Exhibit 4-X
_____________________________________________________________________________
MSDW CAPITAL TRUST ( )
CAPITAL SECURITIES GUARANTEE AGREEMENT
Between
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
(as Guarantor)
and
THE BANK OF NEW YORK
(as Guarantee Trustee)
, 1998
TABLE OF CONTENTS
Page
----
ARTICLE I.
DEFINITIONS
SECTION 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II.
TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application . . . . . . . . . . . 4
SECTION 2.2. List of Holders . . . . . . . . . . . . . . . . . . . 4
SECTION 2.3. Reports by the Guarantee Trustee . . . . . . . . . . . 4
SECTION 2.4. Periodic Reports to the Guarantee Trustee . . . . . . 4
SECTION 2.5. Evidence of Compliance with Conditions Precedent . . . 4
SECTION 2.6. Events of Default; Waiver . . . . . . . . . . . . . . 5
SECTION 2.7. Event of Default; Notice . . . . . . . . . . . . . . . 5
SECTION 2.8. Conflicting Interests . . . . . . . . . . . . . . . . 5
ARTICLE III.
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 3.1. Powers and Duties of the Guarantee Trustee . . . . . . 5
SECTION 3.2. Certain Rights of Guarantee Trustee . . . . . . . . . 6
SECTION 3.3. Indemnity . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.4. Expenses . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE IV.
GUARANTEE TRUSTEE
SECTION 4.1. Guarantee Trustee; Eligibility . . . . . . . . . . . . 8
SECTION 4.2. Appointment, Removal and Resignation of the Guarantee
Trustee . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE V.
GUARANTEE
SECTION 5.1. Guarantee . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 5.2. Waiver of Notice and Demand . . . . . . . . . . . . . 9
SECTION 5.3. Obligations Not Affected . . . . . . . . . . . . . . . 9
SECTION 5.4. Rights of Holders . . . . . . . . . . . . . . . . . . 10
SECTION 5.5. Guarantee of Payment . . . . . . . . . . . . . . . . . 10
SECTION 5.6. Subrogation . . . . . . . . . . . . . . . . . . . . . 10
SECTION 5.7. Independent Obligations . . . . . . . . . . . . . . . 11
ARTICLE VI.
COVENANTS AND SUBORDINATION
SECTION 6.1. Subordination . . . . . . . . . . . . . . . . . . . . 11
SECTION 6.2. Pari Passu Guarantees . . . . . . . . . . . . . . . . 11
ARTICLE VII.
TERMINATION
SECTION 7.1. Termination . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE VIII.
MISCELLANEOUS
SECTION 8.1. Successors and Assigns . . . . . . . . . . . . . . . . 12
SECTION 8.2. Amendments . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 8.3. Notices . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 8.4. Benefit . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 8.5. Interpretation . . . . . . . . . . . . . . . . . . . . 13
SECTION 8.6. Governing Law . . . . . . . . . . . . . . . . . . . . 14
SECTION 8.7. Counterparts . . . . . . . . . . . . . . . . . . . . . 14
Certain Sections of this Guarantee Agreement relating
to Sections 310 through 318 of the
Trust Indenture Act of 1939 Trust Indenture
Guarantee Agreement
Act Section
- --- -------
Section
(ss.) 310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(a)
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(a)
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8, 4.1(c)
(ss.) 311(a) . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(ss.) 312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(ss.) 313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
(ss.) 314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1, 2.5, 3.2
(ss.) 315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(d)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(c)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(d)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(ss.) 316(a) . . . . . . . . . . . . . . . . . . . . . . . . . 1.1,2.6, 5.4
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(ss.) 317(a)(1) . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(ss.) 318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
Note: This reconciliation and tie shall not, for any purpose, be deemed to be
a part of the Guarantee Agreement.
This GUARANTEE AGREEMENT, dated as of , 1998 is executed
and delivered by MORGAN STANLEY, DEAN WITTER, DISCOVER & CO., a Delaware
corporation (the"Guarantor") having its principal office at 1585 Broadway,
New York, New York 10036 and The Bank of New York, a New York banking
corporation, as trustee (the"Guarantee Trustee"), for the benefit of the
Holders (as defined herein) from time to time of the Capital Securities (as
defined herein) of MSDW Capital Trust ( ), a Delaware statutory business
trust (the "Issuer Trust").
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the"Trust
Agreement"), dated as of , 1998, among Morgan Stanley, Dean Witter,
Discover & Co., as Depositor, The Bank of New York, as Property Trustee
(the"Property Trustee"), The Bank of New York (Delaware), as Delaware Trustee
(the "Delaware Trustee") (collectively, the "Issuer Trustees"), two
individuals selected by the holders of the Common Securities to act as
administrators with respect to the Issuer Trust (the "Administrators") and
the Holders from time to time of preferred undivided beneficial ownership
interests in the assets of the Issuer Trust, the Issuer Trust is issuing
$ aggregate Liquidation Amount (as defined herein) of its _____%
Capital Securities, Liquidation Amount $25 per capital security (the "Capital
Securities"), representing preferred undivided beneficial ownership interests
in the assets of the Issuer Trust and having the terms set forth in the Trust
Agreement;
WHEREAS, the Capital Securities will be issued by the Issuer Trust and
the proceeds thereof, together with the proceeds from the issuance of the
Issuer Trust's Common Securities (as defined herein), will be used to
purchase the Junior Subordinated Debentures due ________, ____ (as defined in
the Trust Agreement) (the "Junior Subordinated Debentures") of the Guarantor
which will be deposited with The Bank of New York, as Property Trustee under
the Trust Agreement, as trust assets; and
WHEREAS, as incentive for the Holders to purchase the Capital
Securities, the Guarantor desires irrevocably and unconditionally to agree,
to the extent set forth herein, to pay to the Holders of the Capital
Securities the Guarantee Payments (as defined herein) and to make certain
other payments on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase of the Capital
Securities by each Holder, which purchase the Guarantor hereby acknowledges
shall benefit the Guarantor, and intending to be legally bound hereby, the
Guarantor executes and delivers this Guarantee Agreement for the benefit of
the Holders from time to time of the Capital Securities.
ARTICLE I.
DEFINITIONS
SECTION 1.1. Definitions.
As used in this Guarantee Agreement, the terms set forth below shall,
unless the context otherwise requires, have the following meanings.
Capitalized terms used but not otherwise defined herein shall have the
meanings assigned to such terms in the Trust Agreement as in effect on the
date hereof.
"Additional Amounts" has the meaning specified in the Trust Agreement.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this
definition,"control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly,whether through the ownership of voting securities, by contract or
otherwise;and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Capital Securities" shall have the meaning specified in the first
recital of this Guarantee Agreement.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer Trust.
"Distributions" means preferential cumulative cash distributions
accumulating from , 1998 and payable quarterly in arrears
on__________ and _________ of each year, commencing _________, 1998, at the
annual rate of _____% of the Liquidation Amount.
"Event of Default" means (i) a default by the Guarantor in any of its
payment obligations under this Guarantee Agreement, or (ii) a default by the
Guarantor in any other obligation hereunder that remains unremedied for 30
days.
"Guarantee Agreement" means this Guarantee Agreement, as
modified,amended or supplemented from time to time.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Capital Securities, to the extent
not paid or made by or on behalf of the Issuer Trust: (i) any accumulated and
unpaid Distributions required to be paid on the Capital Securities, to the
extent the Issuer Trust shall have funds on hand available therefor at such
time, (ii) the Redemption Price, with respect to the Capital Securities
called for redemption by the Issuer Trust to the extent that the Issuer Trust
shall have funds on hand available therefor at such time, and (iii) upon a
voluntary or involuntary dissolution, winding-up or liquidation of the Issuer
Trust, unless Junior Subordinated Debentures are distributed to the Holders,
the lesser of (a) the aggregate of the Liquidation Amount and all accumulated
and unpaid Distributions to the date of payment and (b) the amount of assets
of the Issuer Trust remaining available for distribution to Holders on
liquidation of the Issuer Trust (in either case, the"Liquidation
Distribution").
"Guarantee Trustee" means The Bank of New York, until a Successor
Guarantee Trustee has been appointed and has accepted such appointment
pursuant to the terms of this Guarantee Agreement and thereafter means each
such Successor Guarantee Trustee.
"Guarantor" shall have the meaning specified in the first paragraph of
this Guarantee Agreement.
"Holder" means any holder, as registered on the books and records of the
Issuer Trust, of any Capital Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Capital
Securities have given any request, notice, consent or waiver hereunder,
"Holder"shall not include the Guarantor, the Guarantee Trustee, or any
Affiliate of the Guarantor or the Guarantee Trustee.
"Indenture" means the Junior Subordinated Indenture dated as of ,
1998, between Morgan Stanley, Dean Witter, Discover & Co. and The Bank of New
York, as trustee, as may be modified, amended or supplemented from time to
time.
"Issuer Trust" shall have the meaning specified in the first paragraph
of this Guarantee Agreement.
"Liquidation Amount" means the stated amount of $25 per Capital
Security.
"Majority in Liquidation Amount of the Capital Securities" means,except
as provided by the Trust Indenture Act, Capital Securities representing more
than 50% of the aggregate Liquidation Amount of all then outstanding Capital
Securities issued by the Issuer Trust.
"Like Amount" means (i) with respect to a redemption of Trust
Securities, Trust Securities having a Liquidation Amount equal to that
portion of the principal amount of Junior Subordinated Debentures to be
contemporaneously redeemed in accordance with Junior Subordinated Indenture,
allocated to the Common Securities and to the Capital Securities based upon
the relative Liquidation Amounts of such classes and (ii) with respect to a
distribution of Junior Subordinated Debentures to Holders of Trust Securities
in connection with a dissolution or liquidation of the Issuer Trust, Junior
Subordinated Debentures having a principal amount equal to the Liquidation
Amount of the Trust Securities of the Holder to whom such Junior Subordinated
Debentures are distributed.
"Officers' Certificate" means a certificate signed by any one of the
following: the Chairman of the Board, the President, the Chief Financial
Officer, the Chief Strategic and Administrative Officer, the Chief Legal
Officer, the Treasurer, any Assistant Treasurer of the Company or any other
person authorized by the Board of Directors to execute any such certificate,
and delivered to the Guarantee Trustee. Any Officers' Certificate delivered
with respect to compliance with a condition or covenant provided for in this
Guarantee Agreement shall include:
(a) a statement by each officer signing the Officers' Certificate that
such officer has read the covenant or condition and the definitions relating
thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by such officer in rendering the Officers'
Certificate;
(c) a statement that such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether, in the opinion of such officer, such
condition or covenant has been complied with.
"Person" means a legal person, including any individual,corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever
nature.
"Redemption Date" means, with respect to any Capital Security to be
redeemed, the date fixed for such redemption by or pursuant to the Trust
Agreement; provided that each Junior Subordinated Debenture Redemption Date
and the stated maturity of the Junior Subordinated Debentures shall be a
Redemption Date for a Like Amount of Capital Securities.
"Redemption Price" shall have the meaning specified in the Trust
Agreement.
"Responsible Officer" means, when used with respect to the Guarantee
Trustee, any officer assigned to the Corporate Trust Office, including any
managing director, vice president, assistant vice president, assistant
treasurer, assistant secretary or any other officer of the Guarantee Trustee
customarily performing functions similar to those performed by any of the
above designated officers and having direct responsibility for the
administration of this Indenture, and also, with respect to a particular
matter, any other officer to whom such matter is referred because of such
officer's knowledge of and familiarity with the particular subject.
"Senior Indebtedness" shall have the meaning specified in the Indenture.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.1.
"Trust Agreement" means the Amended and Restated Trust Agreement, dated
, 1998, executed by Morgan Stanley, Dean Witter, Discover & Co., as
Depositor, The Bank of New York (Delaware), as Delaware Trustee, and The Bank
of New York, as Property Trustee.
"Trust Indenture Act" means the Trust Indenture Act of 1939 (15 U.S.C.
ss.ss. 77aaa-77bbbb), as amended.
"Trust Securities" means the Common Securities and the Capital
Securities.
ARTICLE II.
TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application.
If any provision hereof limits, qualifies or conflicts with a provision
of the Trust Indenture Act that is required under such Act to be apart of and
govern this Guarantee Agreement, the provision of the Trust Indenture Act
shall control. If any provision of this Guarantee Agreement modifies or
excludes any provision of the Trust Indenture Act that may be so modified or
excluded, the latter provision shall be deemed to apply to this Indenture as
so modified or to be excluded, as the case may be.
SECTION 2.2. List of Holders.
(a) The Guarantor will furnish or cause to be furnished to the
Guarantee Trustee a list of Holders at the following times:
(i) quarterly, not more than 15 days after _________, _______,
__________ and ________ in each year, a list, in such form as the
Guarantee Trustee may reasonably require, of the names and addresses of
the Holders as of such _________, _________, _________ and __________;
and
(ii) at such other times as the Guarantee Trustee may request in
writing, within 30 days after the receipt by the Guarantor of any such
request, a list of similar form and content as of a date not more than
15 days prior to the time such list is furnished.
(b) The Guarantee Trustee shall comply with the requirements of Section
312(b) of the Trust Indenture Act.
SECTION 2.3. Reports by the Guarantee Trustee.
Not later than January 31 of each year, commencing January 31, 1999, the
Guarantee Trustee shall provide to the Holders such reports, if any, as are
required by Section 313 of the Trust Indenture Act in the form and in the
manner provided by Section 313 of the Trust Indenture Act. The Guarantee
Trustee shall also comply with the requirements of Section 313(d) of the
Trust Indenture Act.
SECTION 2.4. Periodic Reports to the Guarantee Trustee.
The Guarantor shall provide to the Guarantee Trustee, and the Holders
such documents, reports and information, if any, as required by Section 314
of the Trust Indenture Act and the compliance certificate required by Section
314 of the Trust Indenture Act, in the form, in the manner and at the times
required by Section 314 of the Trust Indenture Act.
SECTION 2.5. Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide to the Guarantee Trustee such evidence of
compliance with such conditions precedent, if any, provided for in this
Guarantee Agreement that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer pursuant to Section 314(c)(1) may be given in the form of
an Officers' Certificate.
SECTION 2.6. Events of Default; Waiver.
The Holders of a Majority in Liquidation Amount of the Capital
Securities may, by vote, on behalf of the Holders, waive any past Event of
Default and its consequences. Upon such waiver, any such Event of Default
shall cease to exist, and any Event of Default arising therefrom shall be
deemed to have been cured, for every purpose of this Guarantee Agreement, but
no such waiver shall extend to any subsequent or other default or Event of
Default or impair any right consequent therefrom.
SECTION 2.7. Event of Default; Notice.
(a) The Guarantee Trustee shall, within 90 days after the occurrence of
an Event of Default, transmit by mail, first class postage prepaid, to the
Holders, notices of all Events of Default known to the Guarantee Trustee,
unless such Events of Default have been cured before the giving of such
notice;provided that, except in the case of a default in the payment of a
Guarantee Payment, the Guarantee Trustee shall be protected in withholding
such notice if and so long as the Board of Directors, the executive committee
or a trust committee of directors and/or Responsible Officers of the
Guarantee Trustee in good faith determines that the withholding of such
notice is in the interests of the Holders.
(b) The Guarantee Trustee shall not be deemed to have knowledge of any
Event of Default unless a Responsible Officer charged with the administration
of this Guarantee Agreement shall have received written notice of such Event
of Default.
SECTION 2.8. Conflicting Interests.
The Trust Agreement shall be deemed to be specifically described in this
Guarantee Agreement for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III.
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 3.1. Powers and Duties of the Guarantee Trustee.
(a) This Guarantee Agreement shall be held by the Guarantee Trustee for
the benefit of the Holders, and the Guarantee Trustee shall not transfer this
Guarantee Agreement to any Person except a Holder exercising his or her
rights pursuant to Section 5.4(iv) or to a Successor Guarantee Trustee on
acceptance by such Successor Guarantee Trustee of its appointment to act as
Successor Guarantee Trustee hereunder. The right, title and interest of the
Guarantee Trustee, as such, hereunder shall automatically vest in any
Successor Guarantee Trustee, upon acceptance by such Successor Guarantee
Trustee of its appointment hereunder, and such vesting and cessation of title
shall be effective whether or not conveyancing documents have been executed
and delivered pursuant to the appointment of such Successor Guarantee
Trustee.
(b) If an Event of Default has occurred and is continuing, the
Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of
the Holders.
(c) The Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall be obligated to perform only such duties as are specifically set forth
in this Guarantee Agreement (including pursuant to Section 2.1), and no
implied covenants shall be read into this Guarantee Agreement against the
Guarantee Trustee. If an Event of Default has occurred (that has not been
cured or waived pursuant to Section 2.6), the Guarantee Trustee shall
exercise such of the rights and powers vested in it by this Guarantee
Agreement, and use the same degree of care and skill in its exercise thereof,
as a prudent person would exercise or use under the circumstances in the
conduct of his or her own affairs.
(d) No provision of this Guarantee Agreement shall be construed to
relieve the Guarantee Trustee from liability for its own negligent action,
its own negligent failure to act or its own willful misconduct, except that:
(i) Prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Guarantee Trustee shall
be determined solely by the express provisions of this Guarantee
Agreement(including pursuant to Section 2.1), and the Guarantee
Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this
Guarantee Agreement (including pursuant to Section 2.1); and
(B) in the absence of bad faith on the part of the Guarantee
Trustee, the Guarantee Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to
the Guarantee Trustee and conforming to the requirements of this
Guarantee Agreement; but in the case of any such certificates or
opinions that by any provision hereof or of the Trust Indenture Act
are specifically required to be furnished to the Guarantee Trustee,
the Guarantee Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Guarantee Agreement;
(ii) The Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Guarantee
Trustee, unless it shall be proved that the Guarantee Trustee was
negligent in ascertaining the pertinent facts upon which such judgment
was made;
(iii) The Guarantee Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a Majority
in Liquidation Amount of the Capital Securities relating to the time,
method and place of conducting any proceeding for any remedy available
to the Guarantee Trustee, or exercising any trust or power conferred
upon the Guarantee Trustee under this Guarantee Agreement; and
(iv) No provision of this Guarantee Agreement shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or
in the exercise of any of its rights or powers if the Guarantee Trustee
shall have reasonable grounds for believing that the repayment of such
funds or liability is not assured to it under the terms of this
Guarantee Agreement or adequate indemnity against such risk or liability
is not reasonably assured to it.
SECTION 3.2. Certain Rights of Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) The Guarantee Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document reasonably believed by it to be
genuine and to have been signed, sent or presented by the proper party or
parties.
(ii) Any direction or act of the Guarantor contemplated by this
Guarantee Agreement shall be sufficiently evidenced by an Officers'
Certificate unless otherwise prescribed herein.
(iii) Whenever, in the administration of this Guarantee
Agreement, the Guarantee Trustee shall deem it desirable that a matter be
proved or established before taking, suffering or omitting to take any action
hereunder, the Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part,
request and conclusively rely upon an Officers' Certificate which, upon
receipt of such request from the Guarantee Trustee,shall be promptly
delivered by the Guarantor.
(iv) The Guarantee Trustee may consult with legal counsel, and the
advice or written opinion of such legal counsel with respect to legal matters
shall be full and complete authorization and protection in respect of any
action taken, suffered or omitted to be taken by it hereunder in good faith
and in accordance with such advice or opinion. Such legal counsel may be
legal counsel to the Guarantor or any of its Affiliates and may be one of its
employees. The Guarantee Trustee shall have the right at any time to seek
instructions concerning the administration of this Guarantee Agreement from
any court of competent jurisdiction.
(v) The Guarantee Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Guarantee Agreement at the
request or direction of any Holder, unless such Holder shall have provided to
the Guarantee Trustee such security and indemnity as would satisfy a
reasonable person in the position of the Guarantee Trustee, against the
costs,expenses (including attorneys' fees and expenses) and liabilities that
might be incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the Guarantee
Trustee.
(vi) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate,statement, instrument, opinion, report, notice, request,
direction, consent,order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Guarantee Trustee, in its
discretion, may make such further inquiry or investigation into such facts or
matters as it may see fit.
(vii) The Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through its agents or attorneys, and the Guarantee Trustee shall not be
responsible for any negligence or wilful misconduct on the part of any such
agent or attorney appointed with due care by it hereunder.
(viii) Whenever in the administration of this Guarantee
Agreement the Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking any
other action hereunder, the Guarantee Trustee (A) may request instructions
from the Holders,(B) may refrain from enforcing such remedy or right or
taking such other action until such instructions are received and (C) shall
be fully protected in acting in accordance with such instructions.
(b) No provision of this Guarantee Agreement shall be deemed to impose
any duty or obligation on the Guarantee Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it in
any jurisdiction in which it shall be illegal, or in which the Guarantee
Trustee shall be unqualified or incompetent in accordance with applicable
law,to perform any such act or acts or to exercise any such right, power,
duty or obligation. No permissive power or authority available to the
Guarantee Trustee shall be construed to be a duty to act in accordance with
such power and authority.
SECTION 3.3. Indemnity.
The Guarantor agrees to indemnify the Guarantee Trustee for, and to hold
it harmless against, any loss, liability or expense incurred without
negligence, wilful misconduct or bad faith on the part of the Guarantee
Trustee,arising out of or in connection with the acceptance or administration
of this Guarantee Agreement, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The Guarantee Trustee
will not claim or exact any lien or charge on any Guarantee Payments as a
result of any amount due to it under this Guarantee Agreement.
SECTION 3.4. Expenses.
The Guarantor shall from time to time reimburse the Guarantee Trustee
for its expenses and costs (including reasonable attorneys' or agents' fees)
incurred in connection with the performance of its duties hereunder.
ARTICLE IV.
GUARANTEE TRUSTEE
SECTION 4.1. Guarantee Trustee; Eligibility.
(a) There shall at all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a Person that is eligible pursuant to the Trust Indenture
Act to act as such and has a combined capital and surplus of at least
$50,000,000, and shall be a corporation meeting the requirements of
Section 310(c) of the Trust Indenture Act. If such corporation
publishes reports of condition at least annually,pursuant to law or to
the requirements of the supervising or examining authority, then, for
the purposes of this Section and to the extent permitted by the Trust
Indenture Act, the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published.
(b) If at any time the Guarantee Trustee shall cease to be eligible to
so act under Section 4.1(a), the Guarantee Trustee shall immediately resign
in the manner and with the effect set out in Section 4.2.
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act,
the Guarantee Trustee and Guarantor shall in all respects comply with the
provisions of Section 310(b) of the Trust Indenture Act.
SECTION 4.2. Appointment, Removal and Resignation of the Guarantee
Trustee.
(a) No resignation or removal of the Guarantee Trustee and no
appointment of a Successor Guarantee Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the Successor
Guarantee Trustee by written instrument executed by the Successor Guarantee
Trustee and delivered to the Holders and the Guarantee Trustee.
(b) Subject to the immediately preceding paragraph, a Guarantee Trustee
may resign at any time by giving written notice thereof to the Holders.The
Guarantee Trustee shall appoint a successor by requesting from at least three
Persons meeting the eligibility requirements such Person's expenses and
charges to serve as the Guarantee Trustee, and selecting the Person who
agrees to the lowest expenses and charges. If the instrument of acceptance
by the Successor Guarantee Trustee shall not have been delivered to the
Guarantee Trustee within 60 days after the giving of such notice of
resignation, the Guarantee Trustee may petition, at the expense of the
Guarantor, any court of competent jurisdiction for the appointment of a
Successor Guarantee Trustee.
(c) The Guarantee Trustee may be removed for cause at any time by Act
(within the meaning of Section 6.8 of the Trust Agreement) of the Holders of
at least a Majority in Liquidation Amount of the Capital Securities,
delivered to the Guarantee Trustee.
(d) If a resigning Guarantee Trustee shall fail to appoint a successor,
or if a Guarantee Trustee shall be removed or become incapable of acting as
Guarantee Trustee, or if any vacancy shall occur in the office of any
Guarantee Trustee for any cause, the Holders of the Capital Securities, by
Act of the Holders of record of not less than 25% in aggregate Liquidation
Amount of the Capital Securities then outstanding delivered to such Guarantee
Trustee, shall promptly appoint a successor Guarantee Trustee. If no
Successor Guarantee Trustee shall have been so appointed by the Holders of
the Capital Securities and such appointment accepted by the Successor
Guarantee Trustee, any Holder, on behalf of himself and all others similarly
situated, may petition any court of competent jurisdiction for the
appointment of a Successor Guarantee Trustee.
ARTICLE V.
GUARANTEE
SECTION 5.1. Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in full, on
a subordinated basis as set forth in Article VI, to the Holders the Guarantee
Payments (without duplication of amounts theretofore paid by or on behalf of
the Issuer Trust), as and when due, regardless of any defense, right of
set-off or counterclaim which the Issuer Trust may have or assert, except the
defense of payment. The Guarantor's obligation to make a Guarantee Payment
may be satisfied by direct payment of the required amounts by the Guarantor
to the Holders or by causing the Issuer Trust to pay such amounts to the
Holders. The Guarantor shall give prompt written notice to the Guarantee
Trustee in the event it makes any direct payment hereunder.
SECTION 5.2. Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of the Guarantee
Agreement and of any liability to which it applies or may apply,
presentment,demand for payment, any right to require a proceeding first
against the Guarantee Trustee, the Issuer Trust or any other Person before
proceeding against the Guarantor, protest, notice of nonpayment, notice of
dishonor, notice of redemption and all other notices and demands.
SECTION 5.3. Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor under
this Guarantee Agreement shall in no way be affected or impaired by reason of
the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer Trust of any express or implied
agreement, covenant, term or condition relating to the Capital Securities to
be performed or observed by the Issuer Trust;
(b) the extension of time for the payment by the Issuer Trust of all or
any portion of the Distributions (other than an extension of time for payment
of Distributions that results from the extension of any interest payment
period on the Junior Subordinated Debentures as so provided in the
Indenture), Redemption Price, Liquidation Distribution or any other sums
payable under the terms of the Capital Securities or the extension of time
for the performance of any other obligation under, arising out of, or in
connection with, the Capital Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Capital
Securities, or any action on the part of the Issuer Trust granting indulgence
or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or readjustment of
debt of, or other similar proceedings affecting, the Issuer Trust or any of
the assets of the Issuer Trust;
(e) any invalidity of, or defect or deficiency in, the Capital
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor (other than payment of
the underlying obligation), it being the intent of this Section 5.3 that the
obligations of the Guarantor hereunder shall be absolute and unconditional
under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain
the consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4. Rights of Holders.
The Guarantor expressly acknowledges that: (i) this Guarantee Agreement
will be deposited with the Guarantee Trustee to be held for the benefit of
the Holders; (ii) the Guarantee Trustee has the right to enforce this
Guarantee Agreement on behalf of the Holders; (iii) the Holders of a Majority
in Liquidation Amount of the Capital Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available
to the Guarantee Trustee in respect of this Guarantee Agreement or exercising
any trust or power conferred upon the Guarantee Trustee under this Guarantee
Agreement; and (iv) any Holder may institute a legal proceeding directly
against the Guarantor to enforce its rights under this Guarantee Agreement,
without first instituting a legal proceeding against the Guarantee Trustee,
the Issuer Trust or any other Person.
SECTION 5.5. Guarantee of Payment.
This Guarantee Agreement creates a guarantee of payment and not of
collection. This Guarantee Agreement will not be discharged except by
payment of the Guarantee Payments in full (without duplication of amounts
theretofore paid by the Issuer Trust) or upon the distribution of Junior
Subordinated Debentures to Holders as provided in the Trust Agreement.
SECTION 5.6. Subrogation.
The Guarantor shall be subrogated to all rights (if any) of the Holders
against the Issuer Trust in respect of any amounts paid to the Holders by the
Guarantor under this Guarantee Agreement; provided, however, that the
Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to enforce or exercise any rights which it may acquire by
way of subrogation or any indemnity, reimbursement or other agreement, in all
cases as a result of payment under this Guarantee Agreement, at the time of
any such payment, any amounts are due and unpaid under this Guarantee
Agreement or any payments are due to the holders of Capital Securities under
the Trust Agreement. If any amount shall be paid to the Guarantor in
violation of the preceding sentence, the Guarantor agrees to hold such amount
in trust for the Holders and to pay over such amount to the Holders.
SECTION 5.7. Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer Trust with respect to the
Capital Securities and that the Guarantor shall be liable as principal and as
debtor hereunder to make Guarantee Payments pursuant to the terms of this
Guarantee Agreement notwithstanding the occurrence of any event referred to
in subsections(a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI.
COVENANTS AND SUBORDINATION
SECTION 6.1. Subordination.
This Guarantee Agreement will constitute an unsecured obligation of the
Guarantor and will rank subordinate and junior in right of payment to all
Senior Indebtedness of the Guarantor to the extent and in the manner set
forth in the Indenture with respect to the Junior Subordinated Debentures,
and the provisions of Article XIII of the Indenture will apply, mutatis
mutandis, to the obligations of the Guarantor hereunder. The obligations of
the Guarantor hereunder do not constitute Senior Indebtedness of the
Guarantor.
SECTION 6.2. Pari Passu Guarantees.
The obligations of the Guarantor under this Guarantee Agreement shall
rank pari passu with any similar guarantee agreements issued by the Guarantor
on behalf of the holders of preferred or capital securities issued by the
Issuer Trust and with any other security, guarantee or other obligation that
is expressly stated to rank pari passu with the obligations of the Guarantor
under this Guarantee Agreement.
ARTICLE VII.
TERMINATION
SECTION 7.1. Termination.
This Guarantee Agreement shall terminate and be of no further force and
effect upon (i) full payment of the Redemption Price of all Capital
Securities, (ii) the distribution of Junior Subordinated Debentures to the
Holders in exchange for all of the Capital Securities or (iii) full payment
of the amounts payable in accordance with Article IX of the Trust Agreement
upon liquidation of the Issuer Trust. Notwithstanding the foregoing, this
Guarantee Agreement will continue to be effective or will be reinstated, as
the case maybe, if at any time any Holder is required to repay any sums paid
with respect to Capital Securities or this Guarantee Agreement.
ARTICLE VIII.
MISCELLANEOUS
SECTION 8.1. Successors and Assigns.
All guarantees and agreements contained in this Guarantee Agreement
shall bind the successors, assigns, receivers, trustees and representatives
of the Guarantor and shall inure to the benefit of the Holders of the Capital
Securities then outstanding. Except in connection with a consolidation,
merger or sale involving the Guarantor that is permitted under Article IX of
the Indenture and pursuant to which the assignee agrees in writing to perform
the Guarantor's obligations hereunder, the Guarantor shall not assign its
obligations hereunder, and any purported assignment that is not in accordance
with these provisions shall be void.
SECTION 8.2. Amendments.
Except with respect to any changes that do not materially adversely
affect the rights of the Holders (in which case no consent of the Holders
will be required), this Guarantee Agreement may only be amended with the
prior approval of the Holders of not less than a Majority in Liquidation
Amount of the Capital Securities. The provisions of Article VI of the Trust
Agreement concerning meetings of the Holders shall apply to the giving of
such approval.
SECTION 8.3. Notices.
Any notice, request or other communication required or permitted to be
given hereunder shall be in writing, duly signed by the party giving such
notice, and delivered, telecopied (confirmed by delivery of the original) or
mailed by first class mail as follows:
(a) if given to the Guarantor, to the address or telecopy number set
forth below or such other address or telecopy number or to the attention of
such other Person as the Guarantor may give notice to the Holders:
Morgan Stanley, Dean Witter,
Discover & Co.
1585 Broadway
New York, NY 10036
Facsimile No.: (212) 761-0331
Attention: Office of the Secretary
(b) if given to the Issuer Trust, in care of the Guarantee Trustee,at
the Issuer Trust's (and the Guarantee Trustee's) address set forth below or
such other address or telecopy number or to the attention of such other
Personas the Guarantee Trustee on behalf of the Issuer Trust may give notice
to the Holders:
c/o The Bank of New York
101 Barclay Street, Floor 21 West
New York, NY 10286
Facsimile No.: (212) 815-5915
Attention: Corporate Trust Administration
with a copy to:
Morgan Stanley, Dean Witter,
Discover & Co.
1585 Broadway
New York, NY 10036
Facsimile No.: (212) 761-0331
Attention: Office of the Secretary
(c) if given to the Guarantee Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, NY 10286
Facsimile No.: (212) 815-5915
Attention: Corporate Trust Administration
(d) if given to any Holder, at the address set forth on the books and
records of the Issuer Trust.
All notices hereunder shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no
notice was given, such notice or other document shall be deemed to have been
delivered on the date of such refusal or inability to deliver.
SECTION 8.4. Benefit.
This Guarantee Agreement is solely for the benefit of the Holders and is
not separately transferable from the Capital Securities.
SECTION 8.5. Interpretation.
In this Guarantee Agreement, unless the context otherwise requires:
(a) capitalized terms used in this Guarantee Agreement but not defined
in the preamble hereto have the respective meanings assigned to them in
Section 1.1;
(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or
amended from time to time;
(d) all references in this Guarantee Agreement to Articles and Sections
are to Articles and Sections of this Guarantee Agreement unless otherwise
specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Guarantee Agreement unless otherwise defined in this Guarantee
Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice versa; and
(g) the masculine, feminine or neuter genders used herein shall include
the masculine, feminine and neuter genders.
SECTION 8.6. Governing Law.
THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
SECTION 8.7. Counterparts.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.
MORGAN STANLEY, DEAN WITTER,
DISCOVER & CO.
as Guarantor
By:_______________________________________
Name:
Title:
The Bank of New York,
as Guarantee Trustee, and not
in its individual capacity
By:_______________________________________
Name:
Title: