(v) As soon as practicable after the determination of the
amount of cash, if any, to be paid to holders of Certificates formerly
representing MS Common Stock with respect to any fractional share
interests, the Exchange Agent shall make available such amounts to
such holders of Certificates formerly representing MS Common Stock
subject to and in accordance with the terms of Section 2.02(c).
(f) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the holders of the
Certificates for six months after the Effective Time shall be
delivered to DWD, upon demand, and any holders of the Certificates who
have not theretofore complied with this Article II shall thereafter
look only to DWD for payment of their claim for Merger Consideration
or shares of DWD Preferred Stock, any dividends or distributions with
respect to DWD Common Stock or DWD Preferred Stock, as applicable, and
any cash in lieu of fractional shares of DWD Common Stock.
(g) No Liability. None of DWD, MS or the Exchange Agent
shall be liable to any person in respect of any shares of DWD Common
Stock or DWD Preferred Stock, any dividends or distributions with
respect thereto, any cash in lieu of fractional shares of DWD Common
Stock or any cash
from the Exchange Fund, in each case delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
If any Certificate shall not have been surrendered prior to two years
after the Effective Time (or immediately prior to such earlier date on
which any Merger Consideration or shares of DWD Preferred Stock, any
dividends or distributions payable to the holder of such Certificate
or any cash payable to the holder of such Certificate formerly
representing MS Common Stock pursuant to this Article II, would
otherwise escheat to or become the property of any Governmental Entity
(as defined in Section 3.01(d)), any such Merger Consideration or
shares of DWD Preferred Stock, dividends or distributions in respect
of such Certificate or such cash shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation, free
and clear of all claims or interest of any person previously entitled
thereto.
(h) Investment of Exchange Fund. The Exchange Agent shall
invest any cash included in the Exchange Fund, as directed by DWD, on
a daily basis. Any interest and other income resulting from such
investments shall be paid to DWD.
(i) Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such Certificate to be lost, stolen or
destroyed and, if required by the Surviving Corporation, the posting
by such person of a bond in such reasonable amount as the Surviving
Corporation may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificate the
Merger Consideration or shares of DWD Preferred Stock and, if
applicable, any unpaid dividends and distributions on shares of DWD
Common Stock or DWD Preferred Stock deliverable in respect thereof and
any cash in lieu of fractional shares, in each case pursuant to this
Agreement.
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of MS. Except
as disclosed in the MS Filed SEC Documents (as defined in
Section 3.01(g)) or as set forth on the
Disclosure Schedule delivered by MS to DWD prior to the execution of
this Agreement (the "MS Disclosure Schedule") and making reference to
the particular subsection of this Agreement to which exception is
being taken, MS represents and warrants to DWD as follows:
(a) Organization, Standing and Corporate Power. Each of MS
and its subsidiaries (as defined in Section 8.03) is a
corporation or other legal entity duly organized, validly
existing and in good standing (with respect to jurisdictions
which recognize such concept) under the laws of the jurisdiction
in which it is organized and has the requisite corporate or other
power, as the case may be, and authority to carry on its business
as now being conducted, except, as to subsidiaries, for those
jurisdictions where the failure to be so organized, existing or
in good standing individually or in the aggregate would not have
a material adverse effect (as defined in Section 8.03) on MS.
Each of MS and its subsidiaries is duly qualified or licensed to
do business and is in good standing (with respect to
jurisdictions which recognize such concept) in each jurisdiction
in which the nature of its business or the ownership, leasing or
operation of its properties makes such qualification or licensing
necessary, except for those jurisdictions where the failure to be
so qualified or licensed or to be in good standing individually
or in the aggregate would not have a material adverse effect on
MS. MS has made available to DWD prior to the execution of this
Agreement complete and correct copies of its certificate of
incorporation and by-laws, as amended to date.
(b) Subsidiaries. Exhibit 21 to MS's Annual Report on
Form 10-K for the fiscal year ended November 30, 1995 includes
all the subsidiaries of MS which as of the date of this Agreement
are Significant Subsidiaries (as defined in Rule 1-02 of
Regulation S-X of the Securities and Exchange Commission (the
"SEC")). All the outstanding shares of capital stock of, or other
equity interests in, each such Significant Subsidiary have been
validly issued and are fully paid and nonassessable and are owned
directly or indirectly by MS, free and clear of all pledges,
claims, liens, charges, encumbrances and security interests of
any kind or nature whatsoever (collectively, "Liens") and free of
any other restriction (including any
restriction on the right to vote, sell or otherwise dispose of
such capital stock or other ownership interests).
(c) Capital Structure. The authorized capital stock of MS
consists of 600,000,000 shares of MS Common Stock and
30,000,000 shares of preferred stock, without par value, of MS
("MS Authorized Preferred Stock"), of which 3,902,438 shares have
been designated as MS ESOP Preferred Stock, 1,725,000 shares have
been designated as MS Series A Preferred Stock, 1,000,000 shares
have been designated as MS 7-3/4% Preferred Stock, 750,000 shares
have been designated as MS 8-3/4% Preferred Stock,
1,000,000 shares have been designated as MS 7-3/8% Preferred
Stock, 611,238 shares have been designated as MS 7.82% Preferred
Stock, 1,150,000 shares have been designated as MS 7.80%
Preferred Stock, 720,900 shares have been designated as MS 9.00%
Preferred Stock, 996,776 shares have been designated as MS 8.40%
Preferred Stock, 847,500 shares have been designated as MS 8.20%
Preferred Stock and 670,000 shares have been designated as MS
8.03% Preferred Stock (in each case, as defined in
Section 3.01(c) of the MS Disclosure Schedule). "MS Preferred
Stock" means MS Authorized Preferred Stock that is issued and
outstanding from time to time. "MS Capital Units" means capital
units of MS that are issued and outstanding from time to time. At
the close of business on January 20, 1997, (i) 158,324,534 shares
of MS Common Stock were issued and outstanding;
(ii) 5,306,259 shares of MS Common Stock were held by MS in its
treasury; (iii) 8,169,679 shares of MS Authorized Preferred Stock
were issued and outstanding, as follows: (1) 3,694,679 shares of
MS ESOP Preferred Stock, (2) 1,725,000 shares of MS Series A
Preferred Stock, (3) 1,000,000 shares of MS 7-3/4% Preferred
Stock, (4) 750,000 shares of MS 8-3/4% Preferred Stock and
(5) 1,000,000 shares of MS 7-3/8% Preferred Stock;
(iv) 34,745,312 MS Capital Units were issued and outstanding, as
follows: (1) 4,889,904 MS 7.82% Capital Units, (2) 9,200,000 MS
7.80% Capital Units, (3) 5,767,200 MS 9.00% Capital Units,
(4) 7,974,208 MS 8.40% Capital Units, (5) 6,780,000 MS 8.20%
Capital Units and (6) 134,000 MS 8.03% Capital Units (in each
case, as defined in Section 3.01(c) of the MS Disclosure
Schedule); (v) no shares of MS Preferred Stock or MS Capital
Units were held by MS in its treasury, other than shares held for
purposes of market
making, proprietary trading or otherwise on behalf of customers;
(vi) 78,711,412 shares of MS Common Stock were reserved for
issuance pursuant to the MS 1986 Stock Option Plan, as amended,
the MS 1988 Equity Incentive Plan, as amended (the "MS 1988
EICP"), the MS 1995 Equity Incentive Plan (the "MS 1995 EICP")
and the MS 1993 Stock Plan for Outside Directors (such plans,
collectively, the "MS Stock Plans"); (vii) 7,804,976 shares and
532,494 shares of MS Common Stock were reserved for issuance upon
conversion of MS ESOP Preferred Stock and MS Subsidiary
Convertible Preferred Stock (as defined in Section 3.01(c) of the
MS Disclosure Schedule), respectively (collectively, "MS
Convertible Securities"); and (viii) other than the MS Preferred
Stock, no other shares of MS Authorized Preferred Stock have been
designated or issued. Section 3.01(c) of the MS Disclosure
Schedule sets forth a complete and correct list, as of
January 20, 1997, of the number of shares of MS Common Stock
subject to employee stock options or other rights to purchase or
receive MS Common Stock granted under the MS Stock Plans
(collectively, "MS Employee Stock Options") and the exercise
prices thereof. All outstanding shares of capital stock of MS
are, and all shares which may be issued will be, when issued,
duly authorized, validly issued, fully paid and nonassessable and
not subject to preemptive rights. Except as set forth in this
Section 3.01(c) and except for changes since January 20, 1997
resulting from the issuance of shares of MS Common Stock pursuant
to the MS Employee Stock Options, MS Convertible Securities and
other rights referred to above in this Section 3.01(c) or as
permitted by Section 4.01(a)(i)(y) and 4.01(a)(ii), (x) there are
not issued, reserved for issuance or outstanding (A) any shares
of capital stock or other voting securities of MS, (B) any
securities of MS convertible into or exchangeable or exercisable
for shares of capital stock or voting securities of MS, (C) any
warrants, calls, options or other rights to acquire from MS or
any MS subsidiary, and no obligation of MS or any MS subsidiary
to issue, any capital stock, voting securities or securities
convertible into or exchangeable or exercisable for capital stock
or voting securities of MS and (y) other than the MS Capital
Units, the MS Subsidiary Convertible Preferred Stock or
agreements entered into with respect to the MS Stock Plans as of
the close of business on January 20, 1997,
there are not any outstanding obligations of MS or any MS
subsidiary to repurchase, redeem or otherwise acquire any such
securities or to issue, deliver or sell, or cause to be issued,
delivered or sold, any such securities. MS is not a party to any
voting agreement with respect to the voting of any such
securities, other than the MS Stockholders' Agreement (as defined
in Section 3.02(r)) and similar voting agreements contained in
the awards made under MS's employee benefit plans (collectively,
the "MS Voting Arrangements"). Schedule 3.01(c) of the MS
Disclosure Schedule sets forth the maximum number of shares of MS
Common Stock subject to the MS Voting Arrangements as of
January 20, 1997. There are no outstanding (A) securities of MS
or any MS subsidiary convertible into or exchangeable or
exercisable for shares of capital stock or other voting
securities or ownership interests in any MS subsidiary,
(B) warrants, calls, options or other rights to acquire from MS
or any MS subsidiary, and no obligation of MS or any MS
subsidiary to issue, any capital stock, voting securities or
other ownership interests in, or any securities convertible into
or exchangeable or exercisable for any capital stock, voting
securities or ownership interests in, any MS subsidiary or
(C) except pursuant to the provisions of the MS Subsidiary
Convertible Preferred Stock outstanding on the date hereof,
obligations of MS or any MS subsidiary to repurchase, redeem or
otherwise acquire any such outstanding securities of MS
subsidiaries or to issue, deliver or sell, or cause to be issued,
delivered or sold, any such securities. Other than the MS
subsidiaries, MS does not directly or indirectly beneficially own
any securities or other beneficial ownership interests in any
other entity other than in the ordinary course of trading,
underwriting, asset management, merchant banking, securitization
or market making activities of MS or the MS subsidiaries or the
MS Funds or ownership of the MS Funds. "MS Fund" means (i) any
investment account advised or managed by MS on behalf of third
parties, and (ii) any partnership, limited liability company, or
other similar investment vehicle or entity engaged in the
business of making investments of which MS or a MS subsidiary
acts as the general partner, managing member, manager, advisor or
the equivalent or as the general partner of another MS Fund.
(d) Authority; Noncontravention. MS has all requisite
corporate power and authority to enter into this Agreement and,
subject to the MS Stockholder Approval (as defined in
Section 3.01(l)), to consummate the transactions contemplated by
this Agreement. MS has all requisite corporate power and
authority to enter into the Option Agreements and to consummate
the transactions contemplated thereby. The execution and delivery
of this Agreement and the Option Agreements by MS and the
consummation by MS of the transactions contemplated by this
Agreement and the Option Agreements have been duly authorized by
all necessary corporate action on the part of MS, subject, in the
case of the Merger, to the MS Stockholder Approval. This
Agreement and the Option Agreements have been duly executed and
delivered by MS and, assuming the due authorization, execution
and delivery by each of the other parties thereto, constitute
legal, valid and binding obligations of MS, enforceable against
MS in accordance with their terms. The execution and delivery of
this Agreement and the Option Agreements do not, and the
consummation of the transactions contemplated by this Agreement
and the Option Agreements and compliance with the provisions of
this Agreement and the Option Agreements will not, conflict with,
or result in any violation of, or default (with or without notice
or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or
loss of a benefit under, or result in the creation of any Lien
upon any of the properties or assets of MS or any of its
subsidiaries under, (i) the certificate of incorporation or
by-laws of MS or the comparable organizational documents of any
of its subsidiaries, (ii) any loan or credit agreement, note,
bond, mortgage, indenture, lease or other agreement, instrument,
permit, concession, franchise, license or similar authorization
applicable to MS or any of its subsidiaries or their respective
properties or assets or (iii) subject to the governmental filings
and other matters referred to in the following sentence, any
judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to MS or any of its subsidiaries or their
respective properties or assets, other than, in the case of
clauses (ii) and (iii), any such conflicts, violations, defaults,
rights, losses or Liens that individually or in the aggregate
would not (x) have a material adverse effect on MS or
(y) reasonably be expected to impair the ability of MS to perform
its obligations under this Agreement or the Option Agreements. No
consent, approval, order or authorization of, action by or in
respect of, or registration, declaration or filing with, any
federal, state, local or foreign government, any court,
administrative, regulatory or other governmental agency,
commission or authority or any non-governmental self-regulatory
agency, commission or authority (a "Governmental Entity") is
required by or with respect to MS or any of its subsidiaries in
connection with the execution and delivery of this Agreement or
the Option Agreements by MS or the consummation by MS of the
transactions contemplated by this Agreement or the Option
Agreements, except for (1) the filing of a premerger notification
and report form by MS under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"); (2) the
filing with the SEC of (A) a proxy statement relating to the MS
Stockholders Meeting (as defined in Section 5.01(b)) (such proxy
statement, together with the proxy statement relating to the DWD
Stockholders Meeting (as defined in Section 5.01(c)), in each
case as amended or supplemented from time to time, the "Joint
Proxy Statement"), and (B) such reports under Section 13(a),
13(d), 15(d) or 16(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as may be required in connection
with this Agreement, the Option Agreements and the transactions
contemplated by this Agreement and the Option Agreements; (3) the
filing of the Certificate of Merger with the Delaware Secretary
of State and appropriate documents with the relevant authorities
of other states in which MS is qualified to do business and such
filings with Governmental Entities to satisfy the applicable
requirements of state securities or "blue sky" laws; (4) such
filings with and approvals of the NYSE to permit the shares of MS
Common Stock that are to be issued pursuant to the MS Stock
Option Agreement to be listed on the NYSE; (5) the consents,
approvals and notices required under the Investment Company Act
of 1940, as amended (the "1940 Act") and the Investment Advisors
Act of 1940, as amended (the "Advisors Act"); (6) filings in
respect of, and approvals and authorizations of, any Governmental
Entity having jurisdiction over the securities, commodities,
banking, insurance, other financial services or communications
businesses; and (7) such consents, approvals, orders or
authorizations
the failure of which to be made or obtained individually or in
the aggregate would not have a material adverse effect on MS.
(e) SEC Documents; Undisclosed Liabilities. MS has filed all
required reports, schedules, forms, statements and other
documents (including exhibits and all other information
incorporated therein) with the SEC since December 1, 1994 (the
"MS SEC Documents"). As of their respective dates, the MS SEC
Documents complied in all material respects with the requirements
of the Securities Act of 1933, as amended (the "Securities Act"),
or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such
MS SEC Documents, and none of the MS SEC Documents when filed
contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Except
to the extent that information contained in any MS SEC Document
has been revised or superseded by a later filed MS SEC Document,
none of the MS SEC Documents contains any untrue statement of a
material fact or omits to state any material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading. The financial statements of MS included in
the MS SEC Documents comply as to form, as of their respective
dates of filing with the SEC, in all material respects with
applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared
in accordance with generally accepted accounting principles
(except, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the notes
thereto) and fairly present in all material respects the
consolidated financial position of MS and its consolidated
subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal
recurring year-end audit adjustments). Except (i) as reflected in
such financial statements or in the notes thereto or (ii) for
liabilities incurred in connection with this
Agreement or the Option Agreements or the transactions
contemplated hereby or thereby, neither MS nor any of its
subsidiaries has any material liabilities or obligations of any
nature which, individually or in the aggregate, would have a
material adverse effect on MS.
(f) Information Supplied. None of the information supplied
or to be supplied by MS specifically for inclusion or
incorporation by reference in (i) the registration statement on
Form S-4 to be filed with the SEC by DWD in connection with the
issuance of DWD Common Stock and DWD Preferred Stock in the
Merger (the "Form S-4") will, at the time the Form S-4 becomes
effective under the Securities Act, contain any untrue statement
of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading or (ii) the Joint Proxy Statement will, at the date it
is first mailed to MS's stockholders or at the time of the MS
Stockholders Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not
misleading. The Joint Proxy Statement will comply as to form in
all material respects with the requirements of the Exchange Act
and the rules and regulations thereunder, except that no
representation or warranty is made by MS with respect to
statements made or incorporated by reference therein based on
information supplied by DWD specifically for inclusion or
incorporation by reference in the Joint Proxy Statement.
(g) Absence of Certain Changes or Events. Except for
liabilities incurred in connection with this Agreement or the
Option Agreements or the transactions contemplated hereby or
thereby, since August 31, 1996, MS and its subsidiaries have
conducted their business only in the ordinary course, and there
has not been (1) any material adverse change (as defined in
Section 8.03) in MS, (2) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash,
stock or property) with respect to any of MS's capital stock,
other than regular quarterly cash dividends of $.20 per share on
the MS Common Stock and dividends payable on MS Preferred Stock
in accordance with their terms as of the date of this
Agreement (or as of their date of issue if subsequent to the date
of this Agreement), (3) any split, combination or
reclassification of any of MS's capital stock or any issuance or
the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for shares of MS's
capital stock, except for issuances of MS Common Stock upon
conversion of MS Convertible Securities or upon the exercise of
MS Employee Stock Options or in connection with restricted stock
units under the MS Stock Plans, in each case awarded prior to the
date hereof in accordance with their present terms or issued
pursuant to Section 4.01(a), (4) (A) any granting by MS or any of
its subsidiaries to any current or former director, executive
officer or other key employee of MS or its subsidiaries of any
increase in compensation, bonus or other benefits, except for
normal increases in the ordinary course of business or as was
required under any employment agreements in effect as of the date
of the most recent audited financial statements included in the
MS SEC Documents filed and publicly available prior to the date
of this Agreement (as amended to the date of this Agreement, the
"MS Filed SEC Documents"), (B) any granting by MS or any of its
subsidiaries to any such current or former director, executive
officer or key employee of any increase in severance or
termination pay, except in the ordinary course of business, or
(C) any entry by MS or any of its subsidiaries into, or any
amendments of, any employment, deferred compensation, consulting,
severance, termination or indemnification agreement with any such
current or former director, executive officer or key employee,
other than in the ordinary course of business, (5) except insofar
as may have been disclosed in the MS Filed SEC Documents or
required by a change in generally accepted accounting principles,
any change in accounting methods, principles or practices by MS
materially affecting its assets, liabilities or business or
(6) except insofar as may have been disclosed in the MS Filed SEC
Documents, any tax election that individually or in the aggregate
would have a material adverse effect on MS or any of its tax
attributes or any settlement or compromise of any material income
tax liability.
(h) Compliance with Applicable Laws. MS, its subsidiaries
and employees hold all permits, licenses, variances, exemptions,
orders, registrations and
approvals of all Governmental Entities which are required for the
operation of the businesses of MS and its subsidiaries (the "MS
Permits"), except where the failure to have any such MS Permits
individually or in the aggregate would not have a material
adverse effect on MS. MS and its subsidiaries are in compliance
with the terms of the MS Permits and all applicable statutes,
laws, ordinances, rules and regulations, except where the failure
so to comply individually or in the aggregate would not have a
material adverse effect on MS. As of the date of this Agreement,
except as disclosed in the MS Filed SEC Documents, no action,
demand, requirement or investigation by any Governmental Entity
and no suit, action or proceeding by any person, in each case
with respect to MS or any of its subsidiaries or any of their
respective properties is pending or, to the knowledge (as defined
in Section 8.03) of MS, threatened, other than, in each case,
those the outcome of which individually or in the aggregate would
not (i) have a material adverse effect on MS or (ii) reasonably
be expected to impair the ability of MS to perform its
obligations under this Agreement or the Option Agreements or
prevent or materially delay the consummation of any of the
transactions contemplated by this Agreement or the Option
Agreements.
(i) Absence of Changes in Benefit Plans. Since the date of
the most recent audited financial statements included in the MS
Filed SEC Documents, there has not been any adoption or amendment
in any material respect by MS or any of its subsidiaries of any
collective bargaining agreement or any material bonus, pension,
profit sharing, deferred compensation, incentive compensation,
stock ownership, stock purchase, stock option, phantom stock,
retirement, vacation, severance, disability, death benefit,
hospitalization, medical or other plan, arrangement or
understanding providing benefits to any current or former
employee, officer or director of MS or any of its wholly owned
subsidiaries (collectively, the "MS Benefit Plans"), or any
material change in any actuarial or other assumption used to
calculate funding obligations with respect to any MS pension
plans, or any change in the manner in which contributions to any
MS pension plans are made or the basis on which such
contributions are determined.
(j) ERISA Compliance. (i) With respect to the MS Benefit
Plans, no event has occurred and, to the knowledge of MS, there
exists no condition or set of circumstances, in connection with
which MS or any of its subsidiaries could be subject to any
liability that individually or in the aggregate would have a
material adverse effect on MS under the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), the Code or
any other applicable law.
(ii) Each MS Benefit Plan has been administered in
accordance with its terms, except for any failures so to
administer any MS Benefit Plan that individually or in the
aggregate would not have a material adverse effect on MS. MS, its
subsidiaries and all the MS Benefit Plans are in compliance with
the applicable provisions of ERISA, the Code and all other
applicable laws and the terms of all applicable collective
bargaining agreements, except for any failures to be in such
compliance that individually or in the aggregate would not have a
material adverse effect on MS. Each MS Benefit Plan that is
intended to be qualified under Section 401(a) or 401(k) of the
Code has received a favorable determination letter from the IRS
that it is so qualified and each trust established in connection
with any MS Benefit Plan that is intended to be exempt from
federal income taxation under Section 501(a) of the Code has
received a determination letter from the IRS that such trust is
so exempt. To the knowledge of MS, no fact or event has occurred
since that date of any determination letter from the IRS which is
reasonably likely to affect adversely the qualified status of any
such MS Benefit Plan or the exempt status of any such trust.
(iii) Neither MS nor any of its subsidiaries has incurred
any liability under Title IV of ERISA (other than liability for
premiums to the Pension Benefit Guaranty Corporation arising in
the ordinary course). No MS Benefit Plan has incurred an
"accumulated funding deficiency" (within the meaning of
Section 302 of ERISA or Section 412 of the Code) whether or not
waived. To the knowledge of MS, there are not any facts or
circumstances that would materially change the funded status of
any MS Benefit Plan that is a "defined benefit" plan (as defined
in Section 3(35) of ERISA) since the date of the most recent
actuarial report for
such plan. No MS Benefit Plan is a "multiemployer plan" within
the meaning of Section 3(37) of ERISA.
(iv) Neither MS nor any of its subsidiaries is a party to
any collective bargaining or other labor union contract
applicable to persons employed by MS or any of its subsidiaries
and no collective bargaining agreement is being negotiated by MS
or any of its subsidiaries. As of the date of this Agreement,
there is no labor dispute, strike or work stoppage against MS or
any of its subsidiaries pending or, to the knowledge of MS,
threatened which may interfere with the respective business
activities of MS or any of its subsidiaries, except where such
dispute, strike or work stoppage individually or in the aggregate
would not have a material adverse effect on MS. As of the date of
this Agreement, to the knowledge of MS, none of MS, any of its
subsidiaries or any of their respective representatives or
employees has committed any unfair labor practice in connection
with the operation of the respective business of MS or any of its
subsidiaries, and there is no charge or complaint against MS or
any of its subsidiaries by the National Labor Relations Board or
any comparable governmental agency pending or threatened in
writing.
(v) No employee of MS will be entitled to any additional
benefits or any acceleration of the time of payment or vesting of
any benefits under any MS Benefit Plan as a result of the
transactions contemplated by this Agreement or the Option
Agreements.
(k) Taxes. (i) Each of MS and its subsidiaries has filed all
material tax returns and reports required to be filed by it and
all such returns and reports are complete and correct in all
material respects, or requests for extensions to file such
returns or reports have been timely filed, granted and have not
expired, except to the extent that such failures to file, to be
complete or correct or to have extensions granted that remain in
effect individually or in the aggregate would not have a material
adverse effect on MS. MS and each of its subsidiaries has paid
(or MS has paid on its behalf) all taxes (as defined in
Section 3.01(k)(v)) shown as due on such returns, and the most
recent financial statements contained in the MS Filed SEC
Documents reflect an adequate reserve for all taxes payable by MS
and its subsidiaries for all taxable
periods and portions thereof accrued through the date of such
financial statements.
(ii) No deficiencies for any taxes have been proposed,
asserted or assessed against MS or any of its subsidiaries that
are not adequately reserved for, except for deficiencies that
individually or in the aggregate would not have a material
adverse effect on MS. The federal income tax returns of MS and
each of its subsidiaries consolidated in such returns have closed
by virtue of the applicable statute of limitations.
(iii) Neither MS nor any of its subsidiaries has taken any
action or knows of any fact, agreement, plan or other
circumstance that is reasonably likely to prevent the Merger from
qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
(iv) The MS Benefit Plans and other MS compensation
arrangements in effect as of the date of this Agreement have been
designed so that the disallowance of a deduction under
Section 162(m) of the Code for employee remuneration will not
apply to any amount paid or payable by MS or any of its
subsidiaries under any such plan or arrangement and, to the
knowledge of MS, no fact or circumstance exists that would cause
such disallowance to apply to any such amount.
(v) As used in this Agreement, "taxes" shall include all
(x) federal, state, local or foreign income, property, sales,
excise and other taxes or similar governmental charges, including
any interest, penalties or additions with respect thereto,
(y) liability for the payment of any amounts of the type
described in (x) as a result of being a member of an affiliated,
consolidated, combined or unitary group, and (z) liability for
the payment of any amounts as a result of being party to any tax
sharing agreement or as a result of any express or implied
obligation to indemnify any other person with respect to the
payment of any amounts of the type described in clause (x) or
(y); provided, however, that to the extent MS is entitled to be
indemnified for an amount pursuant to the Stock Purchase
Agreement between CDV Acquisition Corporation and Xerox Financial
Services, Inc. dated as of October 13, 1992 or the Stock Purchase
Agreement
among the Van Xxxxxx Xxxxxxx Companies, Inc., VKM Holding, Inc.,
The Travelers Inc. and Associated Madison Companies Inc. dated as
of August 24, 1994, such amount shall not be considered a "tax"
for purposes of this Section 3.01(k) and to the extent DWD is
entitled to be indemnified for an amount pursuant to the tax
sharing agreement between Sears, Xxxxxxx & Co. and DWD dated
February 19, 1993, such amount shall not be considered a "tax"
for purposes of Section 3.02(k) of this Agreement.
(l) Voting Requirements. The affirmative vote of the holders
of a majority of the voting power of all outstanding shares of MS
Common Stock and MS ESOP Preferred Stock, voting as a single
class (with each share of MS Common Stock having one vote per
share and each share of MS ESOP Preferred Stock having 2.7 votes
per share), at the MS Stockholders Meeting to adopt this
Agreement (the "MS Stockholder Approval") is the only vote of the
holders of any class or series of MS's capital stock necessary to
approve and adopt this Agreement, the Option Agreements and the
transactions contemplated hereby and thereby.
(m) State Takeover Statutes. MS has caused Section 203 of
the DGCL not to be applicable to MS by opting out of the
provisions of such Section 203 in its By-laws in accordance with
the DGCL. To the knowledge of MS, no other state takeover statute
is applicable to the Merger or the other transactions
contemplated hereby and by the Option Agreements.
(n) Accounting Matters. Neither MS nor any of its affiliates
(as defined in Section 8.03) has taken or agreed to take any
action that would prevent the business combination to be effected
by the Merger to be accounted for as a pooling of interests.
(o) Brokers. No broker, investment banker, financial advisor
or other person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with
the transactions contemplated by this Agreement and the Option
Agreements based upon arrangements made by or on behalf of MS.
(p) Opinion of Financial Advisor. MS has received the
opinion of Xxxxxx Xxxxxxx & Co.
Incorporated, dated the date of this Agreement, to the effect
that, as of such date, the Exchange Ratio is fair from a
financial point of view to holders of shares of MS Common Stock
(other than DWD and its affiliates), a signed copy of which
opinion has been delivered to DWD.
(q) Ownership of DWD Common Stock. Other than pursuant to
the DWD Stock Option Agreement and except for shares owned by MS
Benefit Plans or shares held or managed for the account of
another person or as to which MS is required to act as a
fiduciary or in a similar capacity, as of the date hereof,
neither MS nor, to its knowledge without independent
investigation, any of its affiliates, (i) beneficially owns (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, or (ii) is party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of, in each case, shares of capital stock of DWD.
(r) Intellectual Property. MS and its subsidiaries own or
have a valid license to use all trademarks, service marks and
trade names (including any registrations or applications for
registration of any of the foregoing) (collectively, the "MS
Intellectual Property") necessary to carry on its business
substantially as currently conducted except for such MS
Intellectual Property the failure of which to own or validly
license individually or in the aggregate would not have a
material adverse effect on MS. Neither MS nor any such subsidiary
has received any notice of infringement of or conflict with, and,
to MS's knowledge, there are no infringements of or conflicts
with, the rights of others with respect to the use of any MS
Intellectual Property that individually or in the aggregate, in
either such case, would have a material adverse effect on MS.
(s) Certain Contracts. Except as set forth in the MS Filed
SEC Documents, neither MS nor any of its subsidiaries is a party
to or bound by any non- competition agreement or any other
agreement or obligation which purports to limit in any material
respect the manner in which, or the localities in which, all or
any material portion of the business of MS and its subsidiaries,
taken as a whole, is or would be conducted.
SECTION 3.02. Representations and Warranties of DWD. Except
as disclosed in the DWD Filed SEC Documents (as defined in
Section 3.02(g)) or as set forth on the Disclosure Schedule delivered
by DWD to MS prior to the execution of this Agreement (the "DWD
Disclosure Schedule") and making reference to the particular
subsection of this Agreement to which exception is being taken, DWD
represents and warrants to MS as follows:
(a) Organization, Standing and Corporate Power. Each of DWD
and its subsidiaries is a corporation or other legal entity duly
organized, validly existing and in good standing (with respect to
jurisdictions which recognize such concept) under the laws of the
jurisdiction in which it is organized and has the requisite
corporate or other power, as the case may be, and authority to
carry on its business as now being conducted, except, as to
subsidiaries, for those jurisdictions where the failure to be so
organized, existing or in good standing individually or in the
aggregate would not have a material adverse effect on DWD. Each
of DWD and its subsidiaries is duly qualified or licensed to do
business and is in good standing (with respect to jurisdictions
which recognize such concept) in each jurisdiction in which the
nature of its business or the ownership, leasing or operation of
its properties makes such qualification or licensing necessary,
except for those jurisdictions where the failure to be so
qualified or licensed or to be in good standing individually or
in the aggregate would not have a material adverse effect on DWD.
DWD has made available to MS prior to the execution of this
Agreement complete and correct copies of its certificate of
incorporation and by-laws, as amended to date.
(b) Subsidiaries. Exhibit 21 to DWD's Annual Report on
Form 10-K for the fiscal year ended December 31, 1995 includes
all the subsidiaries of DWD which as of the date of this
Agreement are Significant Subsidiaries. All the outstanding
shares of capital stock of, or other equity interests in, each
such Significant Subsidiary have been validly issued and are
fully paid and nonassessable and are owned directly or indirectly
by DWD, free and clear of all Liens and free of any other
restriction (including any restriction on the right to vote, sell
or otherwise dispose of such capital stock or otherwise ownership
interests).
(c) Capital Structure. The authorized capital stock of DWD
consists of 500,000,000 shares of DWD Common Stock and
10,000,000 shares of preferred stock, par value $.01 per share,
of DWD ("DWD Authorized Preferred Stock"). At the close of
business on January 31, 1997, (i) 321,218,945 shares of DWD
Common Stock were issued and outstanding, (ii) 20,754,691 shares
of DWD Common Stock were held by DWD in its treasury,
(iii) 59,498,133 shares of DWD Common Stock were reserved for
issuance pursuant to the DWD Omnibus Equity Incentive Plan, DWD
1994 Omnibus Equity Plan, DWD Employees Replacement Stock Plan,
DWD 1993 Stock Plan for Non-Employee Directors, DWD Directors'
Equity Capital Accumulation Plan, DWD Employee Stock Purchase
Plan, DWD Tax Deferred Equity Participation Plan, DWD-Xxxx Xxxxxx
Xxxxxxxx Inc. Branch Manager Compensation Plan, DWD-Xxxx Xxxxxx
Xxxxxxxx Inc. Account Executive Productivity Compensation Plan,
and DWD Savings Today Affords Retirement Tomorrow Plan (such
plans, collectively with the SPS Transaction Services, Inc.
("SPS") Amended and Restated 1992 Employees Stock Plan, SPS 1995
Omnibus Equity Plan, SPS Formula Plan for Non-Affiliate Directors
of 1992, 1994 and 1996, the SPS Tax Deferred Equity Participation
Plan, the SPS Savings Today Affords Retirement Tomorrow Plan and
SPS Employee Stock Purchase Plan, the "DWD Stock Plans"), (iv) no
shares of Series A Junior Participating Preferred Stock (the "DWD
Junior Preferred Stock") were issued and outstanding and
(v) other than the DWD Junior Preferred Stock, no other shares of
DWD Authorized Preferred Stock have been designated or issued.
Section 3.02(c) of the DWD Disclosure Schedule sets forth a
complete and correct list, as of January 31, 1997, of the number
of shares of DWD Common Stock and common stock, par value $.01
per share, of SPS ("SPS Common Stock") subject to employee stock
options or other rights to purchase or receive DWD Common Stock
or SPS Common Stock granted under the DWD Stock Plans
(collectively, "DWD Employee Stock Options") and the exercise
prices thereof. All outstanding shares of capital stock of DWD
are, and all shares which may be issued will be, when issued,
duly authorized, validly issued, fully paid and nonassessable and
not subject to preemptive rights. Except as set forth in this
Section 3.02(c) and except for changes since January 31, 1997
resulting from the issuance of shares of DWD Common Stock
pursuant to the options and other rights referred to
above in this Section 3.02(c), for issuance of DWD Rights or DWD
Common Stock in respect of DWD Rights pursuant to the DWD Rights
Agreement (as defined below) or as permitted by
Section 4.01(b)(i)(y) and 4.01(b)(ii), (x) there are not issued,
reserved for issuance or outstanding (A) any shares of capital
stock or other voting securities of DWD, (B) any securities of
DWD convertible into or exchangeable or exercisable for shares of
capital stock or voting securities of DWD, (C) any warrants,
calls, options or other rights to acquire from DWD, or any DWD
subsidiary and no obligation of DWD or any DWD subsidiary to
issue, any capital stock, voting securities or securities
convertible into or exchangeable or exercisable for capital stock
or voting securities of DWD, (y) there are no outstanding
obligations of DWD or any DWD subsidiary to repurchase, redeem or
otherwise acquire any such securities or to issue, deliver or
sell, or cause to be issued, delivered or sold, any such
securities. DWD is not a party to any voting agreement with
respect to the voting of any such securities. Except pursuant to
agreements entered into with respect to the DWD Stock Plans as of
the close of business of January 31, 1997, there are no
outstanding (A) securities of DWD or any DWD subsidiary
convertible into or exchangeable or exercisable for shares of
capital stock or other voting securities or ownership interests
in any DWD subsidiary, (B) warrants, calls, options or other
rights to acquire from DWD or any DWD subsidiary, and no
obligation of DWD or any DWD subsidiary to issue, any capital
stock, voting securities or other ownership interests in, or any
securities convertible into or exchangeable or exercisable for
any capital stock, voting securities or ownership interests in,
any DWD subsidiary or (C) obligations of DWD or any DWD
subsidiary to repurchase, redeem or otherwise acquire any such
outstanding securities of DWD subsidiaries or to issue, deliver
or sell, or cause to be issued, delivered or sold, any such
securities. Other than the DWD subsidiaries, DWD does not
directly or indirectly beneficially own any securities or other
beneficial ownership interests in any other entity other than in
the ordinary course of trading, underwriting, asset management,
merchant banking, securitization or market making activities of
DWD or the DWD subsidiaries or the DWD Funds or ownership of the
DWD Funds. "DWD Fund" means (i) any investment account advised or
managed by
DWD on behalf of third parties, and (ii) any partnership, limited
liability company, or other similar investment vehicle or entity
engaged in the business of making investments of which DWD or a
DWD subsidiary acts as the general partner, managing member,
manager, advisor or the equivalent or the general partner of
another DWD Fund. DWD has made available to MS a complete and
correct copy of the Rights Agreement dated as of April 25, 1995
(the "DWD Rights Agreement") between DWD and Chase Manhattan Bank
(as successor to Chemical Bank) relating to rights ("DWD Rights")
to purchase DWD Junior Preferred Stock.
(d) Authority; Noncontravention. DWD has all requisite
corporate power and authority to enter into this Agreement and,
subject to the DWD Stockholder Approval (as defined in
Section 3.02(l)), to consummate the transactions contemplated by
this Agreement. DWD has all requisite corporate power and
authority to enter into the Option Agreements and to consummate
the transactions contemplated thereby. The execution and delivery
of this Agreement and the Option Agreements by DWD and the
consummation by DWD of the transactions contemplated by this
Agreement and the Option Agreements have been duly authorized by
all necessary corporate action on the part of DWD, subject, in
the case of the issuance of DWD Common Stock and DWD Preferred
Stock in connection with the Merger, to the DWD Stockholder
Approval. This Agreement and the Option Agreements have been duly
executed and delivered by DWD and, assuming the due
authorization, execution and delivery by each of the other
parties thereto, constitute legal, valid and binding obligations
of DWD, enforceable against DWD in accordance with their terms.
The execution and delivery of this Agreement and the Option
Agreements do not, and the consummation of the transactions
contemplated by this Agreement and the Option Agreements and
compliance with the provisions of this Agreement and the Option
Agreements will not, conflict with, or result in any violation
of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a benefit under, or
result in the creation of any Lien upon any of the properties or
assets of DWD or any of its subsidiaries under, (i) the
certificate of incorporation or by-laws of DWD or the comparable
organizational documents of any of its subsidiaries,
(ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit,
concession, franchise, license or similar authorization
applicable to DWD or any of its subsidiaries or their respective
properties or assets or (iii) subject to the governmental filings
and other matters referred to in the following sentence, any
judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to DWD or any of its subsidiaries or their
respective properties or assets, other than, in the case of
clauses (ii) and (iii), any such conflicts, violations, defaults,
rights, losses or Liens that individually or in the aggregate
would not (x) have a material adverse effect on DWD or
(y) reasonably be expected to impair the ability of DWD to
perform its obligations under this Agreement or the Option
Agreements. No consent, approval, order or authorization of,
action by, or in respect of, or registration, declaration or
filing with, any Governmental Entity is required by or with
respect to DWD or any of its subsidiaries in connection with the
execution and delivery of this Agreement or the Option Agreements
by DWD or the consummation by DWD of the transactions
contemplated by this Agreement or the Option Agreements, except
for (1) the filing of a premerger notification and report form by
DWD under the HSR Act; (2) the filing with the SEC of (A) the
Joint Proxy Statement relating to the DWD Stockholders Meeting,
(B) the Form S-4 and (C) such reports under Section 13(a), 13(d),
15(d) or 16(a) of the Exchange Act as may be required in
connection with this Agreement, the Option Agreements and the
transactions contemplated by this Agreement and the Option
Agreements; (3) the filing of the Certificate of Merger and the
Certificates of Designations with respect to the DWD Preferred
Stock (the "Certificate of Designations") with the Delaware
Secretary of State and appropriate documents with the relevant
authorities of other states in which DWD is qualified to do
business and such filings with Governmental Entities to satisfy
the applicable requirements of state securities or "blue sky"
laws; (4) such filings with and approvals of the NYSE to permit
the shares of DWD Common Stock that are to be issued in the
Merger, under the MS Stock Plans, pursuant to the DWD Stock
Option Agreement and pursuant to the conversion of the DWD
Convertible Preferred Stock, and to permit the depositary shares
and capital units representing shares of DWD Preferred
Stock that are to be issued in the Merger in exchange for like
securities representing MS Preferred Stock that are listed on the
NYSE as of the date hereof, in each case (a "DWD Listed
Security") to be listed on the NYSE; (5) the consents, approvals
and notices required under the 1940 Act and the Advisors Act;
(6) filings in respect of, and approvals and authorizations of,
any Governmental Entity having jurisdiction over the securities,
commodities, banking, insurance, other financial services or
communications businesses; and (7) such consents, approvals,
orders or authorizations the failure of which to be made or
obtained individually or in the aggregate would not have a
material adverse effect on DWD.
(e) SEC Documents; Undisclosed Liabilities. DWD has filed
all required reports, schedules, forms, statements and other
documents (including exhibits and all other information
incorporated therein) with the SEC since January 1, 1995 (the
"DWD SEC Documents"). As of their respective dates, the DWD SEC
Documents complied in all material respects with the requirements
of the Securities Act or the Exchange Act, as the case may be,
and the rules and regulations of the SEC promulgated thereunder
applicable to such DWD SEC Documents, and none of the DWD SEC
Documents when filed contained any untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
misleading. Except to the extent that information contained in
any DWD SEC Document has been revised or superseded by a later
filed DWD SEC Document, none of the DWD SEC Documents contains
any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial
statements of DWD included in the DWD SEC Documents comply as to
form, as of their respective dates of filing with the SEC, in all
material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto,
have been prepared in accordance with generally accepted
accounting principles (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods
involved (except as may be indicated in the notes thereto) and
fairly present in all material respects the consolidated
financial position of DWD and its consolidated subsidiaries as of
the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal recurring year-end
audit adjustments). Except (i) as reflected in such financial
statements or in the notes thereto or (ii) for liabilities
incurred in connection with this Agreement or the Option
Agreements or the transactions contemplated hereby or thereby,
neither DWD nor any of its subsidiaries has any material
liabilities or obligations of any nature which, individually or
in the aggregate, would have a material adverse effect on DWD.
(f) Information Supplied. None of the information supplied
or to be supplied by DWD specifically for inclusion or
incorporation by reference in (i) the Form S-4 will, at the time
the Form S-4 becomes effective under the Securities Act, contain
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make
the statements therein not misleading or (ii) the Joint Proxy
Statement will, at the date it is first mailed to DWD's
stockholders or at the time of the DWD Stockholders Meeting,
contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The
Form S-4 and the Joint Proxy Statement will comply as to form in
all material respects with the requirements of the Exchange Act
and the rules and regulations thereunder, except that no
representation or warranty is made by DWD with respect to
statements made or incorporated by reference therein based on
information supplied by MS specifically for inclusion or
incorporation by reference in the Form S-4 or the Joint Proxy
Statement.
(g) Absence of Certain Changes or Events. Except for
liabilities incurred in connection with this Agreement or the
Option Agreements or the transactions contemplated hereby or
thereby, since September 30, 1996, DWD and its subsidiaries have
conducted their business only in the ordinary course, and there
has not been (1) any material adverse change in DWD, (2) any
declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to
any of DWD's capital stock, other than regular quarterly cash
dividends of $.14 per share (which was $.22 prior to this Stock
Split (as defined below)) on the DWD Common Stock, (3) any split,
combination or reclassification of any of DWD's capital stock or
any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for
shares of DWD's capital stock, except for the DWD two-for-one
stock split in December 1996 (the "Stock Split") and except for
issuances of DWD Common Stock or SPS Common Stock upon the
exercise of DWD Employee Stock Options awarded prior to the date
hereof in accordance with their present terms or issued pursuant
to Section 4.01(b) or for issuances of DWD Rights or DWD Common
Stock in respect of DWD Rights pursuant to the DWD Rights
Agreement, (4) (A) any granting by DWD or any of its subsidiaries
to any current or former director, executive officer or other key
employee of DWD or its subsidiaries of any increase in
compensation, bonus or other benefits, except for normal
increases in the ordinary course of business or as was required
under any employment agreements in effect as of the date of the
most recent audited financial statements included in the DWD SEC
Documents filed and publicly available prior to the date of this
Agreement (as amended to the date of this Agreement, the "DWD
Filed SEC Documents"), (B) any granting by DWD or any of its
subsidiaries to any such current or former director, executive
officer or key employee of any increase in severance or
termination pay, except in the ordinary course of business, or
(C) any entry by DWD or any of its subsidiaries into, or any
amendment of, any employment, deferred compensation consulting,
severance, termination or indemnification agreement with any such
current or former director, executive officer or key employee,
other than in the ordinary course of business, (5) except insofar
as may have been disclosed in the DWD Filed SEC Documents or
required by a change in generally accepted accounting principles,
any change in accounting methods, principles or practices by DWD
materially affecting its assets, liabilities or business or
(6) except insofar as may have been disclosed in the DWD Filed
SEC Documents, any tax election that individually or in the
aggregate would have a material adverse effect on DWD or any of
its tax
attributes or any settlement or compromise of any material income
tax liability.
(h) Compliance with Applicable Laws. DWD, its subsidiaries
and employees hold all permits, licenses, variances, exemptions,
orders, registrations and approvals of all Governmental Entities
which are required for the operation of the businesses of DWD and
its subsidiaries (the "DWD Permits") except where the failure to
have any such DWD Permits individually or in the aggregate would
not have a material adverse effect on DWD. DWD and its
subsidiaries are in compliance with the terms of the DWD Permits
and all applicable statutes, laws, ordinances, rules and
regulations, except where the failure so to comply individually
or in the aggregate would not have a material adverse effect on
DWD. As of the date of this Agreement, except as disclosed in the
DWD Filed SEC Documents, no action, demand, requirement or
investigation by any Governmental Entity and no suit, action or
proceeding by any person, in each case with respect to DWD or any
of its subsidiaries or any of their respective properties is
pending or, to the knowledge of DWD, threatened, other than, in
each case, those the outcome of which individually or in the
aggregate would not (i) have a material adverse effect on DWD or
(ii) reasonably be expected to impair the ability of DWD to
perform its obligations under this Agreement or the Option
Agreements or prevent or materially delay the consummation of any
of the transactions contemplated by this Agreement or the Option
Agreements.
(i) Absence of Changes in Benefit Plans. Since the date of
the most recent audited financial statements included in the DWD
Filed SEC Documents, there has not been any adoption or amendment
in any material respect by DWD or any of its subsidiaries of any
collective bargaining agreement or any material bonus, pension,
profit sharing, deferred compensation, incentive compensation,
stock ownership, stock purchase, stock option, phantom stock,
retirement, vacation, severance, disability, death benefit,
hospitalization, medical or other plan, arrangement or
understanding providing benefits to any current or former
employee, officer or director of DWD or any of its wholly owned
subsidiaries (collectively, the "DWD Benefit Plans"), or any
material change in any actuarial or other assumption used to
calculate funding
obligations with respect to any DWD pension plans, or any change
in the manner in which contributions to any DWD pension plans are
made or the basis on which such contributions are determined.
(j) ERISA Compliance. (i) With respect to the DWD Benefit
Plans, no event has occurred and, to the knowledge of DWD, there
exists no condition or set of circumstances, in connection with
which DWD or any of its subsidiaries could be subject to any
liability that individually or in the aggregate would have a
material adverse effect on DWD under ERISA, the Code or any other
applicable law.
(ii) Each DWD Benefit Plan has been administered in
accordance with its terms, except for any failures so to
administer any DWD Benefit Plan that individually or in the
aggregate would not have a material adverse effect on DWD. DWD,
its subsidiaries and all the DWD Benefit Plans are in compliance
with the applicable provisions of ERISA, the Code and all other
applicable laws and the terms of all applicable collective
bargaining agreements, except for any failures to be in such
compliance that individually or in the aggregate would not have a
material adverse effect on DWD. Each DWD Benefit Plan that is
intended to be qualified under Section 401(a) or 401(k) of the
Code has received a favorable determination letter from the IRS
that it is so qualified and each trust established in connection
with any DWD Benefit Plan that is intended to be exempt from
federal income taxation under Section 501(a) of the Code has
received a determination letter from the IRS that such trust is
so exempt. To the knowledge of DWD, no fact or event has occurred
since that date of any determination letter from the IRS which is
reasonably likely to affect adversely the qualified status of any
such DWD Benefit Plan or the exempt status of any such trust.
(iii) Neither DWD nor any of its subsidiaries has incurred
any liability under Title IV of ERISA (other than liability for
premiums to the Pension Benefit Guaranty Corporation arising in
the ordinary course). No DWD Benefit Plan has incurred an
"accumulated funding deficiency" (within the meaning of
Section 302 of ERISA or Section 412 of the Code) whether or not
waived. To the knowledge of DWD, there are not any facts or
circumstances that would materially change the
funded status of any DWD Benefit Plan that is a "defined benefit"
plan (as defined in Section 3(35) of ERISA) since the date of the
most recent actuarial report for such plan. No DWD Benefit Plan
is a "multiemployer plan" within the meaning of Section 3(37) of
ERISA.
(iv) Neither DWD nor any of its subsidiaries is a party to
any collective bargaining or other labor union contract
applicable to persons employed by DWD or any of its subsidiaries
and no collective bargaining agreement is being negotiated by DWD
or any of its subsidiaries. As of the date of this Agreement,
there is no labor dispute, strike or work stoppage against DWD or
any of its subsidiaries pending or, to the knowledge of DWD,
threatened which may interfere with the respective business
activities of DWD or any of its subsidiaries, except where such
dispute, strike or work stoppage individually or in the aggregate
would not have a material adverse effect on DWD. As of the date
of this Agreement, to the knowledge of DWD, none of DWD, any of
its subsidiaries or any of their respective representatives or
employees has committed any unfair labor practice in connection
with the operation of the respective businesses of DWD or any of
its subsidiaries, and there is no charge or complaint against DWD
or any of its subsidiaries by the National Labor Relations Board
or any comparable governmental agency pending or threatened in
writing.
(v) No employee of DWD will be entitled to any additional
benefits or any acceleration of the time of payment or vesting of
any benefits under any DWD Benefit Plan as a result of the
transactions contemplated by this Agreement or the Option
Agreements, except that DWD Employee Stock Options awarded under
the DWD 1994 Omnibus Equity Plan covering a maximum of
4,231,222 shares of DWD Common Stock will vest as of the
Effective Time as a result of the Merger. Without limiting the
generality of the preceding sentence, no DWD Employee Stock
Options awarded in January 1997 will vest as a result of the
transactions contemplated by this Agreement and the Option
Agreement.
(k) Taxes. (i) Each of DWD and its subsidiaries has filed
all material tax returns and reports required to be filed by it
and all such returns and reports are
complete and correct in all material respects, or requests for
extensions to file such returns or reports have been timely
filed, granted and have not expired, except to the extent that
such failures to file, to be complete or correct or to have
extensions granted that remain in effect individually or in the
aggregate would not have a material adverse effect on DWD. DWD
and each of its subsidiaries has paid (or DWD has paid on its
behalf) all taxes shown as due on such returns, and the most
recent financial statements contained in the DWD Filed SEC
Documents reflect an adequate reserve for all taxes payable by
DWD and its subsidiaries for all taxable periods and portions
thereof accrued through the date of such financial statements.
(ii) No deficiencies for any taxes have been proposed,
asserted or assessed against DWD or any of its subsidiaries that
are not adequately reserved for, except for deficiencies that
individually or in the aggregate would not have a material
adverse effect on DWD. The federal income tax returns of DWD and
each of its subsidiaries consolidated in such returns have closed
by virtue of the applicable statute of limitations.
(iii) Neither DWD nor any of its subsidiaries has taken any
action or knows of any fact, agreement, plan or other
circumstance that is reasonably likely to prevent the Merger from
qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
(iv) The DWD Benefit Plans and other DWD compensation
arrangements in effect as of the date of this Agreement have been
designed so that the disallowance of a deduction under
Section 162(m) of the Code for employee remuneration will not
apply to any amount paid or payable by DWD or any of its
subsidiaries under any such plan or arrangement and, to the
knowledge of DWD, no fact or circumstance exists that would cause
such disallowance to apply to any such amount.
(l) Voting Requirements. The affirmative vote at the DWD
Stockholders Meeting (the "DWD Stockholder Approval") of (i) the
holders of a majority of the voting power of all outstanding
shares of DWD Common Stock is the only vote of the holders of any
class or series of DWD's capital stock necessary to approve and
adopt this Agreement, the Option Agreements and the transactions
contemplated hereby and thereby and (ii) the holders of a
majority of all shares of DWD Common Stock casting votes is the
only vote of the holders of any class or series of DWD's capital
stock necessary to approve, in accordance with the applicable
rules of the NYSE, the issuance of DWD Common Stock pursuant to
the Merger.
(m) State Takeover Statutes; Certificate of Incorporation.
The Board of Directors of DWD (including the disinterested
directors thereof (as defined in Article 11 of the DWD
Certificate of Incorporation)) has unanimously approved the terms
of this Agreement and the Option Agreements and the consummation
of the Merger and the other transactions contemplated by this
Agreement and the Option Agreements and, assuming the accuracy of
MS's representation and warranty contained in Section 3.01(q),
such approval constitutes approval of the Merger and the other
transactions contemplated by this Agreement and the Option
Agreements by the DWD Board of Directors under the provisions of
Section 203 of the DGCL and Section 11.2A of the DWD Certificate
of Incorporation, and represents all the actions necessary to
ensure that such Section 203 and the provisions of Section 11.1.A
of the DWD Certificate of Incorporation do not apply to MS in
connection with the Merger and the other transactions
contemplated hereby and by the Option Agreements. To its
knowledge, no other state takeover statute is applicable to the
Merger or the other transactions contemplated hereby and by the
Option Agreements.
(n) Accounting Matters. Neither DWD nor any of its
affiliates has taken or agreed to take any action that would
prevent the business combination to be effected by the Merger to
be accounted for as a pooling of interests.
(o) Brokers. No broker, investment banker, financial advisor
or other person, other than Xxxxxxxxxxx Xxxxxxx & Co., Inc., the
fees and expenses of which will be paid by DWD or, if the Merger
occurs, the Surviving Corporation, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission
in connection with the transactions contemplated by this
Agreement and the Option
Agreements based upon arrangements made by or on behalf of DWD.
DWD has furnished to MS true and complete copies of all
agreements under which any such fees or expenses are payable and
all indemnification and other agreements related to the
engagement of the persons to whom such fees are payable.
(p) Opinion of Financial Advisor. DWD has received the
opinion of Xxxxxxxxxxx Xxxxxxx & Co., Inc., dated the date of
this Agreement, to the effect that, as of such date, the Exchange
Ratio for the conversion of MS Common Stock into DWD Common Stock
pursuant to the Merger is fair to DWD and, accordingly, to DWD's
stockholders from a financial point of view, a signed copy of
which opinion has been delivered to MS.
(q) Ownership of MS Common Stock. Other than pursuant to the
MS Stock Option Agreement and except for shares owned by DWD
Benefit Plans or shares held or managed for the account of
another person or as to which DWD is required to act as a
fiduciary or in a similar capacity, as of the date hereof,
neither DWD nor, to its knowledge without independent
investigation, any of its affiliates, (i) beneficially owns (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, or (ii) is party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of, in each case, shares of capital stock of MS.
(r) DWD Rights Agreement. The DWD Rights Agreement has been
amended (the "DWD Rights Plan Amendment") to (i) render the DWD
Rights Agreement inapplicable to the Merger and the other
transactions contemplated by this Agreement and the Option
Agreements and (ii) ensure that (y) none of MS, its wholly owned
subsidiaries, its permitted assignees or transferees under the
DWD Stock Option Agreement or the parties to the Stockholders'
Agreement dated February 14, 1986, as amended, to which MS is a
party (the "Stockholders Agreement") or the other Voting
Agreements (as defined in MS's Proxy Statement dated as of
February 26, 1996) is an Acquiring Person (as defined in the DWD
Rights Agreement) pursuant to the DWD Rights Agreement and (z) a
Distribution Date, a Triggering Event or Stock Acquisition Date
(as such terms are defined in the DWD Rights Agreement) does not
occur solely by reason of the execution of this
Agreement and the Option Agreements, the consummation of the
Merger, or the consummation of the other transactions
contemplated by this Agreement and the Option Agreements, and
such amendment may not be further amended by DWD without the
prior consent of MS in its sole discretion.
(s) Intellectual Property. DWD and its subsidiaries own or
have a valid license to use all trademarks, service marks and
trade names (including any registrations or applications for
registration of any of the foregoing) (collectively, the "DWD
Intellectual Property") necessary to carry on its business
substantially as currently conducted, except for such DWD
Intellectual Property the failure of which to own or validly
license individually or in the aggregate would not have a
material adverse effect on DWD. Neither DWD nor any such
subsidiary has received any notice of infringement of or conflict
with, and, to DWD's knowledge, there are no infringements of or
conflicts with, the rights of others with respect to the use of
any DWD Intellectual Property that individually or in the
aggregate, in either such case, would have a material adverse
effect on DWD.
(t) Certain Contracts. Except as set forth in the DWD Filed
SEC Documents, neither DWD nor any of its subsidiaries is a party
to or bound by any non- competition agreement or any other
agreement or obligation which purports to limit in any material
respect the manner in which, or the localities in which, all or
any material portion of the business of DWD and its subsidiaries
(including MS and its subsidiaries, assuming the Merger had taken
place), taken as a whole, is or would be conducted.
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business. (a) Conduct of Business
by MS. Except as set forth in Section 4.01(a) of the MS Disclosure
Schedule, as otherwise expressly contemplated by this Agreement or the
Option Agreements or as consented to by DWD, such consent not to be
unreasonably withheld or delayed, during the period from the date of
this Agreement to the Effective Time, MS shall, and shall cause
its subsidiaries to, carry on their respective businesses in the
ordinary course consistent with past practice and in compliance in all
material respects with all applicable laws and regulations and, to the
extent consistent therewith, use all reasonable efforts to preserve
intact their current business organizations, use reasonable efforts to
keep available the services of their current officers and other key
employees and preserve their relationships with those persons having
business dealings with them to the end that their goodwill and ongoing
businesses shall be unimpaired at the Effective Time. Without limiting
the generality of the foregoing (but subject to the above exceptions),
during the period from the date of this Agreement to the Effective
Time, MS shall not, and shall not permit any of its subsidiaries to:
(i) other than dividends and distributions (including
liquidating distributions) by a direct or indirect wholly owned
subsidiary of MS to its parent, or by a subsidiary that is
partially owned by MS or any of its subsidiaries, provided that
MS or any such subsidiary receives or is to receive its
proportionate share thereof, and other than the regular quarterly
cash dividends of $.20 per share with respect to the MS Common
Stock and dividends payable on MS Preferred Stock in accordance
with their terms as of the date of this Agreement (or as of their
date of issue if subsequent to the date of this Agreement),
(x) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, (y) split,
combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock,
except for issuances of MS Common Stock upon conversion of MS
Convertible Securities or upon the exercise of MS Employee Stock
Options or in connection with restricted stock units under the MS
Stock Plans, in each case, outstanding as of the date hereof in
accordance with their present terms or issued pursuant to
Section 4.01(a)(ii) or (z) except pursuant to the provisions of
the MS Subsidiary Convertible Preferred Stock or agreements
entered into with respect to the MS Stock Plans as of the close
of business on January 20, 1997, purchase, redeem or otherwise
acquire any shares of capital stock of MS or any of its
Subsidiaries or any other securities thereof or any rights,
warrants or options to acquire any such shares or other
securities;
(ii) issue, deliver, sell, pledge or otherwise encumber or
subject to any Lien any shares of its capital stock, any other
voting securities or any securities convertible into, or any
rights, warrants or options to acquire, any such shares, voting
securities or convertible securities (other than (x) the issuance
of MS Common Stock upon conversion of MS Convertible Securities
in accordance with their present terms at the option of the
holders thereof, (y) the issuance of MS Common Stock upon the
exercise of MS Employee Stock Options or in connection with
restricted stock units under the MS Stock Plans, in each case
outstanding as of the date hereof in accordance with their
present terms or, after consulting with DWD, granted after the
date hereof in the ordinary course of business consistent with
past practice for new employees (so long as such additional
amount of MS Common Stock subject to MS Employee Stock Options
and/or restricted stock units issued to new employees does not
exceed 565,000 shares of MS Common Stock in the aggregate) and
(z) the issuance of MS Common Stock pursuant to the MS Stock
Option Agreement) and other than in connection with the issuance
of nonvoting MS Preferred Stock in the ordinary course of
business consistent with past practice;
(iii) amend its certificate of incorporation, by-laws or
other comparable organizational documents, other than in
connection with the issuance of nonvoting MS Preferred Stock in
the ordinary course of business consistent with past practice;
(iv) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any person, except for such
acquisitions made in the ordinary course of business consistent
with past practice;
(v) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties
or assets (including securitizations), other than in the ordinary
course of business consistent with past practice;
(vi) take any action that would cause the representations
and warranties set forth in Section 3.01(g) (with each reference
therein to
"ordinary course of business" being deemed for purposes of this
Section 4.01(a)(vi) to be immediately followed by "consistent
with past practice") to no longer be true and correct;
(vii) take any action to cause or permit additional shares
of MS Common Stock to become subject to the MS Voting
Arrangements, other than in the ordinary course of business
consistent with past practice; or
(viii) authorize, or commit or agree to take, any of the
foregoing actions;
provided that the limitations set forth in this Section 4.01(a) (other
than clause (iii)) shall not apply to any transaction between MS and
any wholly owned subsidiary or between any wholly owned subsidiaries
of MS.
(b) Conduct of Business by DWD. Except as set forth in
Section 4.01(b) of the DWD Disclosure Schedule, as otherwise expressly
contemplated by this Agreement or the Option Agreement or as consented
to by MS, such consent not to be unreasonably withheld or delayed,
during the period from the date of this Agreement to the Effective
Time, DWD shall, and shall cause its subsidiaries to, carry on their
respective businesses in the ordinary course consistent with past
practice and in compliance in all material respects with all
applicable laws and regulations and, to the extent consistent
therewith, use all reasonable efforts to preserve intact their current
business organizations, use reasonable efforts to keep available the
services of their current officers and other key employees and
preserve their relationships with those persons having business
dealings with them to the end that their goodwill and ongoing
businesses shall be unimpaired at the Effective Time. Without limiting
the generality of the foregoing (but subject to the above exceptions),
during the period from the date of this Agreement to the Effective
Time, DWD shall not, and shall not permit any of its subsidiaries to:
(i) other than dividends and distributions (including
liquidating distributions) by a direct or indirect wholly owned
subsidiary of DWD to its parent, or by a subsidiary that is
partially owned by DWD or any of its subsidiaries, provided that
DWD or any such subsidiary receives or is to receive its
proportionate share thereof, and other than the regular quarterly
cash dividends of $.14 per share with respect to the DWD Common
Stock, (x) declare, set aside or pay any dividends on, or make
any other distributions in respect of, any of its capital stock,
(y) split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its
capital stock, except for issuances of DWD Common Stock or SPS
Common Stock upon the exercise of DWD Employee Stock Options
outstanding as of the date hereof in accordance with their
present terms or issued pursuant to Section 4.01(b)(ii) or
(z) except pursuant to agreements entered into with respect to
the DWD Stock Plans as of the close of business on January 31,
1997, purchase, redeem or otherwise acquire any shares of capital
stock of DWD or any of its subsidiaries or any other securities
thereof or any rights, warrants or options to acquire any such
shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber or
subject to any Lien any shares of its capital stock, any other
voting securities or any securities convertible into, or any
rights, warrants or options to acquire, any such shares, voting
securities or convertible securities (other than (x) the issuance
of DWD Common Stock or SPS Common Stock upon the exercise of DWD
Employee Stock Options outstanding as of the date hereof in
accordance with their present terms or, after consulting with MS,
granted after the date hereof in the ordinary course of business
consistent with past practice for new employees (so long as such
additional amount of DWD Common Stock or SPS Common Stock subject
to DWD Employee Stock Options issued to new employees does not
exceed 565,000 shares of DWD Common Stock and SPS Common Stock in
the aggregate), (y) in accordance with the DWD Rights Agreement
or (z) the issuance of DWD Common Stock pursuant to the DWD Stock
Option Agreement);
(iii) except as contemplated hereby, amend its certificate
of incorporation, by-laws or other comparable organizational
documents;
(iv) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any person, except for such
acquisitions
made in the ordinary course of business consistent with past
practice;
(v) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties
or assets (including securitizations), other than in the ordinary
course of business consistent with past practice;
(vi) take any action that would cause the representations
and warranties set forth in Section 3.02(g) (with each reference
therein to "ordinary course of business" being deemed for
purposes of this Section 4.01(b)(vi) to be immediately followed
by "consistent with past practice") to no longer be true and
correct; or
(vii) authorize, or commit or agree to take, any of the
foregoing actions;
provided that the limitations set forth in this Section 4.01(b) (other
than clause (iii)) shall not apply to any transaction between DWD and
any wholly owned subsidiary or between any wholly owned subsidiaries
of DWD.
(c) Coordination of Dividends. Each of DWD and MS shall
coordinate with the other regarding the declaration and payment of
dividends in respect of the DWD Common Stock and the MS Common Stock
and the record dates and payment dates relating thereto, it being the
intention of DWD and MS that any holder of MS Common Stock shall not
receive two dividends, or fail to receive one dividend, for any single
calendar quarter with respect to its shares of MS Common Stock and/or
any shares of DWD Common Stock any such holder receives in exchange
therefor pursuant to the Merger.
(d) Other Actions. Except as required by law, MS and DWD
shall not, and shall not permit any of their respective subsidiaries
to, voluntarily take any action that would, or that could reasonably
be expected to, result in (i) any of the representations and
warranties of such party set forth in this Agreement or the Option
Agreements that are qualified as to materiality becoming untrue at the
Effective Time, (ii) any of such representations and warranties that
are not so qualified becoming untrue in any material respect at the
Effective Time, or (iii) any of the conditions to the Merger set forth
in Article VI not being satisfied.
(e) Advice of Changes. MS and DWD shall promptly advise the
other party orally and in writing to the extent it has knowledge of
(i) any representation or warranty made by it contained in this
Agreement or the Option Agreements that is qualified as to materiality
becoming untrue or inaccurate in any respect or any such
representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect, (ii) the failure by it to comply
in any material respect with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by
it under this Agreement or the Option Agreements and (iii) any change
or event having, or which, insofar as can reasonably be foreseen,
could reasonably be expected to have a material adverse effect on such
party or on the truth of their respective representations and
warranties or the ability of the conditions set forth in Article VI to
be satisfied; provided, however, that no such notification shall
affect the representations, warranties, covenants or agreements of the
parties (or remedies with respect thereto) or the conditions to the
obligations of the parties under this Agreement or the Option
Agreements.
SECTION 4.02. No Solicitation by MS. (a) MS shall not, nor
shall it permit any of its subsidiaries to, nor shall it authorize or
permit any of its directors, officers or employees or any investment
banker, financial advisor, attorney, accountant or other
representative retained by it or any of its subsidiaries to, directly
or indirectly through another person, (i) solicit, initiate or
encourage (including by way of furnishing information), or take any
other action designed to facilitate, any inquiries or the making of
any proposal which constitutes any MS Takeover Proposal (as defined
below) or (ii) participate in any discussions or negotiations
regarding any MS Takeover Proposal; provided, however, that if, at any
time during the 20 business days prior to the publicly announced date
of the MS Stockholders Meeting (as defined in Section 5.01(b)) (the
"MS Applicable Period"), the Board of Directors of MS determines in
good faith, after consultation with outside counsel, that it is
necessary to do so in order to comply with its fiduciary duties to
MS's stockholders under applicable law, MS may, in response to a MS
Superior Proposal (as defined in Section 4.02(b)) which was not
solicited by it or which did not otherwise result from a breach of
this Section 4.02(a), and subject to providing prior written notice of
its decision to take such action to DWD (the "MS Notice") and
compliance with Section 4.02(c),
for a period of five business days following delivery of the MS Notice
(x) furnish information with respect to MS and its subsidiaries to any
person making an MS Superior Proposal pursuant to a customary
confidentiality agreement (as determined by MS after consultation with
its outside counsel) and (y) participate in discussions or
negotiations regarding such MS Superior Proposal. For purposes of this
Agreement, "MS Takeover Proposal" means any inquiry, proposal or offer
from any person relating to any direct or indirect acquisition or
purchase of a business that constitutes 15% or more of the net
revenues, net income or the assets of MS and its subsidiaries, taken
as a whole, or 15% or more of any class of equity securities of MS or
any of its subsidiaries, any tender offer or exchange offer that if
consummated would result in any person beneficially owning 15% or more
of any class of equity securities of MS or any of its subsidiaries, or
any merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving MS or any of
its subsidiaries, other than the transactions contemplated by this
Agreement. MS shall be permitted to deliver only one MS Notice with
respect to each person making a MS Superior Proposal.
(b) Except as expressly permitted by this Section 4.02,
neither the Board of Directors of MS nor any committee thereof shall
(i) withdraw or modify, or propose publicly to withdraw or modify, in
a manner adverse to DWD, the approval or recommendation by such Board
of Directors or such committee of the Merger or this Agreement,
(ii) approve or recommend, or propose publicly to approve or
recommend, any MS Takeover Proposal, or (iii) cause MS to enter into
any letter of intent, agreement in principle, acquisition agreement or
other similar agreement (each, a "MS Acquisition Agreement") related
to any MS Takeover Proposal. Notwithstanding the foregoing, in the
event that during the MS Applicable Period the Board of Directors of
MS determines in good faith that there is a substantial probability
that the adoption of this Agreement by holders of MS Common Stock will
not be obtained due to the existence of a MS Superior Proposal, the
Board of Directors of MS may (subject to this and the following
sentences) terminate this Agreement (and concurrently with or after
such termination, if it so chooses, cause MS to enter into any MS
Acquisition Agreement with respect to any MS Superior Proposal), but
only at a time that is during the MS Applicable Period and is after
the fifth business day following DWD's receipt of written notice
advising DWD that the Board of Directors of MS is
prepared to accept a MS Superior Proposal, specifying the material
terms and conditions of such MS Superior Proposal and identifying the
person making such MS Superior Proposal. For purposes of this
Agreement, a "MS Superior Proposal" means any proposal made by a third
party to acquire, directly or indirectly, including pursuant to a
tender offer, exchange offer, merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar
transaction, for consideration consisting of cash and/or securities,
more than 50% of the combined voting power of the shares of MS Common
Stock then outstanding or all or substantially all the assets of MS
and otherwise on terms which the Board of Directors of MS determines
in its good faith judgment (based on the advice of a financial advisor
of nationally recognized reputation) to be more favorable to MS's
stockholders than the Merger and for which financing, to the extent
required, is then committed or which, in the good faith judgment of
the Board of Directors of MS, is reasonably capable of being obtained
by such third party.
(c) In addition to the obligations of MS set forth in
paragraphs (a) and (b) of this Section 4.02, MS shall immediately
advise DWD orally and in writing of any request for information or of
any MS Takeover Proposal, the material terms and conditions of such
request or MS Takeover Proposal and the identity of the person making
such request or MS Takeover Proposal. MS will keep DWD reasonably
informed of the status and details (including amendments or proposed
amendments) of any such request or MS Takeover Proposal.
(d) Nothing contained in this Section 4.02 shall prohibit MS
from taking and disclosing to its stockholders a position contemplated
by Rule 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to MS's stockholders if, in the good faith judgment of the
Board of Directors of MS, after consultation with outside counsel,
failure so to disclose would be inconsistent with its obligations
under applicable law; provided, however, that neither MS nor its Board
of Directors nor any committee thereof shall withdraw or modify, or
propose publicly to withdraw or modify, its position with respect to
this Agreement or the Merger or approve or recommend, or propose
publicly to approve or recommend, a MS Takeover Proposal.
SECTION 4.03. No Solicitation by DWD. (a) DWD shall not,
nor shall it permit any of its subsidiaries to,
nor shall it authorize or permit any of its directors, officers or
employees or any investment banker, financial advisor, attorney,
accountant or other representative retained by it or any of its
subsidiaries to, directly or indirectly through another person,
(i) solicit, initiate or encourage (including by way of furnishing
information), or take any other action designed to facilitate, any
inquiries or the making of any proposal which constitutes any DWD
Takeover Proposal (as defined below) or (ii) participate in any
discussions or negotiations regarding any DWD Takeover Proposal;
provided, however, that if, at any time during the 20 business days
prior to the publicly announced date of the DWD Stockholders Meeting
(as defined in Section 5.01(c)) (the "DWD Applicable Period"), the
Board of Directors of DWD determines in good faith, after consultation
with outside counsel, that it is necessary to do so in order to comply
with its fiduciary duties to DWD's stockholders under applicable law,
DWD may, in response to a DWD Superior Proposal (as defined in
Section 4.03(b)) which was not solicited by it or which did not
otherwise result from a breach of this Section 4.03(a), and subject to
providing prior written notice of its decision to take such action to
MS (the "DWD Notice") and compliance with Section 4.03(c), for a
period of five business days following delivery of the DWD Notice
(x) furnish information with respect to DWD and its subsidiaries to
any person making a DWD Superior Proposal pursuant to a customary
confidentiality agreement (as determined by DWD after consultation
with its outside counsel) and (y) participate in discussions or
negotiations regarding such DWD Superior Proposal. For purposes of
this Agreement, "DWD Takeover Proposal" means any inquiry, proposal or
offer from any person relating to any direct or indirect acquisition
or purchase of a business that constitutes 15% or more of the net
revenues, net income or the assets of DWD and its subsidiaries, taken
as a whole, or 15% or more of any class of equity securities of DWD or
any of its subsidiaries, any tender offer or exchange offer that if
consummated would result in any person beneficially owning 15% or more
of any class of equity securities of DWD or any of its subsidiaries,
or any merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving DWD or any
of its subsidiaries, other than the transactions contemplated by this
Agreement. DWD shall be permitted to deliver only one DWD Notice with
respect to each person making a DWD Superior Proposal.
(b) Except as expressly permitted by this Section 4.03,
neither the Board of Directors of DWD nor any committee thereof shall
(i) withdraw or modify, or propose publicly to withdraw or modify, in
a manner adverse to MS, the approval or recommendation by such Board
of Directors or such committee of the Merger, this Agreement or the
issuance of DWD Common Stock and DWD Preferred Stock in connection
with the Merger, (ii) approve or recommend, or propose publicly to
approve or recommend, any DWD Takeover Proposal, or (iii) cause DWD to
enter into any letter of intent, agreement in principle, acquisition
agreement or other similar agreement (each, a "DWD Acquisition
Agreement") related to any DWD Takeover Proposal. Notwithstanding the
foregoing, in the event that during the MS Applicable Period the Board
of Directors of DWD determines in good faith that there is a
substantial probability that the adoption of this Agreement by holders
of DWD Common Stock will not be obtained due to the existence of a DWD
Superior Proposal, the Board of Directors of DWD may (subject to this
and the following sentences) terminate this Agreement (and
concurrently with or after such termination, if it so chooses, cause
DWD to enter into any DWD Acquisition Agreement with respect to any
DWD Superior Proposal), but only at a time that is during the MS
Applicable Period and is after the fifth business day following MS's
receipt of written notice advising MS that the Board of Directors of
DWD is prepared to accept a DWD Superior Proposal, specifying the
material terms and conditions of such DWD Superior Proposal and
identifying the person making such DWD Superior Proposal. For purposes
of this Agreement, a "DWD Superior Proposal" means any proposal made
by a third party to acquire, directly or indirectly, including
pursuant to a tender offer, exchange offer, merger, consolidation,
business combination, recapitalization, liquidation, dissolution or
similar transaction, for consideration consisting of cash and/or
securities, more than 50% of the combined voting power of the shares
of DWD Common Stock then outstanding or all or substantially all the
assets of DWD and otherwise on terms which the Board of Directors of
DWD determines in its good faith judgment (based on the advice of a
financial advisor of nationally recognized reputation) to be more
favorable to DWD's stockholders than the Merger and for which
financing, to the extent required, is then committed or which, in the
good faith judgment of the Board of Directors of DWD, is reasonably
capable of being obtained by such third party.
(c) In addition to the obligations of DWD set forth in
paragraphs (a) and (b) of this Section 4.03, DWD shall immediately
advise MS orally and in writing of any request for information or of
any DWD Takeover Proposal, the material terms and conditions of such
request or DWD Takeover Proposal and the identity of the person making
such request or DWD Takeover Proposal. DWD will keep MS reasonably
informed of the status and details (including amendments or proposed
amendments) of any such request or DWD Takeover Proposal.
(d) Nothing contained in this Section 4.03 shall prohibit
DWD from taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or
from making any disclosure to DWD's stockholders if, in the good faith
judgment of the Board of Directors of DWD, after consultation with
outside counsel, failure so to disclose would be inconsistent with its
obligations under applicable law; provided, however, that neither DWD
nor its Board of Directors nor any committee thereof shall withdraw or
modify, or propose publicly to withdraw or modify, its position with
respect to this Agreement, the Merger, the issuance of DWD Common
Stock and DWD Preferred Stock in connection with the Merger, or
approve or recommend, or propose publicly to approve or recommend, a
DWD Takeover Proposal.
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Form S-4 and the Joint
Proxy Statement; Stockholders Meetings. (a) As soon as practicable
following the date of this Agreement, MS and DWD shall prepare and
file with the SEC the Joint Proxy Statement and DWD shall prepare and
file with the SEC the Form S-4, in which the Joint Proxy Statement
will be included as a prospectus. Each of MS and DWD shall use best
efforts to have the Form S-4 declared effective under the Securities
Act as promptly as practicable after such filing. MS will use all best
efforts to cause the Joint Proxy Statement to be mailed to MS's
stockholders, and DWD will use all best efforts to cause the Joint
Proxy Statement to be mailed to DWD's stockholders, in each case as
promptly as practicable after the Form S-4 is declared effective under
the Securities Act. DWD shall also take any action (other than
qualifying to do business in any jurisdiction in which
it is not now so qualified or to file a general consent to service of
process) required to be taken under any applicable state securities
laws in connection with the issuance of DWD Common Stock and DWD
Preferred Stock in the Merger and MS shall furnish all information
concerning MS and the holders of MS Common Stock as may be reasonably
requested in connection with any such action. No filing of, or
amendment or supplement to, the Form S-4 or the Joint Proxy Statement
will be made by DWD without providing MS the opportunity to review and
comment thereon. DWD will advise MS, promptly after it receives notice
thereof, of the time when the Form S-4 has become effective or any
supplement or amendment has been filed, the issuance of any stop
order, the suspension of the qualification of the DWD Common Stock
issuable in connection with the Merger for offering or sale in any
jurisdiction, or any request by the SEC for amendment of the Joint
Proxy Statement or the Form S-4 or comments thereon and responses
thereto or requests by the SEC for additional information. If at any
time prior to the Effective Time any information relating to MS or
DWD, or any of their respective affiliates, officers or directors,
should be discovered by MS or DWD which should be set forth in an
amendment or supplement to any of the Form S-4 or the Joint Proxy
Statement, so that any of such documents would not include any
misstatement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the party
which discovers such information shall promptly notify the other
parties hereto and an appropriate amendment or supplement describing
such information shall be promptly filed with the SEC and, to the
extent required by law, disseminated to the stockholders of MS and
DWD.
(b) MS shall, as soon as practicable following the date of
this Agreement, duly call, give notice of, convene and hold a meeting
of its stockholders (the "MS Stockholders Meeting") for the purpose of
obtaining the MS Stockholder Approval and shall, through its Board of
Directors, recommend to its stockholders the approval and adoption of
this Agreement, the Merger and the other transactions contemplated
hereby. Without limiting the generality of the foregoing but subject
to its rights to terminate this Agreement pursuant to Section 4.02(b),
MS agrees that its obligations pursuant to the first sentence of this
Section 5.01(b) shall not be affected by the commencement, public
proposal, public disclosure or communication to MS of any MS Takeover
Proposal.
(c) DWD shall, as soon as practicable following the date of
this Agreement, duly call, give notice of, convene and hold a meeting
of its stockholders (the "DWD Stockholders Meeting") for the purpose
of obtaining the DWD Stockholder Approval and shall, through its Board
of Directors, recommend to its stockholders the approval and adoption
of this Agreement, the Merger and the other transactions contemplated
hereby. Without limiting the generality of the foregoing but subject
to its rights to terminate this Agreement pursuant to Section 4.03(b),
DWD agrees that its obligations pursuant to the first sentence of this
Section 5.01(c) shall not be affected by the commencement, public
proposal, public disclosure or commencement to DWD of any DWD Takeover
Proposal.
(d) DWD and MS will use best efforts to hold the MS
Stockholders Meeting and the DWD Stockholders Meeting on the same date
and as soon as practicable after the date hereof.
SECTION 5.02. Letters of MS's Accountants. (a) MS shall use
best efforts to cause to be delivered to DWD two letters from MS's
independent accountants, one dated a date within two business days
before the date on which the Form S-4 shall become effective and one
dated a date within two business days before the Closing Date, each
addressed to DWD, in form and substance reasonably satisfactory to DWD
and customary in scope and substance for comfort letters delivered by
independent public accountants in connection with registration
statements similar to the Form S-4.
(b) MS shall use best efforts to cause to be delivered to
DWD a letter from MS's independent accountants addressed to DWD and
MS, dated as of the Closing Date, stating that the Merger will qualify
as a pooling of interests transaction under Opinion 16 of the
Accounting Principles Board and applicable SEC rules and regulations.
SECTION 5.03. Letters of DWD's Accountants. (a) DWD shall
use best efforts to cause to be delivered to MS two letters from DWD's
independent accountants, one dated a date within two business days
before the date on which the Form S-4 shall become effective and one
dated a date within two business days before the Closing Date, each
addressed to MS, in form and substance reasonably satisfactory to MS
and customary in scope and substance for comfort letters delivered by
independent public accountants in connection with registration
statements similar to the Form S-4.
(b) DWD shall use best efforts to cause to be delivered to
MS a letter from DWD's independent accountants, addressed to MS and
DWD, dated as of the Closing Date, stating that the Merger will
qualify as a pooling of interests transaction under Opinion 16 of the
Accounting Principles Board and applicable SEC rules and regulations.
SECTION 5.04. Access to Information; Confidentiality.
Subject to the Confidentiality Agreement dated August 22, 1995, as
amended, between DWD and MS (the "Confidentiality Agreement"), each of
MS and DWD shall, and shall cause each of its respective subsidiaries
to, afford to the other party and to the officers, employees,
accountants, counsel, financial advisors and other representatives of
such other party, reasonable access during normal business hours
during the period prior to the Effective Time to all their respective
properties, books, contracts, commitments, personnel and records and,
during such period, each of MS and DWD shall, and shall cause each of
its respective subsidiaries to, furnish promptly to the other party
(a) a copy of each report, schedule, registration statement and other
document filed by it during such period pursuant to the requirements
of federal or state securities laws and (b) all other information
concerning its business, properties and personnel as such other party
may reasonably request. No review pursuant to this Section 5.04 shall
have an effect for the purpose of determining the accuracy of any
representation or warranty given by either party hereto to the other
party hereto. Each of MS and DWD will hold, and will cause its
respective officers, employees, accountants, counsel, financial
advisors and other representatives and affiliates to hold, any
nonpublic information in accordance with the terms of the
Confidentiality Agreement.
SECTION 5.05. Best Efforts. (a) Upon the terms and subject
to the conditions set forth in this Agreement, each of the parties
agrees to use best efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by
this Agreement and the Option Agreements, including (i) the obtaining
of all necessary actions or nonactions, waivers, consents and
approvals from Governmental Entities and the making of all necessary
registrations and filings and the taking of all steps as may
be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any Governmental Entity, (ii) the obtaining
of all necessary consents, approvals or waivers from third parties,
(iii) the defending of any lawsuits or other legal proceedings,
whether judicial or administrative, challenging this Agreement or the
Option Agreements or the consummation of the transactions contemplated
by this Agreement or the Option Agreements, including seeking to have
any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed, and (iv) the execution and
delivery of any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes of,
this Agreement and the Option Agreements. Nothing set forth in this
Section 5.05(a) will limit or affect actions permitted to be taken
pursuant to Sections 4.02 and 4.03.
(b) In connection with and without limiting the foregoing,
MS and DWD shall (i) take all action necessary to ensure that no state
takeover statute or similar statute or regulation is or becomes
applicable to the Merger, this Agreement, the Option Agreements or any
of the other transactions contemplated by this Agreement or the Option
Agreements and (ii) if any state takeover statute or similar statute
or regulation becomes applicable to the Merger, this Agreement, the
Option Agreements or any other transaction contemplated by this
Agreement or the Option Agreements, take all action necessary to
ensure that the Merger and the other transactions contemplated by this
Agreement and the Option Agreements may be consummated as promptly as
practicable on the terms contemplated by this Agreement and the Option
Agreements and otherwise to minimize the effect of such statute or
regulation on the Merger and the other transactions contemplated by
this Agreement and the Option Agreements.
(c) The parties shall cooperate to assure that neither the
Surviving Corporation, any of its subsidiaries, nor any other person
or group of persons, will be required, as a result of the Merger, to
register as a bank holding company under the Bank Holding Company Act
of 1956, as amended.
SECTION 5.06. Stock Options and Restricted Stock Units.
(a) As soon as practicable following the date of this Agreement, the
Board of Directors of MS (or, if appropriate, any committee
administering the MS Stock Plans)
shall adopt such resolutions or take such other actions as may be
required to effect the following:
(i) adjust the terms of all outstanding MS Employee Stock
Options granted under MS Stock Plans, whether vested or unvested,
as necessary to provide that, at the Effective Time, each MS
Employee Stock Option outstanding immediately prior to the
Effective Time shall be amended and converted into an option to
acquire, on the same terms and conditions as were applicable
under such MS Employee Stock Option, including vesting, the same
number of shares of DWD Common Stock as the holder of such MS
Employee Stock Option would have been entitled to receive
pursuant to the Merger had such holder exercised such MS Employee
Stock Option in full immediately prior to the Effective Time, at
a price per share of DWD Common Stock equal to (A) the aggregate
exercise price for the shares of MS Common Stock otherwise
purchasable pursuant to such MS Employee Stock Option divided by
(B) the aggregate number of shares of DWD Common Stock deemed
purchasable pursuant to such MS Employee Stock Option (each, as
so adjusted, an "Adjusted Option");
(ii) adjust the terms of each restricted stock unit
outstanding under the MS 1988 EICP or the MS 1995 EICP, whether
or not vested, to cause it to be converted into a stock unit (a
"Substitute Unit") that will entitle the holder thereof to
receive, and will represent an obligation of DWD to deliver to
such holder, upon the same terms and conditions as those
applicable to such restricted stock unit immediately prior to the
Effective Time, the Merger Consideration. Any Substitute Units
resulting from the adjustments provided for in the preceding
sentence which have identical terms as to vesting and settlement
and which would entitle the holder to receive upon settlement a
fractional share of DWD Common Stock shall be aggregated, and if
a fractional share results from such aggregation, such holder
shall be entitled to receive, in lieu thereof, an amount in cash
determined by multiplying the closing sale price of the DWD
Common Stock as reported on the NYSE Composite Transaction Tape
(as reported in The Wall Street Journal or, if not reported
thereby, any other authoritative source) on the Closing Date by
the fraction of a share of DWD Common Stock to which such holder
would otherwise have been entitled; and
(iii) make such other changes to the MS Stock Plans as MS
and DWD may agree are appropriate to give effect to the Merger,
including as provided in Section 5.07.
(b) As soon as practicable after the Effective Time, DWD
shall deliver to the holders of MS Employee Stock Options appropriate
notices setting forth such holders' rights pursuant to the respective
MS Stock Plans and the agreements evidencing the grants of such MS
Employee Stock Options and that such MS Employee Stock Options and
agreements shall be assumed by DWD and shall continue in effect on the
same terms and conditions (subject to the adjustments required by this
Section 5.06 after giving effect to the Merger).
(c) A holder of an Adjusted Option may exercise such
Adjusted Option in whole or in part in accordance with its terms by
delivering a properly executed notice of exercise to DWD, together
with the consideration therefor and the federal withholding tax
information, if any, required in accordance with the related MS Stock
Plan.
(d) Except as otherwise contemplated by this Section 5.06
and except to the extent required under the respective terms of the MS
Employee Stock Options, all restrictions or limitations on transfer
and vesting with respect to MS Employee Stock Options awarded under
the MS Stock Plans or any other plan, program or arrangement of MS or
any of its subsidiaries, to the extent that such restrictions or
limitations shall not have already lapsed, shall remain in full force
and effect with respect to such options after giving effect to the
Merger and the assumption by DWD as set forth above.
SECTION 5.07. MS Stock Plans and Certain Employee Matters.
(a) At the Effective Time, by virtue of the Merger, the MS Stock Plans
shall be assumed by DWD, with the result that all obligations of MS
under the MS Stock Plans, including with respect to awards outstanding
at the Effective Time under each MS Stock Plan, shall be obligations
of DWD following the Effective Time. Prior to the Effective Time, DWD
shall take all necessary actions (including, if required to comply
with Section 162(m) of the Code (and the regulations thereunder) or
applicable law or rule of the NYSE, obtaining the approval of its
stockholders at the DWD Stockholders Meeting) for the assumption of
the MS Stock Plans, including the reservation, issuance and listing of
DWD Common Stock in a number at least equal to
(x) the number of shares of DWD Common Stock that will be subject to
Substitute Units and Adjusted Options and (y) the product of the
Exchange Ratio and the number of shares of MS Common Stock available
for future awards under the MS 1995 EICP and the MS 1993 Stock Plan
for Outside Directors immediately prior to the Effective Time. No
later than the Effective Time, DWD shall prepare and file with the SEC
a registration statement on Form S-8 (or another appropriate form)
registering a number of shares of DWD Common Stock determined in
accordance with the preceding sentence. Such registration statement
shall be kept effective (and the current status of the prospectus or
prospectuses required thereby shall be maintained) at least for so
long as Substitute Units or Adjusted Options or any unsettled awards
granted under the MS Stock Plans after the Effective Time remain
outstanding.
(b) Prior to the Effective Time, MS and DWD shall amend the
terms of (i) the grantor trust established pursuant to the Trust
Agreement, dated as of March 5, 1991, between MS and State Street Bank
and Trust Company and (ii) the grantor trust established pursuant to
the Trust Agreement, dated as of April 1, 1994 between MS and State
Street Trust Bank and Trust Company, in each case as amended
(collectively, the "MS Rabbi Trusts") to provide that (x) at the
Effective Time, DWD shall be substituted for MS as the "grantor"
(within the meaning of the Code) of each Rabbi Trust and (y) in the
event that DWD or a material subsidiary of DWD becomes "insolvent"
(within the meaning of the Rabbi Trusts) following the Effective Time,
the assets of each such Rabbi Trust shall be available to satisfy the
claims of the general creditors of DWD or such material subsidiary, on
the same terms and conditions that such assets would be available to
satisfy the claims of general creditors or MS or any material
subsidiary of MS in the event of insolvency.
(c) At the Effective Time, by virtue of the Merger, the MS
and Subsidiaries Amended and Restated Employee Stock Ownership Plan
(the "MS ESOP") shall be assumed by DWD, with the result that all
obligations of MS under the MS ESOP shall be obligations of DWD
following the Effective Time. Prior to the Effective Time, MS shall to
the extent necessary amend the ESOP and the trust agreement relating
thereto to permit the ESOP to hold DWD ESOP Preferred Stock following
the Effective Time.
(d) Following the Effective Time, DWD, as the Surviving
Corporation in the Merger, will honor all
obligations under employment agreements of MS or DWD the existence of
which does not constitute a violation of this Agreement in accordance
with the terms thereof.
SECTION 5.08. Indemnification, Exculpation and Insurance.
(a) DWD agrees that all rights to indemnification and exculpation from
liabilities for acts or omissions occurring at or prior to the
Effective Time now existing in favor of the current or former
directors or officers of MS and its subsidiaries as provided in their
respective certificates of incorporation or by-laws (or comparable
organizational documents) and any indemnification agreements of MS,
the existence of which does not constitute a breach of this Agreement,
shall be assumed by DWD, as the Surviving Corporation in the Merger,
without further action, as of the Effective Time and shall survive the
Merger and shall continue in full force and effect in accordance with
their terms. In addition, from and after the Effective Time, directors
and officers of MS who become directors or officers of DWD will be
entitled to the same indemnity rights and protections as are afforded
to other directors and officers of DWD.
(b) In the event that DWD or any of its successors or
assigns (i) consolidates with or merges into any other person and is
not the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or
substantially all of its properties and assets to any person, then,
and in each such case, proper provision will be made so that the
successors and assigns of DWD assume the obligations set forth in this
Section 5.08.
(c) For six years after the Effective Time, DWD shall
maintain in effect MS's current directors' and officers' liability
insurance covering acts or omissions occurring prior to the Effective
Time with respect to those persons who are currently covered by MS's
directors' and officers' liability insurance policy on terms with
respect to such coverage and amount no less favorable than those of
such policy in effect on the date hereof.
(d) The provisions of this Section 5.08 (i) are intended to
be for the benefit of, and will be enforceable by, each indemnified
party, his or her heirs and his or her representatives and (ii) are in
addition to, and not in substitution for, any other rights to
indemnification or
contribution that any such person may have by contract or otherwise.
SECTION 5.09. Fees and Expenses. (a) Except as provided in
this Section 5.09, all fees and expenses incurred in connection with
the Merger, this Agreement, the Option Agreements and the transactions
contemplated by this Agreement and the Option Agreements shall be paid
by the party incurring such fees or expenses, whether or not the
Merger is consummated, except that each of DWD and MS shall bear and
pay one-half of the costs and expenses incurred in connection with
(1) the filing, printing and mailing of the Form S-4 and the Joint
Proxy Statement (including SEC filing fees) and (2) the filings of the
premerger notification and report forms under the HSR Act (including
filing fees). DWD shall file any return with respect to, and shall
pay, any state or local taxes (including any penalties or interest
with respect thereto), if any, which are attributable to the transfer
of the beneficial ownership of MS's real property (collectively, the
"Real Estate Transfer Taxes") as a result of the Merger. MS shall
cooperate with DWD in the filing of such returns including, in the
case of MS, supplying in a timely manner a complete list of all real
property interests held by MS and any information with respect to such
property that is reasonably necessary to complete such returns. The
fair market value of any real property of MS subject to the Real
Estate Transfer Taxes shall be as agreed to between DWD and MS.
(b) In the event that (i) a MS Takeover Proposal shall have
been made known to MS or any of its subsidiaries or has been made
directly to its stockholders generally or any person shall have
publicly announced an intention (whether or not conditional) to make a
MS Takeover Proposal and thereafter this Agreement is terminated by
either DWD or MS pursuant to Section 7.01(b)(i) or (ii) or (ii) this
Agreement is terminated (x) by MS pursuant to Section 7.01(g) or
(y) by DWD pursuant to Section 7.01(e), then MS shall promptly, but in
no event later than two days after the date of such termination, pay
DWD a fee equal to $250 million (the "Termination Fee"), payable by
wire transfer of same day funds; provided, however, that no
Termination Fee shall be payable to DWD pursuant to clause (i) of this
paragraph (b) or pursuant to a termination by DWD pursuant to
Section 7.01(e) unless and until within 18 months of such termination
MS or any of its subsidiaries enters into any MS Acquisition Agreement
or consummates any MS Takeover Proposal (for the purposes of
the foregoing proviso the terms "MS Acquisition Agreement" and "MS
Takeover Proposal" shall have the meanings assigned to such terms in
Section 4.02 except that the references to "15%" in the definition of
"MS Takeover Proposal" in Section 4.02(a) shall be deemed to be
references to "35%" and "MS Takeover Proposal" shall only be deemed to
refer to a transaction involving MS, or with respect to assets
(including the shares of any subsidiary), MS and its subsidiaries,
taken as a whole, and not any of its subsidiaries alone), in which
event the Termination Fee shall be payable upon the first to occur of
such events. MS acknowledges that the agreements contained in this
Section 5.09(b) are an integral part of the transactions contemplated
by this Agreement, and that, without these agreements, DWD would not
enter into this Agreement; accordingly, if MS fails promptly to pay
the amount due pursuant to this Section 5.09(b), and, in order to
obtain such payment, DWD commences a suit which results in a judgment
against MS for the fee set forth in this Section 5.09(b), MS shall pay
to DWD its costs and expenses (including attorneys' fees and expenses)
in connection with such suit, together with interest on the amount of
the fee at the prime rate of Citibank N.A. in effect on the date such
payment was required to be made.
(c) In the event that (i) a DWD Takeover Proposal shall have
been made known to DWD or any of its subsidiaries or has been made
directly to its stockholders generally or any person shall have
publicly announced an intention (whether or not conditional) to make a
DWD Takeover Proposal and thereafter this Agreement is terminated by
either DWD or MS pursuant to Section 7.01(b)(i) or (iii) or (ii) this
Agreement is terminated (x) by DWD pursuant to Section 7.01(d) or
(y) by MS pursuant to Section 7.01(h), then DWD shall promptly, but in
no event later than two days after the date of such termination, pay
MS the Termination Fee, payable by wire transfer of same day funds;
provided, however, that no Termination Fee shall be payable to MS
pursuant to clause (i) of this paragraph (c) or pursuant to a
termination by MS pursuant to Section 7.01(h) unless and until within
18 months of such termination DWD or any of its subsidiaries enters
into any DWD Acquisition Agreement or consummates any DWD Takeover
Proposal (for the purposes of the foregoing proviso the terms "DWD
Acquisition Agreement" and "DWD Takeover Proposal" shall have the
meanings assigned to such terms in Section 4.03 except that the
references to "15%" in the definition of "DWD Takeover Proposal" in
Section 4.03(a) shall be deemed to be references to "35%"
and "DWD Takeover Proposal" shall only be deemed to refer to a
transaction involving DWD, or with respect to assets (including the
shares of any subsidiary), DWD and its subsidiaries, taken as a whole,
and not any of its subsidiaries alone), in which event the Termination
Fee shall be payable upon the first to occur of such events. DWD
acknowledges that the agreements contained in this Section 5.09(c) are
an integral part of the transactions contemplated by this Agreement,
and that, without these agreements, MS would not enter into this
Agreement; accordingly, if DWD fails promptly to pay the amount due
pursuant to this Section 5.09(c), and, in order to obtain such
payment, MS commences a suit which results in a judgment against DWD
for the fee set forth in this Section 5.09(c), DWD shall pay to MS its
costs and expenses (including attorneys' fees and expenses) in
connection with such suit, together with interest on the amount of the
fee at the prime rate of Citibank N.A. in effect on the date such
payment was required to be made.
SECTION 5.10. Public Announcements. DWD and MS will consult
with each other before issuing, and provide each other the opportunity
to review, comment upon and concur with, any press release or other
public statements with respect to the transactions contemplated by
this Agreement, including the Merger, and the Option Agreements, and
shall not issue any such press release or make any such public
statement prior to such consultation, except as either party may
determine is required by applicable law, court process or by
obligations pursuant to any listing agreement with any national
securities exchange. The parties agree that the initial press release
to be issued with respect to the transactions contemplated by this
Agreement and the Option Agreements shall be in the form
heretofore agreed to by the parties.
SECTION 5.11. Affiliates. As soon as practicable after the
date hereof, MS shall deliver to DWD a letter identifying all persons
who are, at the time this Agreement is submitted for adoption by the
stockholders of MS, "affiliates" of MS for purposes of Rule 145 under
the Securities Act or for purposes of qualifying the Merger for
pooling of interests accounting treatment under Opinion 16 of the
Accounting Principles Board and applicable SEC rules and regulations.
MS shall use best efforts to cause each such person to deliver to DWD
as of the Closing Date, a written agreement substantially in the form
attached as Exhibit C hereto. DWD shall use best efforts to cause all
persons who are "affiliates" of DWD for purposes of qualifying the
Merger for pooling of interests accounting treatment under Opinion 16
of the Accounting Principles Board and applicable SEC rules and
regulations to comply with the fourth paragraph of Exhibit C hereto.
SECTION 5.12. NYSE Listing. DWD shall use best efforts to
cause the DWD Listed Securities to be approved for listing on the
NYSE, subject to official notice of issuance, as promptly as
practicable after the date hereof, and in any event prior to the
Closing Date. MS shall use best efforts to cause the shares of MS
Common Stock to be issued pursuant to the MS Stock Option Agreement to
be approved for listing on the NYSE, subject to official notice of
issuance, as promptly as practicable after the date hereof, and in any
event prior to the Closing Date.
SECTION 5.13. Stockholder Litigation. Each of MS and DWD
shall give the other the reasonable opportunity to participate in the
defense of any stockholder litigation against MS or DWD, as
applicable, and its directors relating to the transactions
contemplated by this Agreement and the Option Agreements.
SECTION 5.14. Tax Treatment. Each of DWD and MS shall use
best efforts to cause the Merger to qualify as a reorganization under
the provisions of Section 368 of the Code and to obtain the opinions
of counsel referred to in Sections 6.02(c) and 6.03(c).
SECTION 5.15. Pooling of Interests. Each of MS and DWD shall
use best efforts to cause the transactions contemplated by this
Agreement, including the Merger, and the Option Agreements to be
accounted for as a pooling of interests under Opinion 16 of the
Accounting Principles Board and applicable SEC rules and regulations,
and such accounting treatment to be accepted by each of MS's and DWD's
independent certified public accountants, and by the SEC,
respectively, and each of MS and DWD agrees that it shall voluntarily
take no action that would cause such accounting treatment not to be
obtained.
SECTION 5.16. DWD Rights Agreement. The Board of Directors
of DWD shall take all further action (in addition to that referred to
in Section 3.02(r)) reasonably requested in writing by MS in order to
render the DWD Rights inapplicable to the Merger and the other
transactions contemplated by this Agreement and the Option Agreements
to
the extent provided herein and in the DWD Rights Plan Amendment.
Except as provided above with respect to the Merger and the other
transactions contemplated by this Agreement and the Option Agreements,
the Board of Directors of DWD shall not, without the consent of MS
(a) amend the DWD Rights Agreement or (b) take any action with respect
to, or make any determination under, the DWD Rights Agreement,
including a redemption of the DWD Rights or any action to facilitate a
DWD Takeover Proposal.
SECTION 5.17. DWD Preferred Stock. Prior to the Effective
Time, the Board of Directors of DWD shall take all necessary action to
establish the terms of the DWD Preferred Stock as contemplated by this
Agreement and file the Certificates of Designations with the Delaware
Secretary of State, all in accordance with the applicable provisions
of the DGCL. The Certificates of Designations shall in all respects be
identical to the existing certificates of designations for the MS
Preferred Stock except (a) as set forth in Sections 2.01(c)(i) and
2.01(d), and (b) that the Certificates of Designations shall state
that DWD's obligations to pay dividends thereunder, if any, shall
commence on the first dividend payment date that occurs following the
Effective Time.
SECTION 5.18. Standstill Agreements; Confidentiality
Agreements. During the period from the date of this Agreement through
the Effective Time, neither MS nor DWD shall terminate, amend, modify
or waive any provision of any confidentiality or standstill agreement
to which it or any of its respective subsidiaries is a party. During
such period, MS or DWD, as the case may be, shall enforce, to the
fullest extent permitted under applicable law, the provisions of any
such agreement, including by obtaining injunctions to prevent any
breaches of such agreements and to enforce specifically the terms and
provisions thereof in any court of the United States of America or of
any state having jurisdiction.
SECTION 5.19. Compliance with 1940 Act Section 15. (a) No
Unfair Burden, Etc. MS and DWD acknowledge that each of MS and DWD has
entered into this Agreement in reliance upon the benefits and
protections provided by Section 15(f) of the 1940 Act. Each of MS and
DWD shall not take, and each of them shall cause its affiliates not to
take, any action not contemplated by this Agreement that would have
the effect, directly or indirectly, of causing the requirements of any
of the
provisions of Section 15(f) of the 1940 Act not to be met in respect
of this Agreement and the transactions contemplated hereby, and each
of them shall not fail to take, and each of them shall cause its
affiliates not to fail to take, and after the Closing Date shall not
cause the Surviving Corporation to fail to take any action if the
failure to take such action would have the effect, directly or
indirectly, of causing the requirements of any of the provisions of
Section 15(f) of the 1940 Act not to be met in respect of this
Agreement and the transactions contemplated hereby. In that regard,
each of MS and DWD shall conduct its business and shall, subject to
applicable fiduciary duties, use its reasonable best efforts to cause
each of its affiliates to conduct its business so as to assure that,
insofar as within the control of MS and DWD or their respective
affiliates:
(i) for a period of three years after the Closing Date, at
least 75% of the members of the Board of Directors or trustees of
each fund that is registered under the 1940 Act, and that
continues after the Closing Date its existing or a replacement
investment advisory contract with any of MS and DWD or any
affiliate of MS and DWD, are not (A) "interested persons" of the
investment manager of such Fund after the Closing Date, or
(B) "interested persons" of the present investment manager of
such fund;
(ii) until October 31, 1998, the investment advisory fee
paid by any fund that was advised or sub- advised by Xxx Xxxxxx
American Capital or its affiliates prior to October 31, 1996 and
that is registered under the 1940 Act shall not be increased, nor
shall any waiver in effect on October 31, 1996 of any portion of
such an investment advisory fee be allowed to expire except in
accordance with the terms of such waiver and except, in each
case, (x) pursuant to an exemptive order naming such funds as
parties issued by the Commission, subject in each case to each of
the conditions set forth in such exemptive order having been
satisfied in the reasonable judgment of The Xxxxxxx & Dubilier
Private Equity Fund IV Limited Partnership, or (y) with the prior
written consent of The Xxxxxxx & Dubilier Private Equity Fund IV
Limited Partnership; and
(iii) for period of two years after the Closing Date, there
shall not be imposed on any of the funds or
sub-advisory funds that is registered under the 1940 Act an
"unfair burden" as a result of the transactions contemplated by
this Agreement, or any terms, conditions or understandings
applicable thereto.
(b) Certain Terms. The terms and quotations in this
Section 5.19 shall have the meanings set forth in Section 15(f) or
Section 2(a)(19) of the 1940 Act.
(c) No Assignment of Investment Advisory Contracts. Until
October 31, 1999, none of MS, DWD, the Surviving Corporation, nor any
of their respective affiliates will voluntarily engage in any
transaction which would constitute an assignment of any investment
advisory contract with any fund that is registered under the 1940 Act
and was managed by Xxx Xxxxxx American Capital or its affiliates prior
to October 31, 1996 to which MS, DWD, the Surviving Corporation or any
such affiliate is a party without first obtaining a covenant in all
material respects the same as that contained in this Section 5.19.
SECTION 5.20. Consent Procedure. In connection with
obtaining consents from investment advisory clients, each of MS and
DWD shall (i) keep the other party informed of the status of obtaining
consents, (ii) facilitate the other party's communication with clients
regarded consents, (iii) provide to the other party draft proxy
statements and (iv) to the extent applicable, deliver to the other
party prior to the Closing copies of all executed client consents and
make available for inspection the originals of such consent prior to
the Closing.
SECTION 5.21. MS Capital Units, Etc. DWD agrees that, at the
Effective Time, it will expressly assume the obligations of MS under
the agreements relating to the MS Capital Units and certain other
indentures, guarantees and other securities in accordance with the
requirements of such agreements, indentures, guarantees and other
securities.
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation to
Effect the Merger. The respective obligation of each party to effect
the Merger is subject to the satisfaction or waiver on or prior to the
Closing Date of the following conditions:
(a) Stockholder Approvals. Each of the MS Stockholder
Approval and the DWD Stockholder Approval shall have been
obtained.
(b) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been
terminated or shall have expired.
(c) No Injunctions or Restraints. No judgment, order,
decree, statute, law, ordinance, rule or regulation, entered,
enacted, promulgated, enforced or issued by any court or other
Governmental Entity of competent jurisdiction or other legal
restraint or prohibition (collectively, "Restraints") shall be in
effect (i) preventing the consummation of the Merger
(ii) prohibiting or limiting the ownership or operation by MS or
DWD and their respective subsidiaries of any material portion of
the business or assets of MS or DWD and their respective
subsidiaries taken as a whole, or compelling MS or DWD and their
respective subsidiaries to dispose of or hold separate any
material portion of the business or assets of MS or DWD and their
respective subsidiaries taken as a whole, as a result of the
Merger or any of the other transactions contemplated by this
Agreement or the Option Agreements or (iii) which otherwise is
reasonably likely to have a material adverse effect on MS or DWD,
as applicable; provided, however, that each of the parties shall
have used its best efforts to prevent the entry of any such
Restraints and to appeal as promptly as possible any such
Restraints that may be entered.
(d) Form S-4. The Form S-4 shall have become effective under
the Securities Act and shall not be the subject of any stop order
or proceedings seeking a stop order.
(e) NYSE Listing. The shares of DWD Listed Securities
issuable to MS's stockholders as contemplated by this Agreement
shall have been approved for listing on the NYSE, subject to
official notice of issuance.
(f) Pooling Letters. DWD and MS shall have received letters
from each of MS's independent accountants and DWD's independent
accountants, dated as of the Closing Date, in each case addressed
to DWD and MS, stating in substance that the Merger will qualify
as a pooling of interests transaction under Opinion 16 of the
Accounting Principles Board and applicable SEC rules and
regulations.
SECTION 6.02. Conditions to Obligations of DWD. The
obligation of DWD to effect the Merger is further subject to
satisfaction or waiver of the following conditions:
(a) Representations and Warranties. The representations and
warranties of MS set forth herein shall be true and correct both
when made and at and as of the Closing Date, as if made at and as
of such time (except to the extent expressly made as of an
earlier date, in which case as of such date), except where the
failure of such representations and warranties to be so true and
correct (without giving effect to any limitation as to
"materiality" or "material adverse effect" set forth therein)
does not have, and is not likely to have, individually or in the
aggregate, a material adverse effect on MS.
(b) Performance of Obligations of MS. MS shall have
performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing
Date.
(c) Tax Opinions. DWD shall have received from Cravath,
Swaine & Xxxxx, counsel to DWD, on a date immediately prior to
the mailing of the Joint Proxy Statement and on the Closing Date,
opinions, in each case dated as of such respective dates and
stating that the Merger will be treated for federal income tax
purposes as a reorganization within the meaning of Section 368(a)
of the Code and that DWD and MS will each be a party to that
reorganization within the meaning of Section 368(b) of the Code
and that no gain
or loss will be recognized by the stockholders of MS upon their
exchange of MS stock for DWD stock under Section 354 of the Code
(except to the extent such a stockholder receives cash in lieu of
fractional shares and to the extent of a payment of transfer
taxes made on behalf of such stockholder, if any). In rendering
such opinions, counsel for DWD shall be entitled to rely upon
representations of officers of DWD, MS and stockholders of MS
substantially in the form of Exhibits D and E hereto.
(d) No Material Adverse Change. At any time after the date
of this Agreement there shall not have occurred any material
adverse change relating to MS; provided that this condition shall
no longer be applicable following the DWD Stockholder Approval.
SECTION 6.03. Conditions to Obligations of MS. The
obligation of MS to effect the Merger is further subject to
satisfaction or waiver of the following conditions:
(a) Representations and Warranties. The representations and
warranties of DWD set forth herein shall be true and correct both
when made and at and as of the Closing Date, as if made at and as
of such time (except to the extent expressly made as of an
earlier date, in which case as of such date), except where the
failure of such representations and warranties to be so true and
correct (without giving effect to any limitation as to
"materiality" or "material adverse effect" set forth therein)
does not have, and is not likely to have, individually or in the
aggregate, a material adverse effect on DWD.
(b) Performance of Obligations of DWD. DWD shall have
performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing
Date.
(c) Tax Opinions. MS shall have received from Xxxxx Xxxx &
Xxxxxxxx, counsel to MS, on a date immediately prior to the
mailing of the Joint Proxy Statement and on the Closing Date,
opinions, in each case dated as of such respective dates and
stating that the Merger will be treated for federal income tax
purposes as a reorganization within the meaning of Section 368(a)
of the Code and that DWD and MS will each be a party to that
reorganization within the
meaning of Section 368(b) of the Code and that no gain or loss
will be recognized by the stockholders of MS upon their exchange
of MS stock for DWD stock under Section 354 of the Code (except
to the extent such a stockholder receives cash in lieu of
fractional shares and to the extent of a payment of transfer
taxes made on behalf of such stockholder, if any). In rendering
such opinions, counsel for MS shall be entitled to rely upon
representations of officers of DWD, MS and stockholders of MS
substantially in the form of Exhibits D and E hereto.
(d) No Material Adverse Change. At any time after the date
of this Agreement there shall not have occurred any material
adverse change relating to DWD; provided that this condition
shall no longer be applicable following the MS Stockholder
Approval.
SECTION 6.04. Frustration of Closing Conditions. Neither DWD
nor MS may rely on the failure of any condition set forth in
Section 6.01, 6.02 or 6.03, as the case may be, to be satisfied if
such failure was caused by such party's failure to use best efforts to
consummate the Merger and the other transactions contemplated by this
Agreement and the Option Agreements, as required by and subject to
Section 5.05.
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination. This Agreement may be terminated
at any time prior to the Effective Time, whether before or after the
MS Stockholder Approval or the DWD Stockholder Approval:
(a) by mutual written consent of DWD and MS;
(b) by either DWD or MS:
(i) if the Merger shall not have been consummated by
the later of September 30, 1997 or such date as the Closing
may have been extended by either party pursuant to the
proviso to Section 1.02; provided, however, that the right
to terminate this Agreement pursuant to this
Section 7.01(b)(i) shall not be available to any
party whose failure to perform any of its obligations under
this Agreement results in the failure of the Merger to be
consummated by such time;
(ii) if the MS Stockholder Approval shall not have been
obtained at a MS Stockholders Meeting duly convened therefor
or at any adjournment or postponement thereof;
(iii) if the DWD Stockholder Approval shall not have
been obtained at a DWD Stockholders Meeting duly convened
therefor or at any adjournment or postponement thereof; or
(iv) if any Restraint having any of the effects set
forth in Section 6.01(c) shall be in effect and shall have
become final and nonappealable; provided, that the party
seeking to terminate this Agreement pursuant to this
Section 7.01(b)(iv) shall have used best efforts to prevent
the entry of and to remove such Restraint;
(c) by DWD, if MS shall have breached or failed to perform
in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement, which
breach or failure to perform (A) would give rise to the failure
of a condition set forth in Section 6.02(a) or (b), and (B) is
incapable of being cured by MS;
(d) by DWD in accordance with Section 4.03(b); provided
that, in order for the termination of this Agreement pursuant to
this paragraph (d) to be deemed effective, DWD shall have
complied with all provisions contained in Section 4.03, including
the notice provisions therein, and with applicable requirements,
including the payment of the Termination Fee, of Section 5.09;
(e) by DWD, if MS or any of its directors or officers shall
participate in discussions or negotiations in breach of
Section 4.02;
(f) by MS, if DWD shall have breached or failed to perform
in any material respect any of its representations, warranties,
covenants or other
agreements contained in this Agreement, which breach or failure
to perform (A) would give rise to the failure of a condition set
forth in Section 6.03(a) or (b), and (B) is incapable of being
cured by DWD;
(g) by MS in accordance with Section 4.02(b); provided that,
in order for the termination of this Agreement pursuant to this
paragraph (g) to be deemed effective, MS shall have complied with
all provisions of Section 4.02, including the notice provisions
therein, and with applicable requirements, including the payment
of the Termination Fee, of Section 5.09; or
(h) by MS, if DWD or any of its directors or officers shall
participate in discussions or negotiations in breach of
Section 4.03;
SECTION 7.02. Effect of Termination. In the event of
termination of this Agreement by either MS or DWD as provided in
Section 7.01, this Agreement shall forthwith become void and have no
effect, without any liability or obligation on the part of DWD or MS,
other than the provisions of Section 3.01(o), Section 3.02(o), the
last sentence of Section 5.04, Section 5.09, this Section 7.02 and
Article VIII, which provisions survive such termination, and except to
the extent that such termination results from the willful and material
breach by a party of any of its representations, warranties, covenants
or agreements set forth in this Agreement.
SECTION 7.03. Amendment. This Agreement may be amended by
the parties at any time before or after the MS Stockholder Approval or
the DWD Stockholder Approval; provided, however, that after any such
approval, there shall not be made any amendment that by law requires
further approval by the stockholders of MS or DWD without the further
approval of such stockholders. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the
parties.
SECTION 7.04. Extension; Waiver. At any time prior to the
Effective Time, a party may (a) extend the time for the performance of
any of the obligations or other acts of the other parties, (b) waive
any inaccuracies in the representations and warranties of the other
parties contained in this Agreement or in any document delivered
pursuant to this Agreement or (c) subject to the proviso of
Section 7.03, waive compliance by the other party with any
of the agreements or conditions contained in this Agreement. Any
agreement on the part of a party to any such extension or waiver shall
be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not
constitute a waiver of such rights.
SECTION 7.05. Procedure for Termination, Amendment,
Extension or Waiver. A termination of this Agreement pursuant to
Section 7.01, an amendment of this Agreement pursuant to Section 7.03
or an extension or waiver pursuant to Section 7.04 shall, in order to
be effective, require, in the case of DWD or MS, action by its Board
of Directors or, with respect to any amendment to this Agreement, the
duly authorized committee of its Board of Directors to the extent
permitted by law.
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the
Effective Time. This Section 8.01 shall not limit any covenant or
agreement of the parties which by its terms contemplates performance
after the Effective Time.
SECTION 8.02. Notices. All notices, requests, claims,
demands and other communications under this Agreement shall be in
writing and shall be deemed given if delivered personally, telecopied
(which is confirmed) or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to DWD, to
Xxxx Xxxxxx, Discover & Co.
Two Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxxxx X. Xxxxxxx
with a copy to:
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxx Xxxxxxxxx
Xxxxxx X. Xxxxxxx; and
(b) if to MS, to
Xxxxxx Xxxxxxx Group Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxx
with copies to:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxx; and
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx
SECTION 8.03. Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such
first person, where "control" means the possession, directly or
indirectly, of the
power to direct or cause the direction of the management policies
of a person, whether through the ownership of voting securities,
by contract, as trustee or executor, or otherwise;
(b) "material adverse change" or "material adverse effect"
means, when used in connection with MS or DWD, any change,
effect, event, occurrence or state of facts that is, or would
reasonably be expected to be, materially adverse to the business
or financial condition of such party and its subsidiaries taken
as a whole other than any change, effect, event or occurrence
relating to (i) the United States economy or securities markets
in general, (ii) this Agreement or the transactions contemplated
hereby or the announcement thereof, (iii) the failure to obtain
applicable regulatory or other third party consents that may be
required in connection with this Agreement or the transactions
contemplated hereby or (iv) to the financial services industry in
general, and not specifically relating to MS or DWD or their
respective subsidiaries, and the terms "material" and
"materially" have correlative meanings;
(c) "person" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust,
unincorporated organization or other entity;
(d) a "subsidiary" of any person means another person, an
amount of the voting securities, other voting ownership or voting
partnership interests of which is sufficient to elect at least a
majority of its Board of Directors or other governing body (or,
if there are no such voting interests, 50% or more of the equity
interests of which) is owned directly or indirectly by such first
person; provided that "subsidiary" shall not include (x) with
respect to MS, any MS Fund or any person in which a MS Fund holds
an ownership interest and (y) with respect to DWD, any DWD Fund
or any person in which a DWD Fund holds an ownership interest;
and
(e) "knowledge" of any person which is not an individual
means the knowledge of such person's executive officers after
reasonable inquiry.
SECTION 8.04. Interpretation. When a reference is made in
this Agreement to an Article, Section or Exhibit, such reference shall
be to an Article or Section of, or an Exhibit to, this Agreement
unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words
"without limitation". The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to
this Agreement as a whole and not to any particular provision of this
Agreement. All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein. The
definitions contained in this Agreement are applicable to the singular
as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such term. Any agreement,
instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such
agreement, instrument or statute as from time to time amended,
modified or supplemented, including (in the case of agreements or
instruments) by waiver or consent and (in the case of statutes) by
succession of comparable successor statutes and references to all
attachments thereto and instruments incorporated therein. References
to a person are also to its permitted successors and assigns.
SECTION 8.05. Counterparts. This Agreement may be executed
in one or more counterparts, all of which shall be considered one and
the same agreement and shall become effective when one or more
counterparts have been signed by each of the parties and delivered to
the other parties.
SECTION 8.06. Entire Agreement; No Third-Party
Beneficiaries. This Agreement (including the documents and instruments
referred to herein), the Option Agreements and the Confidentiality
Agreement (a) constitute the entire agreement, and supersede all prior
agreements and understandings, both written and oral, among the
parties with respect to the subject matter of this Agreement and
(b) except for the provisions of Article II, Section 5.06 and
Section 5.08, are not intended to confer upon any person other than
the parties any rights or remedies.
SECTION 8.07. Governing Law. This Agreement shall be
governed by, and construed in accordance with, the laws of the State
of Delaware, regardless of the laws that might otherwise govern under
applicable principles of conflict of laws thereof.
SECTION 8.08. Assignment. Neither this Agreement nor any of
the rights, interests or obligations under this Agreement shall be
assigned, in whole or in part, by operation of law or otherwise by
either of the parties hereto without the prior written consent of the
other party. Any assignment in violation of the preceding sentence
shall be void. Subject to the preceding two sentences, this Agreement
will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
SECTION 8.09. Enforcement. The parties agree that
irreparable damage would occur and that the parties would not have any
adequate remedy at law in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms
or were otherwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent breaches
of this Agreement and to enforce specifically the terms and provisions
of this Agreement in any federal court located in the State of
Delaware or in Delaware state court, this being in addition to any
other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself to
the personal jurisdiction of any federal court located in the State of
Delaware or any Delaware state court in the event any dispute arises
out of this Agreement or any of the transactions contemplated by this
Agreement, (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any
such court, and (c) agrees that it will not bring any action
relating to this Agreement or any of the transactions contemplated by
this Agreement in any court other than a federal court sitting in the
State of Delaware or a Delaware state court.
SECTION 8.10. Headings. The headings contained in this
Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
SECTION 8.11. Severability. If any term or other provision
of this Agreement is invalid, illegal or incapable of being enforced
by any rule of law or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force
and effect. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible to the
fullest extent permitted by applicable law in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the
extent possible.
IN WITNESS WHEREOF, Xxxx Xxxxxx, Discover & Co. and Xxxxxx
Xxxxxxx Group Inc. have caused this Agreement to be signed by their
respective officers thereunto duly authorized, all as of the date
first written above.
XXXX XXXXXX, DISCOVER & CO.,
by /s/ Xxxxxx X. Xxxxxxx
--------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chairman and Chief
Executive Officer
XXXXXX XXXXXXX GROUP INC.,
by /s/ Xxxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chairman
EXHIBIT A-1
TO THE MERGER AGREEMENT
Certificate of Incorporation of Surviving Corporation
As of the Effective Time, the Certificate of Incorporation of the
Surviving Corporation shall be amended by deleting Articles 1 through
13 thereof in their entirety and replacing them with the following:
"ARTICLE I
Name
The name of the corporation (which is hereinafter referred to as
the "Corporation") is:
Xxxxxx Xxxxxxx, Xxxx Xxxxxx, Discover & Co.
ARTICLE II
Address
The address of the Corporation's registered office in the State
of Delaware is The Corporation Trust Center, 0000 Xxxxxx Xxxxxx in the
City of Wilmington, County of New Castle. The name of the
Corporation's registered agent at such address is The Corporation
Trust Company.
ARTICLE III
Purpose
The purpose of the Corporation shall be to engage in any lawful
act or activity for which corporations may be organized and
incorporated under the General Corporation Law of the State of
Delaware.
ARTICLE IV
Capitalization
The total number of shares of stock which the Corporation
shall have authority to issue is one billion seven hundred and eighty
million (1,780,000,000), consisting of thirty million (30,000,000)
shares of Preferred Stock, par value $0.01 per share (hereinafter
referred to as "Preferred Stock"), and one billion seven hundred and
fifty million (1,750,000,000) shares of Common Stock, par value $0.01
per share (hereinafter referred to as "Common Stock").
The Preferred Stock may be issued from time to time in one or
more series. The Board of Directors is hereby authorized to provide
for the issuance of shares of Preferred Stock in series and, by filing
a certificate pursuant to the applicable law of the State of Delaware
(hereinafter referred to as a "Preferred Stock Designation"), to
establish from time to time the number of shares to be included in
each such series, and to fix
the designation, powers, preferences and rights of the shares of each
such series and the qualifications, limitations and restrictions
thereof. The authority of the Board of Directors with respect to each
series shall include, but not be limited to, determination of the
following:
(1) The designation of the series, which may be by
distinguishing number, letter or title.
(2) The number of shares of the series, which number the
Board of Directors may thereafter (except where otherwise
provided in the Preferred Stock Designation) increase or decrease
(but not below the number of shares thereof then outstanding).
(3) The amounts payable on, and the preferences, if any, of
shares of the series in respect of dividends, and whether such
dividends, if any, shall be cumulative or noncumulative.
(4) Dates at which dividends, if any, shall be payable.
(5) The redemption rights and price or prices, if any, for
shares of the series.
(6) The terms and amount of any sinking fund provided for
the purchase or redemption of shares of the series.
(7) The amounts payable on, and the preferences, if any, of
shares of the series in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Corporation.
(8) Whether the shares of the series shall be convertible
into or exchangeable for shares of any other class or series, or
any other security, of the Corporation or any other corporation,
and, if so, the specification of such other class or series of
such other security, the conversion or exchange price or prices
or rate or rates, any adjustments thereof, the date or dates at
which such shares shall be convertible or exchangeable and all
other terms and conditions upon which such conversion or exchange
may be made.
(9) Restrictions on the issuance of shares of the same
series or of any other class or series.
(10) The voting rights, if any, of the holders of shares of
the series.
The Common Stock shall be subject to the express terms of the
Preferred Stock and any series thereof. Except as may be provided in
this Certificate of Incorporation or in a Preferred Stock Designation
or by applicable law, the holders of shares of Common Stock shall be
entitled to one vote for each such share upon all questions presented
to the stockholders, the Common Stock shall have the exclusive right
to vote for the election of directors and for all other purposes, and
holders of Preferred Stock shall not be entitled to receive notice of
any meeting of stockholders at which they are not entitled to vote.
The holders of the shares of Common Stock shall at all times, except
as otherwise provided in this Certificate of Incorporation or as
required by law, vote as one class, together with the holders of any
other class or series of stock of the Corporation accorded such
general voting rights.
The Corporation shall be entitled to treat the person in whose
name any share of its stock is registered as the owner thereof for all
purposes and shall not be bound to recognize any equitable or other
claim to, or interest in, such share on the part of any other person,
whether or not the Corporation shall have notice thereof, except as
expressly provided by applicable law.
ARTICLE V
By-Laws
In furtherance of, and not in limitation of, the powers conferred
by law, the Board of Directors is expressly authorized and empowered:
(1) to adopt, amend or repeal the Bylaws of the Corporation;
provided, however, that the Bylaws adopted by the Board of
Directors under the powers hereby conferred may be amended or
repealed by the Board of Directors or by the stockholders having
voting power with respect thereto, provided further that, in the
case of amendments by stockholders, the affirmative vote of the
holders of at least 80 percent of the voting power of the then
outstanding Voting Stock, voting together as a single class,
shall be required in order for the stockholders to alter, amend
or repeal any provision of the Bylaws or to adopt any additional
Bylaw; and
(2) from time to time to determine whether and to what
extent, and at what times and places, and under what conditions
and regulations, the accounts and books of the Corporation, or
any of them, shall be open to inspection of stockholders; and,
except as so determined or as expressly provided in this
Certificate of Incorporation or in any Preferred Stock
Designation, no stockholder shall have any right to inspect any
account, book or document of the Corporation other than such
rights as may be conferred by applicable law.
The Corporation may in its Bylaws confer powers upon the Board of
Directors in addition to the foregoing and in addition to the powers
and authorities expressly conferred upon the Board of Directors by
applicable law.
ARTICLE VI
Action of Stockholders
Subject to the rights of the holders of any series of Preferred
Stock or any other series or class of stock as set forth in this
Certificate of Incorporation, any action required or permitted to be
taken by the stockholders of the Corporation must be effected at a
duly called annual or special meeting of stockholders of the
Corporation and may not be effected by any consent in writing in lieu
of a meeting of such stockholders.
ARTICLE VII
Board of Directors
Subject to the rights of the holders of any series of Preferred
Stock, or any other series or class of stock as set forth in this
Certificate of Incorporation, to elect additional directors under
specified circumstances, the number of directors of the Corporation
shall be fixed by the Bylaws of the Corporation and may be increased
or decreased from time to time in such a manner as may be prescribed
by the Bylaws.
Unless and except to the extent that the Bylaws of the
Corporation shall so require, the election of directors of the
Corporation need not be by written ballot.
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 this Certificate of Incorporation, shall be divided
into three classes. The Board of Directors shall consist of 14
members, divided into classes consisting of 6, 4 and 4 directors. One
class of directors consisting of 4 directors shall be initially
elected for a term expiring at the
annual meeting of stockholders to be held in 1998, another class
consisting of 4 directors shall be initially elected for a term
expiring at the annual meeting of stockholders to be held in 1999, and
another class consisting of 6 directors shall be initially elected for
a term expiring at the annual meeting of stockholders to be held in
2000. Members of each class shall hold office until their successors
are elected and qualified. At each annual meeting of the stockholders
of the Corporation commencing with the 1998 annual meeting, directors
elected to succeed those directors whose terms then expire shall be
elected by a plurality vote of all votes cast at such meeting to hold
office for a term expiring at the third succeeding annual meeting of
stockholders after their election, with each director to hold office
until his or her successor shall have been duly elected and qualified.
Subject to the rights of the holders of any series of Preferred
Stock, or any other series or class of stock as set forth in this
Certificate of Incorporation, to elect additional directors under
specified circumstances, vacancies resulting from death, resignation,
retirement, disqualification, removal from office or other cause, and
newly created directorships resulting from any increase in the
authorized number of directors, may be filled only by the affirmative
vote of a majority of the remaining directors, though less than a
quorum of the Board of Directors, and directors so chosen shall hold
office for a term expiring at the annual meeting of stockholders at
which the term of office of the class to which they have been elected
expires and until such director's successor shall have been duly
elected and qualified. No decrease in the number of authorized
directors constituting the Board of Directors shall shorten the term
of any incumbent director.
Subject to the rights of the holders of any series of Preferred
Stock, or any other series or class of stock as set forth in this
Certificate of Incorporation, to elect additional directors under
specified circumstances, any director may be removed from office at
any time, but only for cause and by the affirmative vote of the
holders of at least 80 percent of the voting power of the then
outstanding Voting Stock, voting together as a single class.
ARTICLE VIII
Indemnification
Each person who is or was or had agreed to become a director or
officer of the Corporation or a Subsidiary, and each such person who
is or was serving or who had agreed to serve 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
the heirs, executor, administrators or estate of such person), shall
be indemnified by the Corporation, in accordance with the Bylaws of
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. The Corporation may, by action of the Board of Directors,
provide indemnification to employees and agents of the Corporation or
a Subsidiary, and to each such person serving as partners, members,
employees or agents of another corporation, partnership, limited
liability company, joint venture, trust or other enterprise, at the
request of the Corporation or a Subsidiary, with the same scope and
effect as the foregoing indemnification of directors and officers. The
Corporation shall be required to indemnify any 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 Certificate of Incorporation or otherwise by the Corporation.
Without limiting the generality or the effect of the foregoing, the
Corporation may enter into one or more agreements with any person
which provide for indemnification greater or different than that
provided in this Article VIII. Any amendment or repeal of this Article
VIII shall not adversely affect
any right or protection existing hereunder in respect of any act or
omission occurring prior to such amendment or repeal. For purposes of
this Article VIII, the term "Subsidiary" means a corporation all the
capital stock of which is owned directly or indirectly by the
Corporation, other than directors' qualifying shares.
ARTICLE IX
Directors' Liability
A director of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (1) for any breach
of the director's duty of loyalty to the Corporation or its
stockholders, (2) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law,
(3) under Section 174 of the General Corporation Law of the State of
Delaware, or (4) for any transaction from which the director derived
an improper personal benefit. Any amendment or repeal of this
Article IX shall not adversely affect any right or protection of a
director of the Corporation existing hereunder in respect of any act
or omission occurring prior to such amendment or repeal.
If the General Corporation Law of the State of Delaware shall be
amended, to authorize corporate action further eliminating or limiting
the liability of directors, then a director of the Corporation, in
addition to the circumstances in which he is not liable immediately
prior to such amendment, shall be free of liability to the fullest
extent permitted by the General Corporation Law of the State of
Delaware, as so amended.
ARTICLE X
Amendments
Except as may be expressly provided in this Certificate of
Incorporation, the Corporation reserves the right
at any time and from time to time to amend, alter, change or
repeal any provision contained in this Certificate
of Incorporation or a Preferred Stock Designation, and any
other provisions authorized by the laws of the State
of Delaware at the time in force may be added or inserted, in
the manner now or hereafter prescribed herein or
by applicable law, and all rights, preferences and privileges
of whatsoever nature conferred upon stockholders,
directors or any other persons whomsoever by and pursuant to
this Certificate of Incorporation in its present
form or as hereafter amended are granted subject to the right
reserved in this Article X; provided, however, that
any amendment or repeal of Article VIII or Article IX of this
Certificate of Incorporation shall not adversely
affect any right or protection existing thereunder in respect
of any act or omission occurring prior to such
amendment or repeal, and provided further that no Preferred
Stock Designation shall be amended after the
issuance of any shares of the series of Preferred Stock
created thereby, except in accordance with the terms of
such Preferred Stock Designation and the requirements of
applicable law.
Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, and in addition to approval by the
Board of Directors, the affirmative vote of the holders of at least 80
percent of the voting power of the then outstanding Voting Stock,
voting together as a single class, shall be required to amend, repeal
or adopt any provision inconsistent with paragraph (1) of Article V,
with Article VI or with Article VII. For the purposes of this
Certificate of Incorporation, "Voting Stock" shall mean the
outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors."
Except as provided above, the Certificate of Incorporation of the
Surviving Corporation (including the certificates of designations
thereof) shall remain in full force and effect.
EXHIBIT A-2
TO THE MERGER AGREEMENT
Amendments to By-laws of the Surviving Corporation
The DWD By-laws shall be amended as of the Effective Time so
that they read in their entirety as they exist on the date of this
Agreement, except that:
(1) Section 9 of Article III of such By-laws shall read in its
entirety as follows:
Section 9. 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 "Standing
Committees"). The executive committee shall have those
powers and authority as are delegated to it from time
to time by a resolution passed by a three-quarters vote
of the entire Board of Directors.
(b) The nominating and directors committee shall have
the following exclusive 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 and (v)
periodically reviewing the Corporation's corporate
governance profile. 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) employing independent public
accountants, subject to stockholder ratification at
each annual meeting, to audit the books of account,
accounting procedures, and financial statements of the
Corporation and to perform such other duties from time
to time as the audit committee may prescribe, (ii)
receiving the reports and comments of the Corporation's
internal auditors and of the independent public
accountants employed by the committee and to take such
action with respect thereto as may seem appropriate,
(iii) requesting the Corporation's consolidated
subsidiary and affiliated companies to employ
independent public accountants to audit their
respective books of account, accounting procedures, and
financial statements, (iv) requesting the independent
public accountants to furnish to the compensation
committee the certifications required under any present
or future stock option, incentive compensation or
employee benefit plan of the Corporation, (v) reviewing
the adequacy of internal financial controls, (vi)
approving the accounting principles employed in
financial reporting, (vii) approving the appointment or
removal of the Corporation's general auditor, and
(viii) reviewing the accounting principles employed in
financial reporting. 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
salaries payable to all principal officers, as well as
all employees of the Corporation 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 and (iii) reviewing the
operations of and policies pertaining to any present or
future stock option, incentive compensation or employee
benefit plan of the Corporation and recommending to the
Board of Directors any amendments or changes which may
be required by any such plan. 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.
(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 of the directors of the
Corporation.
(f) Any modification to the powers and/or 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 duties pursuant to these Amended and
Restated By-Laws 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.
(2) Section 10 of Article III of such By-laws shall read in its
entirety as follows:
Section 10. Committee Members. (a) Each member of any
such committee 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 not be amended
absent a three-quarters vote of the entire Board of
Directors.;
(3) Article III of such By-laws shall be amended by inserting at
the end thereof the following: "Section 17. Certain
Modifications. Any change in the number of directors
comprising the Board to other than an even number of
directors shall require a three-quarters vote of the entire
Board of Directors.";
(4) Section 1 of Article IV of such By-laws shall read in its
entirety as follows:
Section 1. 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; a Treasurer and a
Controller. The Board of Directors, in its discretion,
may also elect and specifically identify as officers of
the Corporation; one or more Vice Chairmen of the
Board; one or more Assistant Vice Presidents; one or
more Assistant Secretaries; one or more Assistant
Treasurers and one or more Assistant Controllers as in
its judgment may be necessary or desirable. 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 By-Laws. The officers of
the Corporation need not be stockholders or directors
of the Corporation.
(5) Section 4 of Article IV of such By-laws shall read in its
entirety as follows:
Section 4. 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 expenditures,
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 By-
Laws, 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.
(6) Section 5 of Article IV of such By-laws shall read in its
entirety as follows:
Section 5. 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 expenditures, 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 By-Laws, 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.
(7) Section 6 of Article IV of such By-laws shall read in its
entirety as follows:
Section 6. Certain Actions. Notwithstanding anything to
the contrary contained in these Amended and Restated
By-Laws, the removal of the current Chairman and Chief
Executive Officer or the current President and Chief
Operating Officer as of [the Effective Time], or any
modification to either of their respective roles,
duties or authority shall require a three-quarters vote
of the entire Board of Directors.;
(8) Sections 7 through 21 of Article IV of such By- laws are
hereby deleted.
(9) Section 1 of Article IX of such By-laws shall read in its
entirety as follows:
Section 1. General. These Amended and Restated By-Laws
may be altered, amended or repealed, in whole or in
part, or new By-Laws 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 By-Laws be
contained in the notice of such meeting of stockholders
or in a notice of such meeting of the Board of
Directors, as
the case may be. 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 By-Laws, all such amendments
must be approved by either the holders of eighty
percent (80%) of the outstanding capital stock entitled
to vote thereon or by a majority of the entire Board of
Directors then in office; provided, however,
notwithstanding the foregoing, the Board of Directors
may alter, amend or repeal, or adopt new By-Laws in
conflict with, (i) any provision of these Amended and
Restated By-Laws which requires a three-quarters vote
of the entire Board of Directors for action to be taken
thereunder; (ii) subsection c of Section 10, Article
III of these Amended and Restated By-Laws and (iii)
this proviso to this Section 1 of Article IX of these
Amended and Restated By-laws 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
By-Laws in conflict with, (i) Section 6 of Article IV
of these Amended and Restated By-Laws and (ii) this
further proviso to this Section 1 of Article IX of
these Amended and Restated By-Laws only by a resolution
adopted by a three-quarters vote of the entire Board of
Directors; and
(10) such other changes as DWD and MS may agree to prior to the
date the Joint Proxy Statement is mailed, all as shall be
reflected in the Joint Proxy Statement.
EXHIBIT B
TO THE MERGER AGREEMENT
Corporate Governance of Surviving Corporation
Following the Effective Time
Board of Directors
The Board of Directors of the Surviving Corporation will
consist of 14 members, half of whom shall be designated by each of DWD
and MS and no more than two members appointed by each party shall be
"inside" directors (i.e., current or former employees of such party).
The current chairman and chief executive officer of DWD will serve as
chairman of the Board of Directors of the Surviving Corporation, the
current chairman of MS will serve as chairman of the Executive
Committee of the Surviving Corporation and the current president and
chief operating officer of MS will serve as the other inside director
appointed by MS to the Board of Directors of the Surviving
Corporation. Prior to the mailing of the Joint Proxy Statement, the
parties will designate the individual directors that will comprise
each of the three classes of the Board of Directors (with each class
being equally composed of DWD and MS members).
Committees of the Board of Directors and Chairmen of Committees
The Board of Directors shall initially have four committees:
the executive committee, the audit committee, the nominating and
directors committee and the compensation committee. The executive
committee will be comprised of the four inside directors, and will be
chaired by the current chairman of MS. Each other committee will be
comprised of an even number of directors, all of whom shall be outside
directors and half of whom shall be designated by each of DWD and MS.
DWD will designate the chairman of the audit committee and the
nominating and directors committee and MS will designate the chairman
of the compensation committee.
Officers
The current chief executive officer of DWD and the current
president and chief operating officer of MS will continue in their
respective positions in the Surviving Corporation. Certain other
officers of the Surviving Corporation and its operating divisions
and/or subsidiaries, and certain other related matters with respect
hereto will be as set forth in a memorandum between DWD and MS of even
date herewith.
EXHIBIT C
TO THE MERGER AGREEMENT
Form of Affiliate Letter
Dear Sirs:
The undersigned, a holder of shares of common stock, par
value $1.00 per share ("MS Common Stock"), of Xxxxxx Xxxxxxx Group
Inc., a Delaware corporation ("MS"), is entitled to receive in
connection with the merger (the "Merger") of MS with and into Xxxx
Xxxxxx, Discover & Co., a Delaware corporation ("DWD"), securities
(the "DWD Securities") of DWD. The undersigned acknowledges that the
undersigned may be deemed an "affiliate" of MS within the meaning of
Rule 145 ("Rule 145") promulgated under the Securities Act of 1933, as
amended (the "Securities Act"), by the Securities and Exchange
Commission (the "SEC") and may be deemed an "affiliate" of MS for
purposes of qualifying the Merger for pooling of interests accounting
treatment under Opinion 16 of the Accounting Principles Board and
applicable SEC rules and regulations, although nothing contained
herein should be construed as an admission of either such fact.
If in fact the undersigned were an affiliate under the
Securities Act, the undersigned's ability to sell, assign or transfer
the DWD Securities received by the undersigned in exchange for any
shares of MS Common Stock in connection with the Merger may be
restricted unless such transaction is registered under the Securities
Act or an exemption from such registration is available. The
undersigned understands that such exemptions are limited and the
undersigned has obtained or will obtain advice of counsel as to the
nature and conditions of such exemptions, including information with
respect to the applicability to the sale of such securities of Rules
144 and 145(d) promulgated under the Securities Act. The undersigned
understands that DWD will not be required to maintain the
effectiveness of any registration statement under the Securities Act
for the purposes of resale of DWD Securities by the undersigned.
The undersigned hereby represents to and covenants with DWD
that the undersigned will not sell, assign or transfer any of the DWD
Securities received by the undersigned in exchange for shares of MS
Common Stock in connection with the Merger except (i) pursuant to an
effective registration statement under the Securities Act, (ii) in
conformity with the volume and other limitations of Rule 145 or (iii)
in a transaction which, in the opinion of
the general counsel of DWD or other counsel reasonably satisfactory to
DWD or as described in a "no-action" or interpretive letter from the
Staff of the SEC specifically issued with respect to a transaction to
be engaged in by the undersigned, is not required to be registered
under the Securities Act; provided, however, that in any such case,
such sale, assignment or transfer shall only be permitted if, in the
opinion of counsel of DWD, such transaction would not have, directly
or indirectly, any adverse consequences for DWD with respect to the
treatment of the Merger for tax purposes.
The undersigned hereby further represents to and covenants
with DWD that the undersigned has not, within the preceding 30 days,
sold, transferred or otherwise disposed of any shares of MS Common
Stock held by the undersigned and that the undersigned will not sell,
transfer or otherwise dispose of any DWD Securities received by the
undersigned in connection with the Merger until after such time as
results covering at least 30 days of post-Merger combined operations
of MS and DWD have been published by DWD, in the form of a quarterly
earnings report, an effective registration statement filed with the
SEC, a report to the SEC on Form 10-K, 10-Q or 8-K, or any other
public filing or announcement which includes such combined results of
operations, except as would not otherwise reasonably be expected to
adversely affect the qualification of the Merger as a
pooling-of-interests.
In the event of a sale or other disposition by the
undersigned of DWD Securities pursuant to Rule 145, the undersigned
will supply DWD with evidence of compliance with such Rule, in the
form of a letter in the form of Annex I hereto and the opinion of
counsel or no-action letter referred to above. The undersigned
understands that DWD may instruct its transfer agent to withhold the
transfer of any DWD Securities disposed of by the undersigned, but
that (provided such transfer is not prohibited by any other provision
of this letter agreement) upon receipt of such evidence of compliance,
DWD shall cause the transfer agent to effectuate the transfer of the
DWD Securities sold as indicated in such letter.
DWD covenants that it will take all such actions as may be
reasonably available to it to permit the sale or other disposition of
DWD Securities by the undersigned under Rule 145 in accordance with
the terms thereof.
The undersigned acknowledges and agrees that the legends set
forth below will be placed on certificates representing DWD Securities
received by the undersigned in connection with the Merger or held by a
transferee thereof, which legends will be removed by delivery of
substitute certificates upon receipt of an opinion in form and
substance reasonably satisfactory to DWD from independent counsel
reasonably satisfactory to DWD to the effect that such legends are no
longer required for purposes of the Securities Act.
There will be placed on the certificates for DWD Securities
issued to the undersigned, or any substitutions therefor, a legend
stating in substance:
"The shares represented by this certificate were issued
pursuant to a business combination which is being accounted for
as a pooling of interests, in a transaction to which Rule 145
promulgated under the Securities Act of 1933 applies. The shares
have not been acquired by the holder with a view to, or for
resale in connection with, any distribution thereof within the
meaning of the Securities Act of 1933. The shares may not be
sold, pledged or otherwise transferred (i) until such time as
Xxxxxx Xxxxxxx, Xxxx Xxxxxx, Discover & Co. shall have published
financial results covering at least 30 days of combined
operations after the Effective Time and (ii) except in accordance
with an exemption from the registration requirements of the
Securities Act of 1933."
The undersigned acknowledges that (i) the undersigned has
carefully read this letter and understands the requirements hereof and
the limitations imposed upon the distribution, sale, transfer or other
disposition of DWD Securities and (ii) the receipt by DWD of this
letter is an inducement to DWD's obligations to consummate the Merger.
Very truly yours,
Dated:
ANNEX I
TO EXHIBIT C
[Name] [Date]
On , the undersigned sold the securities of
Xxxxxx Xxxxxxx, Xxxx Xxxxxx, Discover & Co., formerly named Xxxx
Xxxxxx, Discover & Co. ("DWD"), described below in the space
provided for that purpose (the "Securities"). The Securities were
received by the undersigned in connection with the merger of
Xxxxxx Xxxxxxx Group Inc., a Delaware corporation, with and
into DWD.
Based upon the most recent report or statement filed by DWD
with the Securities and Exchange Commission, the Securities sold by
the undersigned were within the prescribed limitations set forth in
paragraph (e) of Rule 144 promulgated under the Securities Act of
1933, as amended (the "Securities Act").
The undersigned hereby represents that the Securities were
sold in "brokers' transactions" within the meaning of Section 4(4) of
the Securities Act or in transactions directly with a "market maker"
as that term is defined in Section 3(a)(38) of the Securities Exchange
Act of 1934, as amended. The undersigned further represents that the
undersigned has not solicited or arranged for the solicitation of
orders to buy the Securities, and that the undersigned has not made
any payment in connection with the offer or sale of the Securities to
any person other than to the broker who executed the order in respect
of such sale.
Very truly yours,
[Space to be provided for description of the Securities.]
EXHIBIT D
TO THE MERGER AGREEMENT
[Letterhead of]
[Xxxx Xxxxxx, Discover & Co.]
___, 0000
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
In connection with the opinion to be delivered by you
pursuant to the Agreement and Plan of Merger (the "Merger Agreement"),
dated as of February 4, 1997, between Xxxx Xxxxxx, Discover & Co., a
Delaware corporation ("DWD"), and Xxxxxx Xxxxxxx Group Inc., a
Delaware corporation ("MS"), I certify, as of the date hereof, to my
knowledge and belief, after due inquiry, as follows:
1. The facts relating to the contemplated merger (the
"Merger") of MS with and into DWD pursuant to the Merger Agreement, as
described in the Merger Agreement, the documents described in Section
8.06 of the Merger Agreement and the joint proxy statement/prospectus
prepared by DWD and MS, are, insofar as such facts pertain to DWD,
true, correct and complete in all material respects.
2. Except in the Merger or in the ordinary course of
business including, without limitation, as an underwriter, trader or
dealer in such stock, neither DWD nor any subsidiary of DWD has
acquired or will acquire, or has owned in the past five years, any
shares of common stock, par value $1.00 per share, of MS ("MS Common
Stock"), or MS Preferred Stock (as defined in the Merger Agreement).
3. Cash payments to be made to stockholders of MS in lieu of
fractional shares of Common Stock, par value $.01 per share, of DWD
("DWD Common Stock") that would otherwise be issued to such
stockholders in the Merger will be made for the purpose of saving DWD
the expense and inconvenience of issuing and transferring fractional
shares of DWD Common Stock, and do not represent separately bargained
for consideration.
4. DWD has no plan or intention, following the Merger, to
reacquire any of the DWD Common Stock issued in the Merger.
5. DWD has no plan or intention, following the Merger, to
sell or otherwise dispose of any of the assets held by MS at the time
of the Merger, except for dispositions of such assets in the ordinary
course of business; provided, however, that DWD may transfer assets of
MS in a manner that is consistent with Section 368(a)(2)(C) of the
Internal Revenue Code of 1986, as amended (the "Code") or with
Proposed Treasury Regulation Section 1.368- 1(d).
6. DWD, MS and the stockholders of MS will each pay their
respective expenses, if any, incurred in connection with the Merger
the payment of which is not specifically provided for in the Merger
Agreement.
7. Following the Merger, DWD will continue the historic
business of MS or use a significant portion of MS's historic business
assets in a business.
8. DWD is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
9. DWD will not take any position on any federal, state or
local income or franchise tax return, or take any other action or
reporting position, that is inconsistent with the treatment of the
Merger as a reorganization within the meaning of Section 368(a)(1)(A)
of the Code or with the representations made in this letter, unless
otherwise required by a "determination" (as defined in Section
1313(a)(1) of the Code).
10. None of the compensation received by any
stockholder-employee of MS represents separate consideration for, or
is allocable to, any of their MS Common Stock. None of the DWD Common
Stock that will be received by MS
stockholder-employees in the Merger represents separately bargained
for consideration which is allocable to any employment agreement or
arrangement. The compensation paid to any shareholder-employees will
be for services actually rendered and will be determined by bargaining
at arm's- length.
11. There is no intercorporate indebtedness existing between
DWD and MS that was issued or acquired, or will be settled, at a
discount.
12. The Merger Agreement and the documents described in
Section 8.06 of the Merger Agreement represent the entire
understanding of MS and DWD with respect to the Merger.
13. References in this letter to MS, DWD or any subsidiary
thereof shall not be considered to refer to any MS Benefit Plan or DWD
Benefit Plan (each as defined in the Merger Agreement).
14. Any terms not defined herein shall have the meanings
assigned to them by the Merger Agreement.
XXXX XXXXXX, DISCOVER & CO.,
By:
EXHIBIT E
TO THE MERGER AGREEMENT
[Letterhead of]
[Xxxxxx Xxxxxxx Group Inc.]
___, 0000
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
In connection with the opinion to be delivered by you
pursuant to the Agreement and Plan of Merger (the "Merger Agreement"),
dated as of February 4, 1997, between Xxxx Xxxxxx, Discover & Co., a
Delaware corporation ("DWD"), and Xxxxxx Xxxxxxx Group Inc., a
Delaware corporation ("MS"), I certify, as of the date hereof, to my
knowledge and belief, after due inquiry, as follows:
1. The facts relating to the contemplated merger (the
"Merger") of MS with and into DWD pursuant to the Merger Agreement, as
described in the Merger Agreement, the documents described in Section
8.06 of the Merger Agreement and the joint proxy statement/prospectus
prepared by DWD and MS, are, insofar as such facts pertain to MS,
true, correct and complete in all material respects.
2. Neither MS nor any of its subsidiaries has issued or
acquired any shares of Common Stock, par value $1.00 per share, of MS
("MS Common Stock") or MS Preferred Stock (as defined in the Merger
Agreement) (together with MS Common Stock, "MS Stock"), in
contemplation of the Merger, or otherwise as part of a plan of which
the Merger is a part.
3. To the knowledge of MS, there is no present plan or
intention on the part of the stockholders of MS to sell, exchange or
otherwise dispose of shares of stock of DWD ("DWD Stock") received (a)
in the Merger in exchange for MS Stock or (b) upon conversion of DWD
ESOP Preferred Stock that would reduce the ownership of DWD Stock by
former holders of MS Stock to a number of shares having a value, as of
immediately prior to the Merger, of less than 40% of the value of all
of the outstanding shares of MS Stock as of such date; provided that
the conversion of DWD ESOP Preferred Stock into DWD Common Stock will
not be treated as a sale, exchange or other disposition for purposes
of this representation. For purposes of this representation, shares of
MS Stock exchanged by holders of MS Stock for cash in lieu of
fractional shares of DWD Stock will be treated as outstanding MS Stock
immediately prior to the Merger. In addition, for purposes of this
representation, shares of MS Stock that are received (i)(a) pursuant
to the terms of a purchase contract that comprises a part of the MS
Capital Units, (b) upon exercise of MS Employee Stock Options or (c)
upon exchange of the MS Subsidiary Convertible Preferred Stock, but in
each case only if such purchase, exercise or exchange occurred on or
after the date of signing or otherwise in contemplation of the Merger,
or (ii) upon exercise of the MS Options, shall not be treated as
outstanding MS Stock immediately prior to the Merger.
4. MS, DWD and the stockholders of MS and DWD will each pay
their respective expenses, if any, incurred in connection with the
Merger the payment of which is not specifically provided for in the
Merger Agreement.
5. MS is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code of 1986, as
amended (the "Code").
6. MS will not take any position on any federal, state or
local income or franchise tax return, or take any other action or
reporting position, that is inconsistent with the treatment of the
Merger as a reorganization within the meaning of Section 368(a)(1)(A)
of the Code or with the representations made in this letter, unless
otherwise required pursuant to a "determination" (as defined in
Section 1313(a)(1) of the Code).
7. None of the compensation received by any
stockholder-employee of MS represents separate consideration for, or
is allocable to, any of their MS Common Stock. None
of the DWD Common Stock that will be received by MS
stockholder-employees in the Merger represents separately bargained
for consideration which is allocable to any employment agreement or
arrangement. The compensation paid to any shareholder-employees will
be for services actually rendered and will be determined by bargaining
at arm's- length.
8. There is no intercorporate indebtedness existing between
DWD and MS that was issued or acquired, or will be settled, at a
discount.
9. MS is not under the jurisdiction of a court in a Title 11
or similar case within the meaning of Section 368(a)(3)(A) of the
Code.
10. The Merger Agreement and the documents described in
Section 8.06 of the Merger Agreement represent the entire
understanding of MS and DWD with respect to the Merger.
11. References in this letter to MS, DWD or any subsidiary
thereof shall not be considered to refer to any MS Benefit Plan or DWD
Benefit Plan (each as defined in the Merger Agreement).
12. Any terms not defined herein shall have the meanings
assigned to them by the Merger Agreement, including the schedules
thereto.
XXXXXX XXXXXXX GROUP INC.
By:
