EX-2.1 2 dex21.htm FORM OF SEPARATION AND DISTRIBUTION AGREEMENT SEPARATION AND DISTRIBUTION AGREEMENT by and between MORGAN STANLEY and DISCOVER FINANCIAL SERVICES Dated as of [ ], 2007 PAGE
Exhibit 2.1
SEPARATION AND DISTRIBUTION AGREEMENT
by and between
XXXXXX XXXXXXX
and
DISCOVER FINANCIAL SERVICES
Dated as of [ ], 2007
TABLE OF CONTENTS
PAGE | ||
ARTICLE 1 | ||
2 | ||
Section 1.02. Interpretation | 9 | |
ARTICLE 2 | ||
PRIOR TO THE DISTRIBUTION | ||
Section 2.01. Information Statement; Listing | 10 | |
Section 2.02. Cash Dividend | 10 | |
Section 2.03. Special Dividend | 10 | |
Section 2.04. Intercompany Accounts | 10 | |
10 | ||
Section 2.06. Shared Employees | 11 | |
Section 2.07. Further Assurances and Consents | 11 | |
ARTICLE 3 | ||
DISTRIBUTION | ||
11 | ||
Section 3.02. The Distribution | 13 | |
Section 3.03. Subdivision of Discover Common Stock to Accomplish the Distribution | 13 | |
Section 3.04. Fractional Shares | 14 | |
Section 3.05. NO REPRESENTATIONS OR WARRANTIES | 14 | |
ARTICLE 4 | ||
INSURANCE MATTERS | ||
Section 4.01. Insurance Prior to the Distribution Date | 14 | |
Section 4.02. Ownership of Existing Policies and Programs | 15 | |
Section 4.03. Maintenance of Insurance for Discover | 15 | |
Section 4.04. Acquisition and Maintenance of Post-Distribution Insurance by Discover | 15 | |
Section 4.05. Rights Under Shared Policies | 16 | |
Section 4.06. Administration and Reserves | 17 | |
Section 4.07. Insurance Premiums | 17 | |
Section 4.08. Agreement for Waiver of Conflict and Shared Defense | 18 | |
Section 4.09. Duty to Mitigate Settlements | 18 | |
Section 4.10. Non-Waiver of Rights to Coverage | 18 |
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ARTICLE 5 | ||
ACCESS TO INFORMATION | ||
Section 5.01. Access to Information | 18 | |
Section 5.02. Litigation Cooperation | 19 | |
Section 5.03. Reimbursement; Ownership of Information | 20 | |
Section 5.04. Retention of Records | 20 | |
Section 5.05. Confidentiality | 21 | |
Section 5.06. Privileged Information | 22 | |
22 | ||
Section 5.08. Inapplicability of Sections 5.01 through 5.07 to Tax Matters | 23 | |
ARTICLE 6 | ||
OTHER AGREEMENTS | ||
Section 6.01. Settlement of Intercompany Accounts | 24 | |
ARTICLE 7 | ||
INDEMNIFICATION | ||
Section 7.01. Discover Indemnification of the Xxxxxx Xxxxxxx Group | 24 | |
Section 7.02. Xxxxxx Xxxxxxx Indemnification of Discover Group | 24 | |
Section 7.03. Procedures | 25 | |
Section 7.04. Calculation of Indemnification Amount | 26 | |
Section 7.05. Contribution | 26 | |
Section 7.06. Non-Exclusivity of Remedies | 27 | |
Section 7.07. Survival of Indemnities | 27 | |
ARTICLE 8 | ||
MISCELLANEOUS | ||
Section 8.01. Notices | 27 | |
Section 8.02. Amendments; No Waivers | 27 | |
Section 8.03. Expenses | 28 | |
Section 8.04. Successors and Assigns | 28 | |
Section 8.05. Governing Law | 28 | |
Section 8.06. Counterparts; Effectiveness; Third-Party Beneficiaries | 28 | |
Section 8.07. Entire Agreement | 28 | |
Section 8.08. Tax Matters | 29 | |
Section 8.09. Jurisdiction | 29 | |
Section 8.10. WAIVER OF JURY TRIAL | 29 | |
Section 8.11. Existing Agreements | 29 | |
Section 8.12. Termination | 30 | |
Section 8.13. Severability | 30 | |
Section 8.14. Survival | 30 | |
Section 8.15. Captions | 30 | |
Section 8.16. Specific Performance | 30 | |
Section 8.17. Performance | 30 |
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SEPARATION AND DISTRIBUTION AGREEMENT
SEPARATION AND DISTRIBUTION AGREEMENT dated as of [ ], 2007 (the βAgreementβ) between Xxxxxx Xxxxxxx, a Delaware corporation (βXxxxxx Xxxxxxxβ), and Discover Financial Services, a Delaware corporation (βDiscoverβ).
ARTICLE 1
βActionβ means any demand, claim, suit, action, arbitration, inquiry, investigation or other proceeding by or before any Governmental Authority or any arbitration or mediation tribunal.
βAffiliateβ means, with respect to any Person, any Person directly or indirectly controlling, controlled by, or under common control with, such other Person; provided that for purposes of this Agreement, any Person who was a member of both Groups prior to the Distribution shall be deemed to be an Affiliate only of the Group of which such Person is a member following the Distribution. For the purposes of this definition, βcontrolβ means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and the terms βcontrollingβ and βcontrolledβ have meanings correlative to the foregoing. Any contrary provision of this Agreement notwithstanding, members of the Xxxxxx Xxxxxxx Group, on the one hand, and members of the Discover Group, on the other hand, shall not be deemed to be Affiliates of the other.
βAgreementβ has the meaning set forth in the preamble.
βAncillary Agreementβ means each of the Corporate Card Agreement, the U.S. Employee Matters Agreement, the Intellectual Property Agreement, the Investment Banking Agreement, the Lease Agreements, the Licensing Agreement, the Tax Sharing Agreement, the Transition Services Agreement, the U.K. Asset Transfer Agreement, the U.K. Employee Matters Agreement and the U.K. Tax Sharing Agreement.
βApplicable Lawβ means, with respect to any Person, any federal, state, local or foreign law (statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule, regulation, order, injunction, judgment, decree, ruling, directive, guidance, instruction, direction, permission, waiver, notice, condition, limitation, restriction or prohibition or other similar requirement enacted, adopted, promulgated, imposed, issued or applied by a Governmental Authority that is binding upon or applicable to such Person, its properties or assets or its business or operations, as amended unless expressly specified otherwise.
βBusinessβ means, as the context requires, the Xxxxxx Xxxxxxx Business or the Discover Business.
βCash Dividendβ has the meaning set forth in Section 2.02.
βClaimβ has the meaning set forth in Section 7.03(a).
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βClaims Administrationβ means the processing of claims made under Xxxxxx Xxxxxxx Policies, including the reporting of claims to the insurance carrier, management and defense of claims, and providing for appropriate releases upon settlement of claims.
βClaims Made Policiesβ has the meaning set forth in Section 4.05(a).
βCodeβ has the meaning set forth in the recitals to this Agreement.
βCommissionβ means the U.S. Securities and Exchange Commission.
βConfidential Informationβ has the meaning set forth in Section 5.05.
βConfidential Personal Informationβ means any identifiable information about individuals (including, without limitation, identifiable consumers or employees or other personnel) to which any member of a Group provides access or transfers to any member of the other Group solely pursuant to this Agreement or any Ancillary Agreement or which any member of such Group otherwise collects, uses, discloses, processes or otherwise handles from or for the other Group solely in connection with this Agreement or any Ancillary Agreement.
βCorporate Card Agreementβ means the Corporate Card Agreement between Xxxxxx Xxxxxxx and Discover to be entered into as of the Distribution Date, substantially in the form of Exhibit A.
βDiscoverβ has the meaning set forth in the preamble.
βDiscover Assumed Actionsβ has the meaning set forth in Section 5.02(a).
βDiscover Businessβ means the business conducted by the Discover Group from time to time, whether before, on or after the Distribution. For clarity, the βDiscover Businessβ shall include (i) the credit card and related assets and business transferred from MSBIL to Goldfish Bank as contemplated pursuant to paragraph 2(a) of Schedule 1 and (ii) Goldfish Card Services transferred from MSGE to Goldfish Bank as contemplated pursuant to paragraph 2(c) of Schedule 1, and exclude the mortgage businesses that were transferred from the Discover business segment of Xxxxxx Xxxxxxx to the Institutional Securities business segment of Xxxxxx Xxxxxxx in 2005, in each case as conducted from time to time, whether before, on or after the Distribution.
βDiscover Common Stockβ has the meaning set forth in the recitals to this Agreement.
βDiscover Groupβ means Discover and its Subsidiaries.
βDiscover Indemniteesβ has the meaning set forth in Section 7.02(a).
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βDiscover Insured Partyβ means any member of the Discover Group that is named insured, additional named insured or insured under any Shared Policy.
βDiscover Liabilitiesβ means, except as otherwise specifically provided for in this Agreement or any Ancillary Agreement, all Liabilities (whether arising before, on or after the Distribution Date and whether based on facts occurring before, on or after the Distribution Date) of or relating to, or arising from or in connection with, the Discover Group, the conduct of the Discover Business or the ownership or use of assets in connection therewith. For clarity, Discover Liabilities shall exclude all Liabilities of or relating to, or arising from or in connection with the mortgage businesses that were transferred from the Discover business segment of Xxxxxx Xxxxxxx to the Institutional Securities business segment of Xxxxxx Xxxxxxx in 2005, as conducted from time to time, whether before, on or after the Distribution, except as expressly contemplated by the Loan Services Agreement referred to in Schedule 5.
βDisposing Partyβ has the meaning set forth in Section 5.04.
βDistributionβ has the meaning set forth in the recitals to this Agreement.
βDistribution Agentβ means [ ].
βDistribution Dateβ means [ ], 2007.
βDistribution Documentsβ means this Agreement and the Ancillary Agreements.
βDistribution Timeβ means [ ] p.m. on the Distribution Date.
βExchange Actβ means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
βFIFO Basisβ means, with respect to the payment of Unrelated Claims pursuant to the same Shared Policy, the payment in full of each successful claim (regardless of whether a Xxxxxx Xxxxxxx Insured Party or a Discover Insured Party is the claimant) in the order in which such successful claim is approved by the insurance carrier, until the limit of the applicable Shared Policy is met.
βFinancial Instrumentsβ means, with respect to any party, all credit facilities, guarantees, comfort letters, letters of credit and similar instruments related primarily to such partyβs Business under which any member of such partyβs Group has any primary, secondary, contingent, joint, several or other liability.
βForm 10β means the registration statement on Form 10 filed by Discover with the Commission to effect the registration of Discover Common Stock pursuant to the Exchange Act in connection with the Distribution, as such registration statement may be amended or supplemented from time to time.
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βGoldfish Bankβ means Goldfish Bank Limited.
βGoldfish Card Servicesβ means Goldfish Card Services Limited.
βGovernmental Authorityβ means any multinational, foreign, federal, state, local or other governmental, statutory or administrative authority, regulatory body or commission or any court, tribunal or judicial or arbitral authority which has any jurisdiction or control over either party (or their Affiliates), including without limitation the United Kingdom Financial Services Authority (or any successor thereto).
βGroupβ means, as the context requires, the Discover Group or the Xxxxxx Xxxxxxx Group.
βIndemnified Partyβ has the meaning set forth in Section 7.03(a).
βIndemnifying Partyβ has the meaning set forth in Section 7.03(a).
βInformation Statementβ means the Information Statement to be sent to each holder of Xxxxxx Xxxxxxx Common Stock in connection with the Distribution.
βInsured Partyβ means a Xxxxxx Xxxxxxx Insured Party or a Discover Insured Party.
βIntellectual Property Agreementβ means the Intellectual Property Agreement between Xxxxxx Xxxxxxx and Discover to be entered into as of the Distribution Date, substantially in the form of Exhibit B.
βIntercompany Accountsβ has the meaning set forth in Section 2.04.
βInvestment Banking Agreementβ means the Investment Banking Agreement between Xxxxxx Xxxxxxx and Discover to be entered into as of the Distribution Date, substantially in the form of Exhibit C.
βIRSβ means the Internal Revenue Service.
βLease Agreementsβ means the amendments to the Lease Agreement between Xxxxxx Xxxxxxx and Discover to be entered into as of the Distribution Date, substantially in the form of Exhibit D.
βLiabilitiesβ means any and all claims, debts, liabilities and obligations, absolute or contingent, matured or not matured, liquidated or unliquidated, accrued or unaccrued, known or unknown, whenever arising, including all costs and expenses relating thereto, and including, without limitation, those debts, liabilities and obligations arising under this Agreement, any Applicable Law, or any award of any arbitrator of any kind, and those arising under any agreement, commitment or undertaking.
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βLicensing Agreementβ means the Licensing Agreement between Xxxxxx Xxxxxxx and Discover to be entered into as of the Distribution Date, substantially in the form of Exhibit E.
βLossesβ means, with respect to any Person, any and all damages, losses, liabilities and expenses incurred or suffered by such Person (including, without limitation, reasonable expenses of investigation and reasonable attorneysβ fees and expenses in connection with any and all Actions or threatened Actions).
βXxxxxx Xxxxxxxβ has the meaning set forth in the preamble.
βXxxxxx Xxxxxxx Assumed Actionsβ has the meaning set forth in Section 5.02(a).
βXxxxxx Xxxxxxx Businessβ means the business conducted by the Xxxxxx Xxxxxxx Group for time to time, whether before, on or after the Distribution (but excluding the Discover Business).
βXxxxxx Xxxxxxx Common Stockβ has the meaning set forth in the recitals to this Agreement.
βXxxxxx Xxxxxxx Groupβ means Xxxxxx Xxxxxxx and its Subsidiaries (other than any Subsidiary or member of, or other entity in, the Discover Group).
βXxxxxx Xxxxxxx Indemniteesβ has the meaning set forth in Section 7.01(a).
βXxxxxx Xxxxxxx Insured Partyβ means any member of the Xxxxxx Xxxxxxx Group that is named insured, additional named insured or insured under any Shared Policy.
βXxxxxx Xxxxxxx Liabilitiesβ means, except as otherwise specifically provided in this Agreement or any Ancillary Agreement, all Liabilities (whether arising before, on or after the Distribution Date and whether based on facts occurring before, on or after the Distribution Date) of or relating to, or arising from or in connection with, the Xxxxxx Xxxxxxx Group, the conduct of the Xxxxxx Xxxxxxx Business or the ownership or use of assets in connection therewith, but excluding any Discover Liabilities.
βXxxxxx Xxxxxxx Policiesβ has the meaning set forth in Section 4.02.
βMSBILβ means Xxxxxx Xxxxxxx Bank International Limited, a private limited company incorporated in England and Wales.
βMSDCIβ means Xxxxxx Xxxxxxx Domestic Capital, Inc., a Delaware corporation, which is a wholly owned indirect Subsidiary of Xxxxxx Xxxxxxx and the sole shareholder of Discover, and its successors and assigns (including without limitation, any Person which may acquire all or substantially all of MSDCIβs assets or business, or with or into which MSDCI may be consolidated or merged).
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βMSGEβ means Xxxxxx Xxxxxxx Group (Europe), an unlimited company incorporated in England and Wales.
βNYSEβ means The New York Stock Exchange, Inc.
βOccurrence Based Policiesβ has the meaning set forth in Section 4.05(a).
βPersonβ means an individual, corporation, limited liability company, partnership, association, trust or other entity or organization, including a governmental or political subdivision or an agency or instrumentality thereof.
βPersonal Information Incidentβ means any actual or threatened unauthorized access, acquisition, use, alteration, creation, destruction, loss, theft, copying or disclosure of Confidential Personal Information of the other Group, including user IDs or passwords, regardless of whether such has been encrypted, only if such incident is reasonably likely to result in harm to a consumer or customer by way of misuse of such consumerβs or customerβs Confidential Personal Information.
βPrivilegeβ has the meaning set forth in Section 5.06.
βPrivileged Informationβ has the meaning set forth in Section 5.06.
βReceiving Partyβ has the meaning set forth in Section 5.04.
βRecord Dateβ means [ ], 2007.
βRelated Claimsβ means a claim or claims against a Shared Policy made by one or more Discover Insured Parties, on the one hand, and one or more Xxxxxx Xxxxxxx Insured Parties, on the other hand, filed in connection with Losses suffered by either a Discover Insured Party or a Xxxxxx Xxxxxxx Insured Party, as the case may be, arising out of the same underlying transaction or series of transactions or event or series of events that have also given rise to Losses suffered by a Xxxxxx Xxxxxxx Insured Party or a Discover Insured Party, as the case may be, which Losses are the subject of a claim or claims by such Person against a Shared Policy.
βRepresentativesβ has the meaning set forth in Section 5.05.
βRestructuringβ means the reorganization of certain businesses of the Discover Group and the Xxxxxx Xxxxxxx Group intended to be completed on or before the Distribution Date, as described in Schedule 1.
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βSecurities Actβ means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
βShared Policiesβ has the meaning set forth in Section 4.05(a).
βSpecial Dividendβ has the meaning set forth in Section 2.03.
βSubsidiaryβ means, with respect to any Person, any other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by such Person. For clarity, Goldfish Bank and Goldfish Card Services are Subsidiaries of Discover for purposes of this Agreement.
βTax Sharing Agreementβ means the Tax Sharing Agreement between Xxxxxx Xxxxxxx and Discover to be entered into as of the Distribution Date, substantially in the form of Exhibit F.
βThird-Party Claimβ has the meaning set forth in Section 7.03(b).
βThird Partyβ means a Person that is not an Affiliate of the Discover Group or Xxxxxx Xxxxxxx Group.
βTransferred Actionsβ has the meaning set forth in Section 5.02(b).
βTransition Services Agreementβ means the Transition Services Agreement between Xxxxxx Xxxxxxx and Discover to be entered into as of the Distribution Date, substantially in the form of Exhibit G.
βU.K. Asset Transfer Agreementβ means the Asset Transfer Agreement between MSBIL and Goldfish Bank to be entered into as of the Distribution Date, substantially in the form of Exhibit H.
βU.K. Employee Matters Agreementβ means the U.K. Employee Matters Agreement between Xxxxxx Xxxxxxx and Discover to be entered into as of the Distribution Date, substantially in the form of Exhibit I.
βU.K. Tax Sharing Agreementβ means the Supplemental Tax Sharing Agreement Relating to Direct Tax and VAT in the United Kingdom between Xxxxxx Xxxxxxx and Discover to be entered into as of the Distribution Date, substantially in the form of Exhibit J.
βUnrelated Claimsβ means a claim or claims against a Shared Policy that is not a Related Claim.
βU.S. Employee Matters Agreementβ means the U.S. Employee Matters Agreement between Xxxxxx Xxxxxxx and Discover to be entered into as of the Distribution Date, substantially in the form of Exhibit K.
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βVisa/MasterCard Litigationβ has the meaning set forth in Section 2.03.
Section 1.02. Interpretation. (a) In this Agreement, unless the context clearly indicates otherwise:
(i) words used in the singular include the plural and words used in the plural include the singular;
(ii) references to any Person include such Personβs successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement;
(iii) reference to any gender includes the other gender;
(iv) the words βinclude,β βincludesβ and βincludingβ shall be deemed to be followed by the words βwithout limitationβ;
(v) reference to any Article, Section, Exhibit or Schedule means such Article or Section of, or such Exhibit or Schedule to, this Agreement, as the case may be, and references in any Section or definition to any clause means such clause of such Section or definition;
(vi) the words βherein,β βhereunder,β βhereof,β βheretoβ and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or other provision hereof;
(vii) reference to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and by this Agreement;
(viii) reference to any law (including statutes and ordinances) means such law (including all rules and regulations promulgated thereunder) as amended, modified, codified or reenacted, in whole or in part, and in effect at the time of determining compliance or applicability;
(ix) relative to the determination of any period of time, βfromβ means βfrom and including,β βtoβ means βto but excludingβ and βthroughβ means βthrough and includingβ;
(x) the titles to Articles and headings of Sections contained in this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect the meaning or interpretation of this Agreement; and
(xi) unless otherwise specified in this Agreement, all references to dollar amounts herein shall be in respect of lawful currency of the United States.
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ARTICLE 2
On or prior to the Distribution Date:
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arrangements as shall be necessary, to (i) terminate all obligations of the other party (and members of its Group) under any of the first partyβs Financial Instruments that is in existence immediately prior to the Distribution or (ii) cause itself (or another member of its Group) to be substituted for the other party (and members of its Group) in respect of their obligations under any of the first partyβs Financial Instruments that is in existence immediately prior to the Distribution; provided that if such a termination or substitution is not effected by the Distribution (i) each party shall indemnify and hold harmless the other party from and against any Losses arising from or relating to its Financial Instruments in accordance with the applicable provisions of Section 7.01 or Section 7.02 and (ii) without the prior written consent of the other party (or the applicable members of its Group), such party shall not, and shall not permit any other member of its Group to, renew or extend the term of, increase the obligations or Liabilities under, or transfer to a third party, any such Financial Instrument unless all obligations of the other party (and members of its Group) with respect thereto are thereupon terminated by documentation reasonably satisfactory in form and substance to the other party (or the applicable members of its Group).
ARTICLE 3
(i) the Board of Directors of Xxxxxx Xxxxxxx shall be satisfied that the Distribution will be made out of surplus within the meaning of Section 170 of the General Corporation Law of the State of Delaware and shall have received a solvency opinion in form and substance satisfactory to the Board of Directors of Xxxxxx Xxxxxxx to that effect;
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(ii) prior to the declaration of the Special Dividend and the Restructuring, the Cash Dividend shall have been declared and distributed by Discover;
(iii) prior to the Restructuring, the Special Dividend shall have been declared and distributed by Discover;
(iv) the Restructuring shall have been consummated;
(v) all material Intercompany Accounts shall have been settled;
(vi) no stop order suspending the effectiveness of the Form 10 shall be in effect, no proceedings for such purpose shall be pending before or threatened by the Commission, and the Information Statement shall have been mailed to holders of the Xxxxxx Xxxxxxx Common Stock as of the Record Date;
(vii) all actions and filings necessary or appropriate under applicable federal, state or foreign securities or βblue skyβ laws and the rules and regulations thereunder shall have been taken and, where applicable, become effective or been accepted;
(viii) the Discover Common Stock to be delivered in the Distribution shall have been approved for listing on the NYSE, subject to official notice of issuance;
(ix) the Board of Directors of Discover, as named in the Information Statement, shall have been elected by Xxxxxx Xxxxxxx, as sole stockholder of Discover, and the amended and restated certificate of incorporation and bylaws of Discover, each in substantially the form filed as an exhibit to the Form 10, shall be in effect;
(x) each of the Ancillary Agreements shall have been duly executed and delivered by the parties thereto;
(xi) Xxxxxx Xxxxxxx shall have received a private letter ruling from the IRS and/or an opinion of Xxxxx Xxxx & Xxxxxxxx, in either case reasonably satisfactory to the Board of Directors of Xxxxxx Xxxxxxx, confirming the application of Sections 355 and 368 of the Code to the Distribution and certain related matters, and a ruling from the California Franchise Tax Board or an opinion of counsel, in either case reasonably satisfactory to the Board of Directors of Xxxxxx Xxxxxxx, confirming the application of the corresponding provisions of California state tax law to the Distribution;
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(xii) no Applicable Law shall have been adopted, promulgated or issued that prohibits the consummation of the Distribution and the other transactions contemplated hereby;
(xiii) all material governmental approvals and consents and all material permits, registrations and consents from third parties, in each case, necessary to effect the Distribution and to permit the operation of the Discover Business after the Distribution Date substantially as it is conducted at the date hereof shall have been obtained;
(xiv) Discover shall have received credit ratings from the rating agencies that are satisfactory to Xxxxxx Xxxxxxx; and
(xv) no event or development shall have occurred or exist that, in the judgment of the Board of Directors of Xxxxxx Xxxxxxx, in its sole discretion, makes it inadvisable to effect the Distribution or the other transactions contemplated hereby.
Each of the foregoing conditions is for the sole benefit of Xxxxxx Xxxxxxx and shall not give rise to or create any duty on the part of Xxxxxx Xxxxxxx or its Board of Directors to waive or not to waive any such condition or to effect the Distribution, or in any way limit Xxxxxx Xxxxxxxβx rights of termination set forth in this Agreement. Any determination made by Xxxxxx Xxxxxxx on or prior to the Distribution concerning the satisfaction or waiver of any or all of the conditions set forth in this Section 3.01 shall be conclusive and binding on the parties.
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ARTICLE 4
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including as a result of the level or scope of any such insurance policies, insurance contracts, claim administration contracts, the creditworthiness of any insurance carrier, the terms and conditions of any policy or contract and the adequacy or timeliness of any notice to any insurance carrier or claims administrator with respect to any actual claim or potential claim or otherwise.
Section 4.04. Acquisition and Maintenance of Post-Distribution Insurance by Discover. Commencing on and as of the Distribution Date, Discover shall be responsible for establishing and maintaining separate property damage and business interruption and liability insurance policies and programs (including general liability (whether primary, excess or umbrella), fiduciary liability, automobile, aircraft hull and liability, all risk property (including business interruption) and casualty, directors and officers liability, employerβs liability, workersβ compensation, comprehensive crime, errors and omissions and property/boiler and machinery insurance policies) for activities and claims involving any member of the Discover Group. Each member of the Discover Group, as appropriate, shall be responsible for all administrative and financial matters relating to insurance policies established and maintained by any member of the Discover Group claims relating to any period at or after the Distribution Time involving any member of the Discover Group.
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(b) In the event that after the Distribution Time Xxxxxx Xxxxxxx proposes to amend, commute, terminate, buy-out, extinguish liability under or
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otherwise modify any Shared Policies under which Discover, the Discover Business or and the other members of the Discover Group has or may in the future have rights to assert claims pursuant to this Article 4 in a manner that would adversely affect any such rights of Discover, the Discover Business or and the other members of the Discover Group, Xxxxxx Xxxxxxx will give Discover prior notice thereof.
(c) To the extent that the limits of any Shared Policy preclude payment in full of Unrelated Claims filed by any member of the Xxxxxx Xxxxxxx Group, on the one hand, and any member of the Discover Group, on the other hand, the insurance proceeds available under such Shared Policy shall be paid to Xxxxxx Xxxxxxx and/or Discover, as applicable, on a FIFO Basis. In the event that any member of the Xxxxxx Xxxxxxx Group, on the one hand, and any member of the Discover Group, on the other hand, file Related Claims under any Shared Policy, each of Xxxxxx Xxxxxxx and Discover shall receive a pro rata amount of the available insurance proceeds, based on the relationship the Loss incurred by each such party bears to the total Loss to both such parties from the occurrence or event underlying the Related Claims.
(b) From and after the Distribution, the Discover Group will be responsible for the Claims Administration with respect to claims of the Discover Group under Shared Policies. Discover shall provide advance notice to Xxxxxx Xxxxxxx of any such claims.
(c) Each party agrees to consider in good faith (but shall have no obligation to accept) any requests by the other party to provide assistance to, and cooperate with, such party or any member of its Group with respect to the Claims Administration referred to in Sections 4.06 (a) and 4.06(b). None of the members of either Group and their respective directors, officers, agents and employees shall have any liability, whether direct or indirect, in contract or tort or otherwise, to any Person for or in connection with the provision of such assistance or cooperation. All out of pocket expenses incurred by either party in providing any such assistance or cooperation shall be reimbursed promptly by the other party.
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foregoing, to the extent that Discover has previously paid a premium (or has been allocated a portion of a premium by Xxxxxx Xxxxxxx) or satisfied a deductible amount under a Shared Policy, Discover shall not be required to pay such premium pursuant to the foregoing sentence or satisfy such deductible again if Discover makes a claim under such Shared Policy in accordance with this Article 4.
ARTICLE 5
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Agreement, any regulatory proceeding, any regulatory filings, complying with reporting disclosure requirements or any other requirements imposed by any Governmental Authority or any other reasonable business purpose of the Group requesting such access; provided that any such access shall not unreasonably interfere with the conduct of the business of the Group providing such access; provided further that in the event any party reasonably determines that affording any such access to the other party would be commercially detrimental in any material respect or violate any Applicable Law or agreement to which such party or member of its Group is a party, or waive any attorney-client privilege applicable to such party or any member of its Group, the parties shall use reasonable efforts to permit the compliance with such request in a manner that avoids any such harm or consequence.
(b) Without limiting the generality of the foregoing, until the end of the first full Discover fiscal year occurring after the Distribution Date (and for a reasonable period of time afterwards as required for each party to prepare consolidated financial statements or complete a financial statement audit for the fiscal year during which the Distribution Date occurs), each party shall use reasonable efforts, to cooperate with the other partyβs information requests to enable the other party to meet its timetable for dissemination of its earnings releases, financial statements and enable such other partyβs auditors to timely complete their audit of the annual financial statements and review of the quarterly financial statements.
(b) The applicable member of the Xxxxxx Xxxxxxx Group shall transfer the Transferred Actions to the applicable member of the Discover Group, and the applicable member of the Discover Group shall receive and have the benefit of all
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of the proceeds of such Transferred Actions. βTransferred Actionsβ means those Actions (in which any member of the Xxxxxx Xxxxxxx Group is a plaintiff or claimant) primarily relating to the Discover Business including those listed on Schedule 5.02(b).
(c) Each party agrees that at all times from and after the Distribution if an Action relating primarily to its Business is commenced by a third party naming a member of each Group as defendants thereto, then the party as to which the Action primarily relates shall use its reasonable efforts to cause the other party or member of its Group to be removed from such Action; provided that if the first party is unable to cause the member of the Group of the other party to be removed from such Action, the parties shall cooperate and consult to the extent necessary or advisable with respect to such Action.
(d) The parties agree that at all times from and after the Distribution if an Action which does not relate primarily to either partyβs Business is commenced by a third party naming a member of each Group as defendants thereto, then the parties shall cooperate and consult to the extent necessary or advisable with respect to such Action.
(e) Each Group shall use reasonable efforts to make available to the other Group and its accountants, counsel, and other designated representatives, upon written request, its directors, officers, employees and representatives as witnesses, and shall otherwise cooperate with the other Group, to the extent reasonably required in connection with any Action arising out of either Groupβs Business prior to the Distribution Date in which the requesting party may from time to time be involved.
(b) All information owned by one party that is provided to the other party under Section 5.01 or Section 5.02 shall be deemed to remain the property of the providing party. Unless specifically set forth herein, nothing contained in this Agreement shall be construed to grant or confer rights of license of otherwise in any such information.
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any and all information in its possession or control relating to the other Groupβs Business. Neither party shall destroy or otherwise dispose of any such information, subject to such retention practice, unless, prior to such destruction or disposal, the party proposing such destruction or disposal (the βDisposing Partyβ) provides not less than 30 daysβ prior written notice to the other party (the βReceiving Partyβ), specifying the information proposed to be destroyed or disposed of and the scheduled date for such destruction or disposal. If the Receiving Party shall request in writing prior to the scheduled date for such destruction or disposal that any of the information proposed to be destroyed or disposed of be delivered to the Receiving Party, the Disposing Party shall promptly arrange for the delivery of such of the information as was requested at the expense of the Receiving Party; provided that in the event that the Disposing Party reasonably determines that any such provision of information would violate any Applicable Law or agreement to which such party or member of its Group is a party, or waive any attorney-client privilege applicable to such party or any member of its Group, the parties shall use reasonable efforts to permit the compliance with such request in a manner that avoids any such harm or consequence. Any records or documents that were subject to a litigation hold prior to the Distribution Date must be retained by the applicable party until such party is notified by the other party that the litigation hold is no longer in effect.
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such party will promptly notify the other party and, upon request, use reasonable efforts to cooperate with the other partyβs efforts to seek a protective order or other remedy. If no such protective order or other remedy is obtained or if the other party waives in writing such partyβs compliance with this Section 5.05, such party may furnish only that portion of the information which it concludes, after consultation with counsel, is legally required to be disclosed and will exercise its reasonable efforts to obtain reliable assurance that confidential treatment will be accorded such information. Each party agrees to be responsible for any breach of this Section 5.05 by it and its Representatives.
(b) Upon receipt by either party of any subpoena, discovery or other request that calls for the production or disclosure of Privileged Information of the other party, such party shall promptly notify the other party of the existence of the request and shall provide the other party a reasonable opportunity to review the information and to assert any rights it may have under this Section 5.06 or otherwise to prevent the production or disclosure of such Privileged Information. Each party agrees that it will not produce or disclose any information that may be covered by a Privilege of the party under this Section 5.06 unless (i) the other party has provided its written consent to such production or disclosure (which consent shall not be unreasonably withheld) or (ii) a court of competent jurisdiction has entered a final, nonappealable order finding that the information is not entitled to protection under any applicable Privilege.
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given by the party from which the Confidential Personal Information originates, as may be modified from time to time. Upon completion of either partyβs use of Confidential Personal Information pursuant to this subsection, the receiving party will maintain the Confidential Personal Information in compliance with the applicable requirements of this Section 5.07 and with its reasonable record retention and destruction policies.
(b)(i) Each of Xxxxxx Xxxxxxx and Discover and their respective Subsidiaries and Affiliates will comply with Applicable Law with respect to the Confidential Personal Information received by it from the disclosing party and shall maintain procedures reasonably designed to detect and respond to Personal Information Incidents, including procedures for corrective action.
(ii) If a receiving party uses agents or subcontractors who will access, use or otherwise have control over Confidential Personal Information of the disclosing party, the receiving party will enter into a written agreement with such agents and subcontractors that will include confidentiality obligations that are at least as restrictive as those provisions to which the receiving party subjects such agents or subcontractors who have access to the receiving partyβs Confidential Personal Information.
(iii) Subject to any other obligations either Xxxxxx Xxxxxxx or Discover may have under Applicable Law, each of Xxxxxx Xxxxxxx and Discover agrees to promptly notify the other party upon such partyβs discovery of a potential or actual Personal Information Incident. Each of Xxxxxx Xxxxxxx and Discover understands and agrees that the receiving party or its Affiliates may be required to report Personal Information Incidents to affected individuals and/or any governmental authority or agency having supervisory or oversight authority over the receiving party and the disclosing party may provide such reports, provided that, the receiving party agrees that it will not notify any affected individuals or authority or agency until the receiving party first consults with and the disclosing party has had an opportunity to review any such notice.
(c) In addition to any other obligations a receiving party may have under this Agreement, in the event of a Personal Information Incident, at the request of the disclosing party, a receiving party shall: (i) assist in the identification of affected persons and relevant jurisdictions; (ii) reimburse the disclosing party for any costs associated with providing affected persons with any assistance (credit monitoring, etc.) as the disclosing party deems reasonable; and (iii) undertake a procedural review/audit to determine any appropriate corrective measures to avoid a similar situation recurring, and report to the disclosing party the corrective measures undertaken.
Section 5.08. Inapplicability of Sections 5.01 through 5.07 to Tax Matters. Sections 5.01 through 5.07 shall not apply with respect to information, records, Actions and other matters relating to tax matters, all of which shall be governed by the Tax Sharing Agreement and the U.K. Tax Sharing Agreement.
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ARTICLE 6
ARTICLE 7
(b) Except to the extent set forth in Section 7.02(b), Discover shall indemnify, defend and hold harmless each of the Xxxxxx Xxxxxxx Indemnitees and each Person, if any, who controls any Xxxxxx Xxxxxxx Indemnitee within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all Losses caused by any untrue statement or alleged untrue statement of a material fact contained in the Form 10 or any amendment thereof or the Information Statement (as amended or supplemented if Discover shall have furnished any amendments or supplements thereto), or caused by any omission or alleged omission to state therein a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
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(b) Xxxxxx Xxxxxxx shall indemnify, defend and hold harmless each of the Discover Indemnitees and each Person, if any, who controls any Discover Indemnitee within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all Losses caused by any untrue statement or alleged untrue statement of a material fact contained in the Form 10 or any amendment thereof or the Information Statement (as amended or supplemented if Discover shall have furnished any amendments or supplements thereto), or caused by any omission or alleged omission to state therein a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, in each case to the extent, but only to the extent, that such Losses are caused by any such untrue statement or omission or alleged untrue statement or omission arising out of information set forth in Schedule 4.
(b) The Indemnifying Party shall be entitled to participate in the defense of any Claim asserted by any third party (βThird-Party Claimβ) and, subject to the limitations set forth in this Section 7.03, if it so notifies the Indemnified Party no later than 30 days after receipt of the notice described in Section 7.03(a), shall be entitled to control and appoint lead counsel for such defense, in each case at its expense. If the Indemnifying Party does not, the Indemnified Party shall have the right to defend or contest such Third-Party Claim through counsel chosen by the Indemnified Party reasonably acceptable to the Indemnifying Party, subject to the provisions of this Section 7.03. The Indemnified Party shall provide the Indemnifying Party and such counsel with such information regarding such Third-Party Claim as either of them may reasonably request (which request may be general or specific).
(c) If the Indemnifying Party shall assume the control of the defense of any Third-Party Claim in accordance with the provisions of this Section 7.03, (i) the Indemnifying Party shall obtain the prior written consent of the Indemnified Party (which shall not be unreasonably withheld) before entering into any settlement of such Third-Party Claim, if the settlement does not release the Indemnified Party from all liabilities and obligations with respect to such Third-
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Party Claim or the settlement imposes injunctive or other equitable relief against the Indemnified Party and (ii) the Indemnified Party shall be entitled to participate in (but not control) the defense of such Third-Party Claim and to employ separate counsel of its choice for such purpose. The fees and expenses of such separate counsel shall be paid by the Indemnified Party.
(d) Each party shall cooperate, and cause their respective Affiliates to cooperate, in the defense or prosecution of any Third-Party Claim and shall furnish or cause to be furnished such records, information and testimony, and attend such conferences, discovery proceedings, hearings, trials or appeals, as may be reasonably requested in connection therewith.
(e) Each Indemnified Party shall use reasonable efforts to collect any amounts available under insurance coverage, or from any other Person alleged to be responsible, for any Losses payable under Section 7.01 or Section 7.02.
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hand, and the Discover Group, on the other hand, shall be determined by reference to, among other things, whether the untrue statement or alleged untrue statement of a material fact or the omission or alleged omission of a material fact relates to information supplied by Xxxxxx Xxxxxxx or Discover. The parties hereby agree that information set forth in Schedule 4 shall be deemed supplied by Xxxxxx Xxxxxxx, and all other information shall be deemed supplied by Discover.
ARTICLE 8
If to Xxxxxx Xxxxxxx to:
[ ]
If to Discover to:
[ ]
or to such other addresses or telecopy numbers as may be specified by like notice to the other party. All such notices, requests and other communications shall be deemed given, (a) when delivered in person or by courier or a courier services, (b) if sent by facsimile transmission (receipt confirmed) on a Business Day prior to 5 p.m. in the place of receipt, on the date of transmission (or, if sent after 5 p.m., on the following Business Day) or (c) if mailed by certified mail (return receipt requested), on the date specified on the return receipt.
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(b) No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.
Section 8.05. Governing Law. This Agreement shall be construed in accordance with and governed by the law of the State of New York, without regard to the conflicts of laws rules thereof.
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parties with respect to the subject matter hereof and thereof. No representation, inducement, promise, understanding, condition or warranty not set forth herein or in the other Distribution Documents has been made or relied upon by any party hereto or any member of their Group with respect to the transactions contemplated by the Distribution Documents. To the extent that the provisions of this Agreement are inconsistent with the provisions of any other Distribution Document, the provisions of such other Distribution Document shall prevail.
Section 8.09. Jurisdiction. Any Action seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in the United States District Court for the Southern District of New York or any other New York State court sitting in New York County, and each of the parties hereby consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 8.01 shall be deemed effective service of process on such party.
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