As filed with the Securities and Exchange Commission on April 30, 1999,
File No. 811-08045
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-2
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 1
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MANAGED SECURITIES PLUS FUND, INC.
(Exact name of registrant as Specified in its Charter)
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575 Lexington Avenue
New York, New York 10022
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (212) 272-2093
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Stephen A. Bornstein
Bear Stearns Asset Management Inc.
245 Park Avenue
New York, New York 10167
(Name and Address of Agent for Service)
Copies to:
Philip H. Harris, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
PART A
INFORMATION REQUIRED IN PART A OF FORM N-2
Items 1, 2, 3.2, 4, 5, 6 and 7 of Part A are omitted pursuant to
Item G.3 of the General Instructions to Form N-2.
This Part A of Form N-2, which incorporates by reference the
entire Part B of this Form N-2, concisely sets forth certain information
about the Company (as hereinafter defined) that a prospective shareholder
should know before investing in the Company. Shareholders should read this
Part A of Form N-2 carefully and retain it for future reference. A copy of
Part B of this Form N-2 may be obtained without charge by calling (212)
272- 2093. Part B of this Form N-2 has been filed with the Securities and
Exchange Commission ("SEC") and is available along with other related
Company materials at the SEC's internet web site (http://www.sec.gov).
This Form N-2 is dated April 28, 1999.
Item 3. Fee Table and Synopsis.
1. INAPPLICABLE.
INAPPLICABLE.
Item 8. General Description of Registrant.
1. General: Managed Securities Plus Fund, Inc. (the
"Company"), is a non-diversified, closed-end management
investment company registered under the Investment
Company Act of 1940 (the "1940 Act"). The Company was
incorporated under the laws of Delaware on January 27,
1997.
2. Investment Objective and Policies:
a. Investment Objective. The Company's investment
objective is too seek a high level of total
return on its assets, through a combination of
capital appreciation and current income by
investing in securities and other financial
instruments, including but not limited to
fixed-income and equity securities as well as
securities convertible into common stock and
various derivative instruments. The Company may
also invest in high-yielding fixed income
securities such as corporate bonds, debentures,
notes, convertible securities, preferred stocks
and domestic and foreign government obligations.
Debt securities purchased by the Company may be
of any credit quality, including those rated in
lower rating categories of recognized
statistical rating agencies, such as securities
rated "BB" or lower by Standard &Poor's Ratings
Group Inc. ("S&P") or "Ba" or lower by Moody's
Investor Services, Inc. ("Moody's"), or may be
non-rated securities of comparable quality.
These debt securities are predominantly
speculative and involve major risk exposure to
adverse conditions and are often referred to in
the financial press as "junk bonds."
b. Investment Policies. The Company may invest in
any security or financial instrument in any
proportion as permitted by the 1940 Act and the
Commodity Exchange Act (so long as it is not a
commodity pool) and the Adviser (as hereinafter
defined) will allocate investments based on its
view of market opportunities. Risks inherent in
the Company's investment objective and policies
are discussed below. There can be no assurance
that the Company will achieve its investment
objective.
Equity Securities. Common stocks
represent the residual ownership interest in the
issuer and are entitled to the income and
increase in the value of the assets and business
of the entity after all of its obligations and
preferred stock are satisfied. Common stocks
generally have voting rights. Common stocks
fluctuate in price in response to many factors
including historical and prospective earnings of
the issuer, the value of its assets, general
economic conditions, interest rates, investor
perceptions and market liquidity.
Equity securities also include
preferred stock (whether or not convertible into
common stock) and debt securities convertible
into or exchangeable for common or preferred
stock. Preferred stock has a preference over
common stock in liquidation (and generally
dividends as well) but is subordinated to the
liabilities of the issuer in all respects. As a
general rule the market value of preferred stock
with a fixed dividend rate and no conversion
element varies inversely with interest rates and
perceived credit risk, while the market price of
convertible preferred stock generally also
reflects some element of conversion value.
Because preferred stock is junior to debt
securities and other obligations of the issuer,
deterioration in the credit quality of the
issuer will cause greater challenges in the
value of a preferred stock than in a more senior
debt security with similarly stated yield
characteristics. Debt securities that are
convertible into or exchangeable for preferred
common stock are liabilities of the issuer but
are generally subordinated to more senior
elements of the issuer's balance sheet. Although
such securities also generally reflect an
element of conversion value, their market value
also varies with interest rates and perceived
credit risk.
Convertible Securities. Convertible
securities typically offer lower interest rates
than if the securities were not convertible as a
result of their conversion feature. During
periods of rising interest rates, it is possible
that the potential for capital gain on
convertible securities may be less than that of
a common stock equivalent if the yield on the
convertible security is at a level that would
cause it to sell at a discount. Also, in the
absence of adequate anti-dilution provisions in
a convertible security, dilution in the value of
the Company's holding may occur in the event the
underlying stock is subdivided, additional
securities are issued, a stock dividend is
declared, or the issuer enters into another type
of corporate transaction which increases its
outstanding securities.
Convertible securities may or may not
be rated within the four highest categories by
S&P and Moody's and are, therefore, not
investment grade. To the extent that convertible
securities are rated lower than investment grade
or not rated, there would be greater risk as to
timely repayment of the principal of, and timely
payment of interest or dividends on, those
securities.
Securities that are rated BB or lower
by S&P or Ba or lower by Moody's are often
referred to in the financial press as "junk
bonds" and may include securities of issuers in
default. "Junk bonds" are considered by the
rating agencies to be predominately speculative
and may involve major risk exposures such as:
(i) vulnerability to economic downturns and
changes in interest rates; (ii) sensitivity to
adverse economic changes and corporate
developments; (iii) redemption or call
provisions which may be exercised at inopportune
times; and (iv) difficulty in accurately valuing
or disposing of such securities. There is no
minimum credit standard which is a prerequisite
for the Company to an investment in any security
and the Company may invest in securities of
issuers in default. Such securities may rank
junior to other outstanding securities and
obligations of the issuer, all or a significant
portion of whose debt securities may be secured
by substantially all of the issuer's assets.
Moreover, the Company may invest in securities
which are not protected by financial covenants
or limitations on additional indebtedness.
Nonconvertible Debt Securities. Under
normal market conditions, the Company may
invests in fixed income securities which are not
convertible or exchangeable for common stock.
These securities include preferred stocks,
bonds, debentures, notes, asset and mortgage
backed securities and money market instruments
such as commercial paper and bankers
acceptances. There is no minimum credit rating
for these securities in which the Company may
invest. See "Equity Securities" for a discussion
of credit considerations. Preferred stocks are
subject to the same types of risks as debt
instruments.
The Company may invest up to 100% of
its assets in nonconvertible fixed income
securities or high quality money market
instruments.
U.S. Government Securities. U.S.
Government Securities include: (1) U.S. Treasury
obligations and (2) obligations issued or
guaranteed by U.S. Government agencies and
instrumentalities ("Agencies") which are
supported by: (a) the full faith and credit of
the U.S. Government; (b) the right of the issuer
or guarantor to borrow an amount from a line of
credit with the U.S. Treasury; (c) discretionary
power of the U.S. Government to purchase
obligations of the Agencies; and (d) the credit
of the Agencies. U.S. Government Securities also
may include: (1) real estate mortgage investment
conduits ("REMICs") and other mortgage-backed
securities ("Mortgage- Backed Securities")
issued or guaranteed by an Agency; (2)
"when-issued" commitments relating to the
foregoing; and (3) repurchase agreements
("Repos") collateralized by U.S. Government
Securities. The Company may invest in U.S.
Government Securities of varying maturities and
interest rates, including investments in
obligations issued or guaranteed in zero coupon
securities ("Zero Coupon Securities").
Zero Coupon Securities. Zero Coupon
Securities are U.S. Treasury Notes and bonds
which are stripped of their unmatured interest
coupons and therefore pay no interest to its
holder during the life thereof. Because Zero
Coupon Securities do not pay interest prior to
maturity, such securities usually trade at a
deep discount from their face or par value and
such securities are subject to greater
fluctuations of market value in response to
changing interest rates than debt obligations of
comparable maturities which make current
distributions of interest. Even though the
holder of a Zero Coupon Security does not
receive interest payments prior to maturity, a
portion of the purchase price discount must be
accrued as income each year under current
federal tax law. In order to generate sufficient
cash to make distributions, the Company may have
to dispose of securities that it would otherwise
continue to hold, which, in some cases, may be
disadvantageous to the Company.
Asset-Backed and Mortgage-Backed
Securities. Mortgage-Backed Securities in which
the Company may invest include certificates
issued by the Government National Mortgage
Association ("GNMA"), the Federal National
Mortgage Association ("FNMA") and the Federal
Home Loan Mortgage Corporation ("FHLMC").
Mortgage-Backed Securities also include mortgage
pass-through certificates representing
participation interests in pools of mortgage
loans originated by the U.S. Government or
private lenders and guaranteed by U.S.
Government agencies such as GNMA, FNMA or FHLMC.
Guarantees by GNMA are backed by the full faith
and credit of the United States. Guarantees by
other agencies or instrumentalities of the U.S.
Government, such as FNMA or FHLMC, are not
backed by the full faith and credit of the
United States, although FNMA and FHLMC are
authorized to borrow from the U.S. Treasury to
meet their obligations.
Prepayments of principal may be made
at any time on the obligations underlying asset
and mortgage backed securities and are passed on
to the holders of the asset and mortgage backed
securities. As a result, if the Company
purchases such a security at a premium, faster
than expected prepayments will reduce and slower
than expected prepayments will increase yield to
maturity. Conversely, if the Company purchases
these securities at a discount, faster than
expected prepayments will increase, while slower
than expected prepayments will reduce, yield to
maturity.
The yield and payment characteristics
of Mortgage-Backed Securities differ from
traditional debt securities. Interest and
principal payments are made regularly and
frequently, usually monthly, over the life of
the mortgage loans unlike traditional debt
securities and principal may be prepaid at any
time. The value of most Mortgage-Backed
Securities tends to vary inversely with changes
in interest rates. Mortgage-Backed Securities,
however, may benefit less than traditional debt
securities from declining interest rates because
prepayment of mortgages tends to accelerate
during periods of declining interest rates. When
mortgage loans underlying Mortgage-Backed
Securities held by the Company are prepaid, the
Company may reinvest the prepaid amounts in
other income-producing securities, the yields of
which will reflect interest rates prevailing at
the time.
Commercial Paper. Commercial paper is a
short-term unsecured debt obligation of a
corporation generally sold at a discount from
face value and maturing from 30 to 270 days from
issuance. The Company will only purchase
dollar-denominated commercial paper rated A-1 by
S&P or P-1 by Moody's at the time of investment
("Eligible Commercial Paper").
Foreign Securities. Investments outside
the United States or denominated in non-U.S.
currencies pose currency exchange risks
(including blockage, devaluation and
non-exchangeability) as well as a range of other
potential risks which could include, depending
on the country involved, expropriation,
confiscatory taxation, political or social
instability, illiquidity, price volatility and
market manipulation. In addition, less
information may be available regarding non-U.S.
issuers and non-U.S. companies may not be
subject to accounting, auditing and financial
reporting standards and requirements comparable
to or as uniform as those of U.S. companies.
Further, foreign securities markets may not be
as liquid as U.S. markets. Transaction costs of
investing outside the U.S. generally are higher
than in the U.S. Higher costs result because of
the cost of converting a foreign currency to
dollars, the payment of fixed brokerage
commissions on some foreign exchanges and the
imposition of transfer taxes or transaction
charges by foreign exchanges. There generally is
less government supervision and regulation of
exchanges, brokers and issuers outside of the
U.S. than there is in the U.S. and there is
greater difficulty in taking appropriate legal
action in non-U.S. courts. Non-U.S. markets also
have different clearance and settlement
procedures which in some markets have at times
failed to keep pace with the volume of
transactions, thereby creating substantial
delays and settlement failures that could
adversely affect the Company's performance.
To the extent the Company does not or
is not able to hedge foreign exchange risks, the
Company may be exposed to additional risk due to
exchange rate fluctuations. The Company also may
hedge currency exchange risks where considered
economically justifiable. The Company may
attempt within the parameters of currency and
exchange controls that may be in effect, to
obtain rights to exchange its invested capital,
dividends, interest, fees, other distributions
and capital gains into convertible currencies.
Further, the Company may incur costs in
connection with conversions between various
currencies. Foreign exchange rates have been
highly volatile in recent years. The combination
of volatility and leverage gives rise to the
possibility of large profit and large loss. In
addition, there is counterparty risk since
currency trading is done on a principal to
principal basis.
Short Sales. The Company may make short
sales of securities. If the price of the
security sold short increases between the time
of the short sale and the time the Company
replaces the security borrowed for the short
sale, the Company will incur a loss; conversely,
if the price declines, the Company will realize
a capital gain. The Company will collateralize
its obligation to replace any security sold
short with cash, U.S. government securities or
other highly liquid securities. The Company will
not make a short sale if, after giving effect to
such sale, the market value of all securities
sold short exceeds 50% of the value of the
Company's assets.
Corporate Reorganizations. Subject to
the Company's policy of investing its assets in
fixed-income and equity securities, the Company
may invest without limit in securities for which
a tender or exchange offer has been made or
announced and in securities of companies for
which a merger, consolidation, liquidation or
similar reorganization proposal has been
announced if, in the judgment of the Adviser,
there is a reasonable prospect of capital
appreciation significantly greater than the
added portfolio turnover expenses inherent in
the short term nature of such transactions. The
principal risk is that such offers or proposals
may not be consummated within the time and under
the terms contemplated at the time of the
investment, in which case, unless such offers or
proposals are replaced by equivalent or
increased offers or proposals which are
consummated, the Company may sustain a loss.
Strategic Transactions. The Company may
engage in strategic transactions, purchase and
sell securities on a "when issued" and "delayed
delivery" basis, enter into Repos and lend
portfolio securities in certain circumstances,
in each case subject to the
limitations set forth below.
The Company may purchase and sell
derivative instruments such as exchange-listed
and over-the-counter put and call options on
securities, financial futures, equity and
fixed-income indices, and other financial
instruments; purchase and sell financial futures
and forward contracts and options thereon; and
enter into various interest rate and currency
transactions such as swaps, caps, floors or
collars. Collectively, all of the above are
referred to as "Strategic Transactions".
Strategic Transactions have risks
including the possible default or illiquidity of
the other party to the transaction. Furthermore
the ability to successfully use Strategic
Transactions depends on the Adviser's ability to
predict pertinent market movements, which cannot
be assured. Thus, the use of such Strategic
Transactions may result in losses greater than
if they had not been used, require the Company
to sell or purchase portfolio securities at
inopportune times or for prices other than
current market values, limit the amount of
appreciation the Company can realize on an
investment, or cause the Company to hold a
security it might otherwise sell. Money paid by
the Company as premium and money or other assets
placed in margin accounts in connection with
entering into Strategic Transactions are not
otherwise available to the Company for
investment purposes.
The Company may purchase and sell "when
issued" and "delayed delivery" securities. The
Company accrues no income on such securities
until the Company actually takes delivery of
such securities. These transactions are subject
to market fluctuation; the value of the
securities at delivery may be more or less than
their purchase price. The yields generally
available on comparable securities when delivery
occurs may be higher than yields on the
securities obtained pursuant to such
transactions. Because the Company relies on the
buyer or seller to consummate the transaction,
failure by the other party to complete the
transaction may result in the Company missing
the opportunity of obtaining a price or yield
considered to be advantageous. The Company will
engage in when issued and delayed delivery
transactions for the purpose of acquiring
securities consistent with the Company's
investment objective and policies.
The Company may enter into Repos
whereby the Company acquires securities and
agrees to resell the securities at an agreed
upon time and at an agreed upon price. The
difference between the purchase amount and
resale amount is accrued as interest in the
Company's net income. Failure of the seller to
repurchase the securities may cause losses for
the Company. Thus, the Company must consider the
credit-worthiness of such party. In the event of
default by such party, the Company may not have
a right to the underlying security and there may
be possible delays and expenses in liquidating
the security purchased, resulting in a decline
in its value and loss of interest.
The Company may lend its portfolio
securities to banks or broker-dealers, up to a
maximum of 33 1/3 % of the total assets of the
Company, provided such loans are callable at any
time and are continuously secured by collateral
consisting of cash or U.S. Government Securities
equal to at least 100% of the value of the
securities loaned, including accrued interest.
This percentage restriction does not apply to
repurchase agreements. The Company will receive
income for having made the loan. The Company is
the beneficial owner of the loaned securities so
that any gain or loss in the market price during
the loan inures to the Company and its
shareholders.
Non-Diversified Status. The Company's
classification as a "non-diversified" investment
company means that the proportion of its assets
that may be invested in the securities of a
single issuer is not limited by the 1940 Act.
However, the Company intends to conduct its
operations so as to qualify as a "regulated
investment company" for purposes of the Code,
which requires that, at the end of each quarter
of its taxable year, (i) at least 50% of the
market value of the Company's total assets be
invested in cash, U.S. Government Securities,
the securities of other regulated investment
companies and other securities, with such other
securities of any one issuer limited for the
purposes of this calculation to an amount not
greater than 5% of the value of the Company's
total assets and 10% of the outstanding voting
securities of such issuer, and (ii) not more
than 25% of the value of its total assets be
invested in the securities of any one issuer
(other than U.S. Government Securities or the
securities of other regulated investment
companies). Since a relatively high percentage
of the Company's assets may be invested in the
securities of a limited number of issuers, the
Company's portfolio securities may be more
susceptible to any single economic, political or
regulatory occurrence than the portfolio
securities of a diversified investment company.
Simultaneous Investments. Investment
decisions for the Company are made independently
from those of other investment companies or
accounts advised by the Adviser. However, if
such other investment companies or accounts are
prepared to invest in, or desire to dispose of,
securities of the type in which the Company
invests at the same time as the Company,
available investments or opportunities for sales
will be allocated equitably to each. In some
cases, this procedure may adversely affect the
size of the position obtained for or disposed of
by the Company or the price paid or received by
the Company.
c. The Company's investment objective and the
investment restrictions set forth in Item 17.2
are fundamental and may not be changed without
the approval of the holders of a majority of the
outstanding Common Stock and Preferred Stock,
each voting separately as a class. All other
investment policies or practices are considered
by the Company not to be fundamental and
accordingly may be changed by the Board of
Directors without stockholder approval.
d. See Item 8.2.b.
3. Risk Factors:
a. General: See Item 8.2.b.
b. INAPPLICABLE.
4. Other Policies: See Item 8.2.b.
5. Share Price Data: INAPPLICABLE.
6. Business Development Companies: INAPPLICABLE.
Item 9. Management.
1. General:
a. Board of Directors: The business and affairs of
the Company are managed under the direction of
the Board of Directors of the Company. Subject
to the Directors' authority, the Adviser
determines the investment of the Company's
assets, provides administrative services and
manages the Company's business and affairs.
b. Investment Adviser: The Company's investment
adviser is Bear Stearns Asset Management Inc.
(the "Adviser"), a wholly-owned subsidiary of
the Bear Stearns Companies Inc. ("Bear
Stearns"), which is located at 575 Lexington
Avenue, New York, New York 10022. Bear Stearns
is a holding company which, through its
subsidiaries including its principal subsidiary,
Bear, Stearns & Co. Inc., is a leading United
States investment banking, securities trading
and brokerage firm serving United States and
foreign corporation, governments and
institutional and individual investors. The
Adviser is a registered investment adviser and
offers, either directly or through affiliates,
investment advisory and administrative services
to open-end and closed-end investment funds and
other managed pooled investment vehicles with
net assets at March 31, 1999 of approximately
$10 billion.
The Adviser supervises and assists in
the day-to-day management of the Company's
affairs under an Investment Advisory Agreement
between the Adviser and the Company, subject to
the overall authority of the Company's Board of
Directors. Under the terms of the Investment
Advisory Agreement, the Company has agreed to
pay the Adviser a monthly fee at the rate of
0.075% per annum of the Company's average
monthly net assets.
From time to time, the Adviser may
waive receipt of its fees or voluntarily assume
certain Company expenses, which would have the
effect of lowering the Company's expense ratio
and increasing yield to investors at the time
such amounts are waived or assumed, as the case
may be. The Company will not pay the Adviser at
a later time for any amounts it may waive, nor
will the Company reimburse the Adviser for any
amounts it may assume.
c. Portfolio Management: Eli Wachtel is primarily
responsible for the day-to-day management of the
Company's portfolio and has been responsible for
the Company's portfolio since the Company's
inception in 1997. Mr. Wachtel is a Senior
Managing Director of Bear Stearns and has been
employed by Bear Stearns since January 1983.
d. Administrator: Under the terms of an
Administrative Services Agreement with the
Company, PFPC Inc. provides certain
administrative services to the Company. For
providing these services, the Company has agreed
to pay PFPC Inc. an annual fee of $80,000 plus
out of pocket expenses.
e. Custodian and Transfer Agent: Custodian Trust
Company, 101 Carnegie Center, Princeton, New
Jersey 08540, an affiliate of Bear Stearns, is
the Company's custodian (the "Custodian"). PFPC
Inc., Bellevue Corporate Center, 400 Bellevue
Parkway, Wilmington, Delaware 19809, is the
Company's transfer agent, dividend disbursing
agent and registrar for the Common Stock,
Preferred Stock and Notes (the "Transfer
Agent"). The Transfer Agent also provides
certain administrative services to the Company.
f. Expenses: The expenses to be borne by the
Company include: organizational costs, taxes,
interest, loan commitment fees, interest and
distributions paid on securities sold short,
brokerage fees and commissions, if any, fees of
board members who are not officers, directors,
employees or holders of 5% or more of the
outstanding voting securities of the Adviser, or
its affiliates, SEC fees, state Blue Sky
qualification fees, advisory, administrative and
fund accounting fees, charges of custodians,
transfer and dividend disbursing agents' fees,
certain insurance premiums, industry association
fees, outside auditing and legal expenses, costs
of maintaining the Company's existence, costs of
independent pricing services, costs attributable
to investor services (including, without
limitation, telephone and personnel expenses),
costs of shareholders' reports and meetings,
costs of preparing and printing certain
prospectuses and statements of additional
information, and any extraordinary expenses.
g. Affiliated Brokerage: Brokerage commissions may
be paid to Bear, Stearns & Co. Inc. and its
affiliates for executing transactions on an
agency basis only if the use of Bear, Stearns &
Co. Inc. and its affiliates is likely to result
in price and execution at least as favorable as
that obtainable from other qualified
broker-dealers.
2. Non-resident Managers: INAPPLICABLE.
3. Control Persons: Bear Stearns controls the Company
through the ownership of 100% of the Company's Common
Stock.
Item 10. Capital Stock, Long-Term Debt and Other Securities.
1. Capital Stock:
Common Stock
General. The Company is authorized to issue up
to 97,000 shares of Common Stock. The Company currently
has 32,037 shares of Common Stock outstanding, all of
which are beneficially owned by Bear Stearns. The Common
Stock has not been and will not be registered under the
Securities Act of 1933, as amended (the "Securities Act")
and as a consequence the Common Stock may be offered or
transferred only in a private transaction.
Dividends. Holders of Common Stock are entitled
to receive dividends when, as and if declared by the
Board of Directors out of funds legally available
therefor, provided that, so long as any Preferred Stock
is outstanding, no dividends or other distributions
(including redemptions and purchases) may be made with
respect to the Common Stock unless full dividends on the
Preferred Stock have been paid. In order to remain
qualified as a RIC, the Company distributes annually at
least 90% of its annual investment company taxable income
(not including net capital gains) to stockholders.
Conversion. The holders of Common Stock do not
have any rights to convert or exchange such shares into
shares of any other class or series of capital stock of
the Company.
Redemption. Holders of Common Stock have no
redemption or preemptive rights and are not liable for
further calls or assessments.
Voting Rights. Subject to the rights, if any, of
the holders of any class or series of Preferred Stock
(including the voting rights of the holders of the
Preferred Stock described herein), the holders of Common
Stock are entitled to one vote per share and will vote
together as a single class with the holders of Preferred
Stock on all matters submitted to the Company's
stockholders generally.
Rights Upon Liquidation. In the event of the
liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, after there have been
paid or set aside for the holders of all series of
Preferred Stock the full preferential amounts to which
such holders are entitled, the holders of Common Stock
are entitled to share equally and ratably in any assets
remaining after the payment of all debts and liabilities.
Preferred Stock
The Company is authorized to issue up to 2,000
shares of Preferred Stock. Subject to limitations
prescribed by Delaware law and the Company's Certificate
of Incorporation, the Board of Directors is expressly
authorized to provide for the issuance of all or any
shares of the Preferred Stock in one or more classes or
series, and to fix for each such class or series such
voting powers, full or limited, or no voting powers, and
such distinctive designations, preferences and relative,
participating, optional or other special rights and such
qualifications, limitations or restrictions thereof, as
shall be stated and expressed in the resolution or
resolutions adopted by the Board of Directors providing
for the issuance of such class or series and as may be
permitted by the Delaware General Corporation Law,
including, without limitation, the authority to provide
that any such class or series may be (i) subject to
redemption at such time or times and at such price or
prices; (ii) entitled to receive dividends (which may be
cumulative or non-cumulative) at such rates, on such
conditions, and at such times, and payable in preference
to, or in such relation to, the dividends payable on any
other class or classes or any other series; (iii)
entitled to such rights upon the dissolution of, or upon
any distribution of the assets of, the Company; or (iv)
convertible into, or exchangeable for, shares of any
other class or classes of stock, or of any other series
of the same or any other class or classes of stock, of
the Company at such price or prices or at such rates of
exchange and with such adjustments; all as may be stated
in such resolution or resolutions.
Preferred Stock, upon issuance against full
payment of the purchase price therefor, will be fully
paid and nonassessable. The specific terms of a
particular class or series of Preferred Stock is
described in the Certificate of Designation relating to
that class or series. The description of the Preferred
Stock set forth herein is subject in its entirety to the
actual provisions of the Certificate of Designation with
respect to the Preferred Stock, which is incorporated
herein by reference.
Restrictions on Transfer. The Preferred Stock
has not been and will not be registered under the
Securities Act and as a consequence the Preferred Stock
may be offered or transferred only in a private
transaction. The minimum amount of Preferred Stock that
may be transferred to, or held by, any one beneficial
owner is $4,000,000. All certificates representing shares
of Preferred Stock will bear a legend referring to the
restrictions described above.
Dividends. Holders of Preferred Stock are
entitled to receive, when, as and if declared by the
Board of Directors of the Company out of assets of the
Company legally available therefor, cash dividends, for
each quarterly dividend period, in an amount equal to
$13,270 per share per annum (the "Initial Rate")
(representing an annual dividend yield of 13.270%) until
and including December 30, 2006 (the "Initial Term"), and
thereafter in an amount equal to $1,000 per share per
annum (the "Special Rate") (representing an annual
dividend yield of 1.00%). Dividends on the Preferred
Stock will be payable quarterly on March 30, June 30,
September 30 and December 30 of each year (provided,
however, that if such date is not a Business Day, such
payments shall be due and payable on the next succeeding
Business Day). Each such dividend will be payable to
holders of record as they appear on the stock register of
the Company on such record dates, not exceeding 45 days
preceding the payment dates thereof, as shall be fixed by
the Board of Directors of the Company or a duly
authorized committee thereof. Dividends will be
cumulative from the date of original issue. Dividends
payable on the Preferred Stock for each full dividend
period shall be computed by dividing the rate per annum
by four. Dividends for any dividend period greater or
less than a full dividend period will be computed on the
basis of a 360-day year consisting of twelve 30-day
months and the actual number of days elapsed in the
period. For purposes of the Company's Certificate of
Designation, "Business Day" means any day other than a
Saturday, Sunday or other day on which banks are
authorized to be closed in New York, New York.
If any Preferred Stock is outstanding, no
dividends shall be declared or paid or set apart for
payment on any series of capital stock of the Company
ranking, as to dividends, on a parity with or junior to
the Preferred Stock for any period unless (i) full
cumulative dividends have been or contemporaneously are
declared and paid, or declared and a sum sufficient for
the payment thereof is set apart for such payments, on
the Preferred Stock for all past dividend periods and the
then-current dividend period and (ii) at the time of the
declaration of such dividend, the Preferred Stock has an
Asset Coverage (defined below) of at least 200%. When
dividends are not paid in full (or a sum sufficient for
such full payment is not set apart) upon the Preferred
Stock and the shares of any other series of capital stock
ranking on a parity as to dividends with the Preferred
Stock, all dividends declared upon Preferred Stock and
any other series of capital stock ranking on a parity as
to dividends with the Preferred Stock shall be declared
pro rata so that the amount of dividends declared per
share on the Preferred Stock and such other series of
capital stock shall in all cases bear to each other the
same ratio that accrued and unpaid dividends per share on
the Preferred Stock and such other series of capital
stock bear to each other.
Except as provided in the immediately preceding
paragraph, unless (i) full cumulative dividends on the
Preferred Stock have been or contemporaneously are
declared and paid or declared and a sum sufficient for
the payment thereof has been set apart for payment for
all past dividend periods, (ii) at the time of the
declaration of such dividend, the Preferred Stock has an
Asset Coverage of at least 200% after deducting the
amount of such dividend, no dividends (other than
dividends or distributions paid in shares of, or options,
warrants or rights to subscribe for or purchase shares of
Common Stock or other capital stock ranking junior to the
Preferred Stock as to dividends and upon liquidation)
shall be declared or paid or set aside for payment and no
other distribution shall be declared or made upon the
Common Stock or any other capital stock of the Company
ranking junior to or on a parity with the Preferred Stock
as to dividends or amounts upon liquidation, nor shall
any Common Stock or any other capital stock of the
Company ranking junior to or on a parity with the
Preferred Stock as to dividends or amounts upon
liquidation be redeemed, purchased or otherwise acquired
for any consideration (or any moneys to be paid to or
made available for a sinking fund for the redemption of
any such stock) by the Company (except by conversion into
or exchange for other capital stock of the Company
ranking junior to the Preferred Stock as to dividends and
amounts upon liquidation).
Voting Rights. Each holder of Preferred Stock
will be entitled to one vote per share on all matters
submitted to the Company's stockholders generally and,
except as expressly required by applicable law or except
as indicated below, will vote together on such matters as
a single class with the holders of shares of Common
Stock, except in those circumstances described below.
At all times that Preferred Stock is outstanding
and the Company is registered as an investment company
under the 1940 Act, the holders of Preferred Stock shall
have the right to elect two directors to the Company's
Board of Directors. If the dividends on the Preferred
Stock have been in arrears and unpaid for eight
consecutive quarterly dividend periods, the holders of
the Preferred Stock, voting separately as a class, will
be entitled to elect a majority of the directors to serve
on the Company's Board of Directors. Such election shall
occur either by written consent, at a special meeting of
the holders of Preferred Stock (if the right to such
election occurs more than 90 days prior to the next
annual meeting of stockholders), or at the next annual
meeting of stockholders. Such right shall continue until
there are no dividends in arrears upon the Preferred
Stock. Each director elected by the holders of the
Preferred Stock shall continue to serve as such director
for the term for which he or she shall have been elected,
or, if earlier, until such time as such arrearage shall
cease to exist.
The affirmative vote or consent of the holders
of majority of the outstanding Preferred Stock, voting
separately as a class, is necessary to: (i) create any
additional class or series of stock of the Company; (ii)
alter or amend the Company's investment objective or
fundamental investment limitations as set forth herein;
or (iii) alter or amend the provisions of the Company's
Certificate of Incorporation (including the Certificate
of Designation establishing the Preferred Stock) so as to
adversely affect the voting powers, preferences or
special rights of the holders of Preferred Stock of the
Company, provided, however, that a sale of all or
substantially all of the property or business of the
Company or a merger or consolidation of the Company into
or with any other corporation or of any other corporation
into or with the Company, or the liquidation, dissolution
or winding up of the Company will not constitute such an
alteration or amendment. The affirmative vote or consent
of the holders of at least a majority of the outstanding
shares of Common Stock, voting separately as a class,
also is required for any of the preceding actions.
A majority vote of the holders of the Common
Stock and the Preferred Stock, voting together as a
single class, shall be necessary to effectuate the
following actions: (i) sell all or substantially all the
property or business of the Company, or merge or
consolidate any other corporation into or with the
Company; or (ii) liquidate, dissolve or wind-up the
Company ; provided, however, that the affirmative vote or
consent of the holders of at least a majority of the
outstanding Preferred Stock, voting separately as a
class, shall be necessary to sell all or substantially
all of the property or business of the Company, or merge
or consolidate the Company into or with any other
corporation or merge or consolidate any other corporation
into or with the Company, if such sale, merger or
consolidation would result in consideration being paid to
the holders of Preferred Stock which is less than (i) the
sum of the present values of all future dividend payments
due on the Preferred Stock (rounded to the nearest cent
per share), discounted on a quarterly basis at the "Class
Vote Discount Rate" to the dividend payment date
immediately preceding the date of such sale, merger or
consolidation, plus (ii) any accrued but unpaid dividends
up to and including the date of such sale, merger or
consolidation. "Class Vote Discount Rate" shall mean
2.47% per quarter (which equates to a semiannual
equivalent rate per annum of 10.00%).
"Indebtedness" means, with respect to the
Company, without duplication, and whether or not
contingent, (i) all indebtedness of the Company for
borrowed money or which is evidenced by a note, bond,
debenture or similar instrument, including any
indebtedness provided by a bank that is not an affiliate
of the Company, (ii) all obligations of the Company in
respect of letters of credit or bankers' acceptances
issued or created for the account of the Company, (iii)
all liabilities of others of the kind described in the
preceding clause (i) secured by any mortgage, lien,
pledge, charge, security interest or encumbrance of any
kind on any property owned by the Company even though the
Company has not assumed or become liable for the payment
of such liabilities, (iv) to the extent not otherwise
included, any guarantee by the Company of any
indebtedness of any other individual, corporation,
partnership, joint venture, association, joint-stock
company, limited liability company, trust, unincorporated
organization or government or any agency or political
subdivision thereof, or other obligations described in
clauses (i) through (iii) above, and (v) any "acquisition
indebtedness" or indebtedness which would give rise to
unrelated trade or business income within the meaning of
Section 514 of the Code.
Redemption. The Preferred Stock will not be
redeemable at the option of the Company, except upon the
occurrence of a Tax Event (as defined in the Certificate
of Designation) or certain other events as set forth in
the Certificate of Designation with respect to the
Preferred Stock, in which case the Preferred Stock may be
redeemed as required by the Certificate of Designation.
Conversion. The holders of Preferred Stock shall
not have any rights to convert or exchange such shares
into shares of any other class or series of capital stock
of the Company.
Rights Upon Liquidation. In the event of any
voluntary or involuntary liquidation, dissolution or
winding up of the Company, the holders of the Preferred
Stock at the time outstanding will be entitled to receive
out of assets of the Company available for distribution
to stockholders, before any distribution of assets is
made to holders of Common Stock or any other class of
stock ranking junior to the Preferred Stock upon
liquidation, liquidating distributions in an amount equal
to $100,000 per share.
After payment of the full amount of the
liquidating distributions to which they are entitled, the
holders of Preferred Stock will have no right or claim to
any of the remaining assets of the Company. In the event
that, upon any such voluntary or involuntary liquidation,
dissolution or winding up, the available assets of the
Company are insufficient to pay the amount of the
liquidation distributions on all outstanding Preferred
Stock and the corresponding amounts payable on all shares
of other series of capital stock of the Company ranking
on a parity with the Preferred Stock in the distribution
of assets upon any liquidation, dissolution or winding up
of the affairs of the Company, then the holders of the
Preferred Stock and such other series of capital stock
shall share ratably in any such distribution of assets in
proportion to the full liquidating distributions to which
they would otherwise be respectively entitled.
For such purposes, the consolidation or merger
of the Company with or into any other corporation, the
consolidation or merger of any other corporation with or
into the Company or the sale of all or substantially all
of the property or business of the Company, shall not be
deemed to constitute a liquidation, dissolution or
winding up of the Company.
Asset Coverage. In order to declare a dividend
or make a distribution on the Common Stock, the 1940 Act
requires the Preferred Stock to have an asset coverage of
200%. For purposes of this 1940 Act asset coverage
requirement, "asset coverage" means the ratio which the
value of the total assets of the Company, less all
liabilities and indebtedness not represented by senior
securities, bears to the aggregate amount of senior
securities representing indebtedness of the Company plus
the aggregate of the involuntary liquidation preference
of the Preferred Stock.
2. Long-Term Debt:
a. The Company has outstanding $50,000 aggregate
principal amounts of Floating Rate Notes paying
interest quarterly at a floating rate equal to
three-month LIBOR plus 2.50% per annum over the
yield of the one-year constant maturity Treasury
security. The Notes are redeemable at face value
at any time by the Company and are due upon the
earlier of December 30, 2017 and the dissolution
of the Company.
b. INAPPLICABLE.
c. INAPPLICABLE.
d. INAPPLICABLE.
e. INAPPLICABLE.
3. General: INAPPLICABLE
4. Taxes: The Company intends to qualify as a Regulated
Investment Company under Subchapter M of the
Internal Revenue code of 1986, as amended (the "Code").
As such, the Company will distribute all of its net
income and capital gains to its shareholders and such
distributions will generally be taxable as such to its
shareholders. While shareholders may be proportionately
liable for taxes on income and gains of the Company,
shareholders not subject to tax on their income will not
be required to pay tax on amounts distributed to them.
The Company will inform shareholders of the amount and
nature of such income and gains distributed.
5. Outstanding Securities. The following information relates
to each class of authorized securities of the Company.
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Amount
Outstanding
Amount held Excessive
by Registrant of Amount
Title of Class Amount Authorized for its Account Shown Under (3)
- - ------------------------- ----------------------- ----------------------- -----------------------
<S> <C> <C> <C>
Common Stock 97,000 0 32,037
Preferred Stock 2,000 0 2,000
Notes 100 0 100
</TABLE>
6. Securities Ratings. The Preferred Stock is not rated by any
nationally recognized securities rating organization.
Item 11. Defaults and Arrears on Senior Securities.
The Company is not in default on any long term debt issued by the
Company. The Company is not in arrears on payment of accumulated dividends
on any issue of capital stock.
Item 12. Legal Proceedings.
The Company is not a party to any material pending legal
proceeding.
Item 13. Table of Contents of the Statement of Additional Information
General Information and History..............................B-1
Investment Objectives and Policies...........................B-1
Management of the Company....................................B-3
Compensation Table...........................................B-5
Control Persons and Principal Holders of Securities..........B-6
Investment Advisory and Other Services.......................B-6
Brokerage Allocation and Other Practices.....................B-7
Tax Status...................................................B-9
Financial Statements........................................B-10
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
Item 14. Cover Page.
Managed Securities Plus Fund, Inc. (the "Company") is a
non-diversified, closed-end management investment company.
This Part B to Form N-2 is not a prospectus. This Part B to Form
N-2 should be read in conjunction with Part A to this Form N-2 dated as of
the same date as this Part B to Form N-2. This Part B to Form N-2 does not
include all of the information a prospective investor should consider
before purchasing shares of the Company. Investors should obtain and read
the Form N-2 prior to purchasing shares of the Company. A Form N-2 may be
obtained without charge by writing or calling Bear Stearns Asset Management
Inc., 575 Lexington Avenue, New York, New York 10022 at (212) 272-2093.
This Part B to Form N-2 is dated April 28, 1999
Item 15. Table of Contents Page
General Information and History.................................B-1
Investment Objectives and Policies..............................B-1
Management of the Company.......................................B-3
Compensation Table..............................................B-5
Control Persons and Principal Holders of Securities.............B-6
Investment Advisory and Other Services..........................B-6
Brokerage Allocation and Other Practices........................B-7
Tax Status......................................................B-9
Financial Statements...........................................B-10
Item 16. General Information and History.
See Item 8.
Item 17. Investment Objectives and Policies.
1. See Item 8.
2. Investment Limitations. The Company's investment
objective and the following investment restrictions are
fundamental and cannot be changed without the approval of
the holders of a majority of the outstanding Common Stock
and Preferred Stock, each voting separately as a class.
All other investment policies or practices are considered
by the Company not to be fundamental and accordingly may
be changed by the Board of Directors without stockholder
approval. If a percentage restriction on investment or
use of assets set forth below is adhered to at the time a
transaction is effected, later changes in percentage
resulting from changing market values will not be
considered a deviation from policy. The Company may not:
1. invest 25% or more of the value of its total
assets in any one issuer (neither the U.S.
Government nor any of its agencies or
instrumentalities will be considered an issuer
for purposes of this limitation);
2. issue senior securities other than (a) preferred
stock not in excess of the excess of 50% of the
total assets over any senior securities
described in clause (b) below that are
outstanding, (b) senior securities other than
preferred stock (including borrowing money,
including on margin if margin securities are
owned and through entering into reverse
repurchase agreements) not in excess of 331/3%
of its total assets, and (c) borrowings up to 5%
of its total assets for temporary purposes
without regard to the amount of senior
securities outstanding under clauses (a) and (b)
above; provided, however that the Company's
obligations under interest rate swaps, when
issued and forward commitment transactions and
similar transactions are not treated as senior
securities if covering assets are appropriately
segregated; or pledge its assets other than to
secure such issuances or in connection with
hedging transactions, short sales, when-issued
and forward commitment transactions and similar
investment strategies. For purposes of clauses
(a), (b) and (c) above, "total assets" shall be
calculated after giving effect to the net
proceeds of any such issuance and net of any
liabilities and indebtedness that do not
constitute senior securities except for such
liabilities and indebtedness as are excluded
from treatment as senior securities by the
proviso to this item 2;
3. make loans of money or property to any person,
except through loans of portfolio securities,
the purchase of fixed income securities
consistent with the Company's investment
objective and policies or the acquisition of
securities subject to repurchase agreements;
4. underwrite the securities of other issuers,
except to the extent that in connection with the
disposition of portfolio securities or the sale
of its own securities the Company may
be deemed to be an underwriter;
5. purchase or sell real estate or interests
therein, provided that the Company may invest in
securities all or a portion of which are secured
by real estate or interests therein or are
issued by companies that invest in real estate
or interests therein and may receive real estate
in the event of default of such securities; or
6. purchase or sell commodities or commodity
contracts or enter into other Strategic
Transactions, except for transactions that do
not require it to register as commodity pool
under the Commodity Exchange Act.
3. INAPPLICABLE
4. Frequency of portfolio turnover will not be a limiting
factor if the Company considers it advantageous to
purchase or sell securities. Other than with respect to
short-term securities, the Company anticipates that the
portfolio turnover rate of the Company will normally be
less than 200%.
For the period from the Company's inception to December
30, 1997 and for the fiscal year ended December 31, 1998,
the portfolio turnover rates were 26% and 67%,
respectively.
Item 18. Management of the Company.
The tables below list the directors and officers of the Company
and their principal occupations for the last five years and their
affiliations, if any, with Bear Stearns, the Adviser and their affiliates.
<TABLE>
<CAPTION>
Principal Occupation
Name and Address Position with Company During Past Five Years
---------------- --------------------- ----------------------
<S> <C> <C>
Peter M. Bren Director President of The Bren Co.; President of
Koll, Bren Realty Advisors Koll, Bren Realty Advisors and Senior
126 E. 56th Street Partner for Lincoln Properties prior
New York, NY 10022 thereto.
Age: 64
John R. McKernan, Jr. Director Chairman and Chief Executive Officer
P.O. Box 15213 of McKernan Enterprises since January
Portland, ME 02110 1995; Governor of Maine prior thereto.
Age: 50
William J. Montgoris* Director and Chief Operating Officer, Bear, Stearns
245 Park Avenue Chairman of the Board & Co. Inc.; Chairman, The Bear
New York, NY 10167 Stearns Companies, Inc.
Age: 52
M.B. Oglesby, Jr. Director Consultant since March 1998; President
Cassidy & Associates and chief Executive Officers of
700 Thirteenth St., NW Association of American Railroads
Suite 400 from June 1997 to March 1998; Vice
Washington, DC 20005 Chairman of Cassidy & Associates
Age: 56 since February 1996; Senior Vice
President of RJR Nabisco, Inc. from
April 1989 to February, 1996; Former
Deputy Chief of Staff-White House
from 1988 to January 1989.
Eli Wachtel* Director and President Senior Managing Director, Bear,
245 Park Avenue Stearns & Co. Inc.
New York, NY 10022
Age: 47
Frank J. Maresca Vice President and Treasurer Managing Director of Bear Stearns
575 Lexington Avenue since September 1994; Associate
New York, NY 10022 Director of Bear Stearns, September,
Age: 40 1993 to September 1994; Chief
Executive Officer and President
of BSFM since December 1997;
Associated Director of Bear Stearns
from September 1993 to September
1994; Vice President of Bear Stearns
from March 1992 to September 1993.
Stephen A. Bornstein Secretary Managing Director, Legal Department
575 Lexington Avenue of Bear Stearns; General Counsel, Bear
New York, NY 10167 Stearns Asset Management since
Age: 55 September 1997.
Vincent L. Pereira Vice President; Assistant Associate Director of Bear Stearns
575 Lexington Avenue Treasurer and Assistant Secretary since September, 1995; Executive Vice
New York, NY 10167 President of BSFM since December
Age: 33 1997; Vice President of Bear Stearns
from May, 1993 to September, 1995.
- - ------------------
* Interested person of the Company and the Adviser as defined in Section
2(a)(19) of the Investment Company Act of 1940 ("1940 Act").
</TABLE>
The Company pays each Director who is not an "affiliated person"
of the Adviser or Bear Stearns the following amounts for serving as a
director (i) $5,000 per year; (ii) $500 per in-person meeting attended by
the director; (iii) $500 per in-person committee meeting attended by the
director; and (iv) all out-of-pocket expenses of such members in attending
each such meeting.
Certain of the Directors and officers of the Company hold
comparable positions with certain other investment companies of which Bear
Stearns, the Adviser or an affiliate thereof is the investment adviser,
administrator or distributor. As of March 31, 1999, the Directors and
officers as a group owned less than 1% of the outstanding shares of capital
stock of the Company.
Compensation Table
The following table sets forth certain information regarding the
compensation of the Company's Directors and Officers. Except as described
below, no executive officer or person affiliated with the Company received
compensation from the Company for the calendar year ended December 31,
1998, in excess of $60,000.
The parenthetical number represents the number of investment
companies from which such person receives compensation that are considered
part of the same fund complex as the Company.
<TABLE>
<CAPTION>
Pension or Total
Aggregate Retirement Compensation
Compensation Benefits Accrued as Estimated Annual from Company
from the part of Company Benefits upon and Fund Complex
Name of Director Company* Expenses** Retirement** Paid to Directors
---------------- ------- -------- ---------- -----------------
<S> <C> <C> <C> <C>
Peter M. Bren $6,500 None None $13,000 (2)
William J. Montgoris None None None None
John R. McKernan, Jr. $7,000 None None $14,000 (2)
M.B. Oglesby, Jr. $7,000 None None $14,000 (2)
Eli Wachtel None None None None
============================ =================== ======================= ===================== =======================
</TABLE>
- - --------
* Amount does not include reimbursable expenses for attending
board meetings.
** The Company does not have a pension or retirement plan applicable to
Directors or Officers of the Company.
Item 19. Control Persons and Principal Holders of Securities.
1. The Bear Stearns Companies Inc. ("Bear Stearns"), 245
Park Avenue, New York, NY 10167, controls the Company
through the ownership of 100% of the Company's
outstanding Common Stock and approximately 95% of the
total voting power of the Company and affiliates own 100%
of the Company's outstanding Preferred Stock.
Accordingly, Bear Stearns will have the ability to take
any action not reserved to the holders of the Preferred
Stock and so long as Bear Stearns owns the Preferred
Stock, all actions, including the ability to cause the
Company to redeem the Notes and to deregister as an
investment company. If the Company ceases to be
registered as an investment company after February 5,
2007, Bear Stearns would have the ability to initiate a
merger between itself and the Company without the consent
of the holders of the Preferred Stock, provided that the
consideration paid to the holders of the Preferred Stock
upon such merger is not less than that amount entitling
such holders to a separate class vote. In addition, as
provided in the Certificate of Incorporation of the
Company, any such merger will not be deemed to constitute
a liquidation, dissolution or winding-up of the
Corporation. Bear Stearns is organized under the laws of
the State of Delaware.
2. Bear Stearns owns 100% of the outstanding Common Stock of
the Company. The address of the Bear Stearns is set forth
in 1 above.
3. None of the Company's Officers or Directors owns shares
of the Company.
Item 20. Investment Advisory and Other Services.
1. a. See Item 9
b. See Item 18
c. The Company and the Adviser are parties to an
investment advisory agreement (the "Agreement"),
which provides that the Adviser will provide
investment advisory services to the Company for
a fee equal to 0.075% of the Company's average
monthly net assets. The Agreement may be
continued from year to year if specifically
approved at least annually (a)(i) by the
Company's Directors or (ii) by vote of a
majority of the Company's outstanding voting
securities and (b) by the affirmative vote of a
majority of the Directors who are not parties to
the agreement or interested persons of any such
party by votes cast in person at a meeting
called for that purpose. The Agreement provides
that it may be terminated without penalty by
either party on 30 days' written notice. The
Company has not completed three fiscal years.
However, the Adviser was paid $398,906 for the
fiscal year ended December 31, 1998, and
$350,762 for the period ending December 31, 1997
for advisory and administrative services
rendered to the Company.
2. Subject to the general supervision of the Directors of
the Company, the Adviser (a) provides supervision of all
aspects of the Company's non-investment operations (other
than certain operations performed by others pursuant to
agreements with the Company) and corporate management (b)
provides the Company with personnel to perform such
executive, administrative and clerical services as are
reasonably necessary to provide effective administration
of the Company, to the extent not provided pursuant to
the agreement with the Company's custodian, transfer and
dividend disbursing agent or agreements with other
institutions, (c) arranges, to the extent not provided
pursuant to such agreements, for the preparation, at the
Company's expense, of reports to shareholders along with
the financial information for such reports periodic
updating of this Form N-2, and reports filed with the
Securities and Exchange Commission (the "SEC") , (d)
arranges for and oversees the calculation of the net
asset value of the Company's shares, (e) provides the
Company, to the extent not provided pursuant to such
agreements, with adequate office space and certain
related office equipment and services, (f) arranges for
and oversees the maintenance of all of the Company's
books and records other than those maintained pursuant to
such agreements; and (g) oversees the performance of
administrative and professional services rendered to the
Company by others, including its custodian, registrar,
transfer agent, as well as accounting, auditing and other
services.
3. INAPPLICABLE
4. INAPPLICABLE
5. INAPPLICABLE
6. The custodian of all the Company's assets is Custodian
Trust Company, 101 Carnegie Center, Princeton, New Jersey
08540.
7. Deloitte & Touche LLP, Two World Financial Center, New
York, New York 10281-1434 are the Independent Accountants
for the Company.
8. Custodian Trust Company, an affiliate of the Adviser,
provides custodial services to the Company and receives a
contractual fee in the amount of .01% of average net
assets, subject to a minimum of $6,000, plus transaction
charges at the rate of $10.00 for "free" transfers,
$15.00 for book-entry securities, $25.00 for physical
delivery and at cost charged by foreign subcustodians for
international transactions.
Item 21. Brokerage Allocation and Other Practices.
1. Subject to policies established by the Board of
Directors, the Adviser is responsible for the execution
of the Company's transactions and the allocation of
brokerage transactions for the Company. In executing
portfolio transactions, the Adviser seeks to obtain the
best net results for the Company, taking into account
such factors as the price (including the applicable
brokerage commission or dealer spread), size of the
order, difficulty of execution and operational facilities
of the firm involved. While the Adviser generally seeks
reasonably competitive commission rates, payment of the
lowest commission or spread is not necessarily consistent
with obtaining the best results in particular
transactions. The reasonableness of any negotiated
commission paid by the Company will be evaluated on the
basis of the difficulty involved in execution, the time
taken to conclude the transaction, the extent of the
broker's commitment, if any, of its own capital and the
amount involved in the transaction. In the case of
over-the-counter issues, there is generally no stated
commission, but the price usually includes an undisclosed
commission or markup, and the Company will normally deal
with the principal market makers unless it can obtain
better terms elsewhere.
The Adviser currently serves as adviser to a number of
investment company clients and may in the future act as
adviser to others. Affiliates of the Adviser act as
investment adviser to numerous private accounts. It is
the practice of the Adviser and its affiliates to cause
purchase and sale transactions to be allocated among the
Company and others whose assets they manage in such
manner as they deem equitable. In making such allocations
among the Company and other client accounts, the main
factors considered are the respective investment
objectives, the relative size of portfolio holdings of
the same or comparable securities, the availability of
cash for such investment, the size of investment
commitments generally held and the opinions of the
persons responsible for managing the portfolios of the
Company and other client accounts.
2. The Adviser may use Bear, Stearns & Co., Inc. as a broker
when it appears that, as an introducing broker or
otherwise, Bear, Stearns & Co., Inc. can obtain a price
and execution which is at least as favorable as that
obtainable by other qualified brokers.
As required by Rule 17e-1 under the 1940 Act, the Board
of Directors has adopted "Procedures" which provide that
the commissions paid to Bear, Stearns & Co., Inc. on stock
exchange transactions may not exceed that which would
have been charged by another qualified broker or member
firm able to effect the same or comparable transaction at
an equally favorable price. Rule 17e-1 and the
Procedures contain requirements that the Board, including
its Independent Directors, conduct periodic compliance
reviews of such brokerage allocations and review such
schedule at least annually for its continuing compliance
with the foregoing standard. The Adviser and Bear,
Stearns & Co., Inc. are also required to furnish reports
and maintain records in connection with such
reviews.
Bear, Stearns & Co., Inc. is a wholly owned subsidiary of
Bear Stearns.
The Company paid no brokerage commissions for the year
ended December 31, 1998 and the period ended December 31,
1997.
3. The Company does not have any obligation to deal with any
broker or group of brokers in the execution of portfolio
transactions. The Adviser may, consistent with the
interests of the Company and subject to the approval of
the Board of Directors, select brokers on the basis of
the research, statistical and pricing services they
provide to the Company and other clients of the Adviser.
Information and research received from such brokers will
be in addition to, and not in lieu of, the services
required to be performed by the Adviser. A commission
paid to such brokers may be higher than that which
another qualified broker would have charged for effecting
the same transaction, provided that the Adviser, as
applicable, determines in good faith that such commission
is reasonable in terms either of the transaction or the
overall responsibility of the Adviser to the Company and
its other clients and that the total commissions paid by
the Company will be reasonable in relation to the
benefits to the Company over the long-run.
Research services furnished by brokers or dealers through
which the Company effects securities transactions are
used by the Adviser and its advisory affiliates in
carrying out their responsibilities with respect to all
of their accounts over which they exercise investment
discretion. Such investment information may be useful
only to one or more of the other accounts of the Adviser
and its advisory affiliates, and research information
received for the commissions of those particular accounts
may be useful both to the Company and one or more of such
other accounts. The purpose of this sharing of research
information is to avoid duplicative charges for research
provided by brokers and dealers.
Most of the debt obligations to be purchased by the
Company generally trade on the over-the-counter market on
a "net" basis without a stated commission, through
dealers acting for their own account and not as brokers.
The Company will primarily engage in transactions with
these dealers or deal directly with the issuer unless a
better price or execution could be obtained by using a
broker. Prices paid to a dealer in debt securities will
generally include a "spread," which is the difference
between the prices at which the dealer is willing to
purchase and sell the specific security at the time, and
includes the dealer's normal profit.
4. Neither the Company, nor the Adviser has any legally
binding agreement with any broker or dealer regarding any
specific amount of brokerage commissions which will be
paid in recognition for
research services provided.
5. INAPPLICABLE
Item 22. Tax Status.
The Company intends to qualify as a regulated investment company
("RIC") under Subchapter M of the Internal Revenue Code of 1986,
as amended. To qualify as a RIC, the Company must comply with
certain requirements of the Code relating to, among other things,
the source of its income and diversification of its assets. If the
Company so qualifies and if it distributes each year to its
shareholders at least 90% of its investment company taxable
income, it will not be required to pay federal income taxes on the
income distributed to shareholders. Investment company taxable
income generally is calculated in the same manner as the taxable
income of a corporation that is not a RIC (i.e., gross income less
applicable deductions with certain adjustments) but excludes net
capital gain, which is the excess of net long-term capital gain
for the taxable year over any net short-term capital loss for such
year. The Company intends to distribute at least the minimum
amount of investment company taxable income to satisfy the 90%
distribution requirement. The Company will not be subject to
federal income tax on any net capital gains distributed to
shareholders.
The Company may be subject to tax if it fails to distribute net
capital gains, or if its annual distributions, as a percentage of
its income, are less than the distributions required by tax laws.
In order to avoid a 4% excise tax, the Company will be required to
distribute by December 31 of each year at least 98% of its
ordinary income for such year and at least 98% of its capital gain
net income (the latter of which is generally computed on the basis
of the one-year period ending on October 31 of such year), plus
any required distribution amounts that were not distributed in
previous taxable years. For purposes of the excise tax, any
ordinary income or capital gain net income retained by, and
subject to federal income tax in the hands of, the Company will be
treated as having been distributed.
Some of the Company's practices may be subject to special
provisions of the Code, that may, among other things, defer the
use of certain losses of the Company and affect the holding period
of the securities held by the Company and the character of gains
or losses realized by the Company. These provisions may also
require the Company to mark-to-market some of the positions in its
portfolio (i.e., treat them as if they were closed out), which may
cause the Company to recognize income without receiving the cash
with which to make distributions in amounts necessary to satisfy
the distribution requirements for avoiding federal income and
excise taxes. The Company will monitor its transactions and may
make certain tax elections in order to mitigate the effect of
these rules and prevent disqualification of the Company as a RIC.
Investments of the Company in securities issued at a discount or
providing for deferred interest or payment of interest in kind are
subject to special tax rules that will affect the amount, timing
and character of distributions to shareholders. For example, with
respect to securities issued at a discount, the Company will be
required to accrue as income each year a portion of the discount
and to distribute such income each year in order to maintain its
qualification as a RIC and to avoid income and excise taxes. In
order to generate sufficient cash to make distributions necessary
to satisfy the 90% distribution requirement and avoid income and
excise taxes, the Company may have to dispose of securities that
it would otherwise have continued to hold.
The Company's ability to dispose of portfolio securities may be
limited by the requirement for qualification as a RIC that less
than 30% of the Company's gross income be derived from the
disposition of securities held for less than three months.
Distributions of the Company's investment company taxable income
are taxable to shareholders as ordinary income whether received in
shares or in cash. Shareholders who receive distributions in the
form of additional shares will have a basis for federal income tax
purposes in each such share equal to the fair market value thereof
on the reinvestment date. Distributions of the Company's net
capital gains ("capital gains dividends") are taxable to
shareholders as long-term capital gains regardless of the length
of time the shares of the Company have been held by such
shareholders. Distributions in excess of the Company's earnings
and profits, such as distributions of principal, first will reduce
the adjusted tax basis of the shares held by the shareholders and,
after such adjusted tax basis is reduced to zero, will constitute
capital gains to such shareholders (assuming such shares are held
as a capital asset). The Company will inform shareholders of the
source and tax status of such distributions promptly after the
close of each calendar year. Distributions from the Company will
not be eligible for the dividends-received deduction for
corporations.
Redemption or resale of shares of the Company will be a taxable
transaction for federal income tax purposes. Redeeming
shareholders will recognize gain or loss in an amount equal to the
difference between their basis in such redeemed shares of the
Company and the amount received. If such shares are held as a
capital asset, the gain or loss generally will be a capital gain
or loss and will be long-term if such shareholders have held their
shares for more than one year. Any loss realized on shares held
for six months or less will be treated as long-term capital loss
to the extent of any amounts received by the shareholder as
capital gains dividends with respect to such shares.
Although dividends generally will be treated as distributed when
paid, dividends declared in October, November or December, payable
to shareholders of record on a specified date in such months and
paid in January of the following year, will be treated as having
been distributed by the Company and received by the shareholders
on December 31 of the year in which the dividends were declared.
In addition, certain other distributions made after the close of a
taxable year of the Company may be "spilled back" and treated as
having been paid by the Company (except for purposes of the 4%
excise tax) during such taxable year. In such case, shareholders
will be treated as having received such dividends in the taxable
year in which the distribution is actually made.
The Company is required in certain circumstances to withhold 31%
of dividends and certain other payments, including redemptions,
paid to shareholders who do not furnish to the Company their
correct taxpayer identification number (in the case of
individuals, their social security number) or who are otherwise
subject to backup withholding. Foreign shareholders, including
shareholders who are nonresident aliens, may be subject to U.S.
withholding tax on certain distributions (whether received in cash
or in shares) at a rate of 30% or such lower rate as prescribed by
any applicable treaty.
The Company and its stockholders may be subject to state or local
taxation in various state or local jurisdictions, including those
in which it or they transact business or reside. The state and
local tax treatment of the Company and its stockholders may not
conform to the federal income tax consequences discussed above.
Consequently, prospective stockholders should consult with their
own tax advisors regarding the effect of state and local tax laws
on an investment in the Company.
Item 23. Financial Statements.
The Company's annual report for the fiscal year ended December 31,
1998 (the "Report"), is hereby incorporated by reference with
respect to all information other than the information set forth in
the letter to Stockholders included therein. The Company will
furnish without change a copy of its Report, upon request to the
Company at 575 Lexington Avenue, New York, New York 10022 or by
telephone at (212) 272-2093.
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
1. Financial Statements
Included in the Statement of Additional Information(1)
2. Exhibits
a. Certificate of Incorporation(2)
a.i. Amendment to Certificate of Incorporation
b. By-Laws(2)
c. INAPPLICABLE
d.i. Certificate of Designation(2)
d.ii Specimen Share Certificate - Common Stock(2)
d.iii. Specimen Share Certificate - Preferred Stock(2)
d.iv. Form of Notes(2)
d.v. Amended Certificate of Designation
e. INAPPLICABLE
f. INAPPLICABLE
g. Advisory Agreement(2)
h. INAPPLICABLE(3)
i. INAPPLICABLE
j. Custodian Contract(2)
k.i. Transfer Agency Agreement(2)
k.ii. Sub-Administration and Accounting Services Agreement(2)
l. INAPPLICABLE(3)
m. INAPPLICABLE
n. INAPPLICABLE(3)
o. INAPPLICABLE(3)
p. INAPPLICABLE
q. INAPPLICABLE
r. INAPPLICABLE
------------------
(1) Incorporated by reference from the Company's Annual Report
for the year ended December 31, 1998, File No. 811-08045, as
filed with the SEC on March 4, 1999.
(2) Incorporated by reference from the Company's Registration
Statement on Form N-2, File No. 811- 08045, as filed with the
SEC on May 6, 1997.
(3) Items 24.2.h, 24.2.l, 24.2.n and 24.2.o are omitted pursuant
to Item G.3 of the General Instructions to Form N-2.
Item 25. Marketing Arrangements
None
Item 26. Other Expenses of Issuance and Distribution
None
Item 27. Persons Controlled by or Under Common Control with Registrant
Insofar as the following have substantially identical boards of
directors they may be deemed with the Company to be under common control:
The Bear Stearns Funds and Bear Stearns Investment Trust.
Item 28. Number of Holders of Securities.
As of March 31, 1999:
(1) (2)
Title of Class Number of Record Holders
-------------- ------------------------
Common Stock 1
Preferred Stock 1
Notes 100
Item 29. Indemnification.
Reference is made to Article Sixth of the Company's Certificate of
Incorporation.
Article Sixth of the Company's Certificate of Incorporation
provides that no director shall be personally liable to the Company or any
of its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) pursuant to Section 174 of the Delaware General
Corporate Law or (iv) for any transaction from which the director derived
an improper personal benefit. Any repeal or modification of Article Sixth
by the stockholders of the Company shall not adversely affect any right or
protection of a director of the Company existing at the time of such repeal
or modification with respect to acts or omissions occurring prior to such
repeal or modification.
The Company has purchased insurance on behalf of its officers and
directors protecting such persons from liability arising from their
activities as officers or directors of the Company. The insurance does not
protect or purport to protect such persons from liability to the Company or
to its shareholders to which such officer or director would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of their office.
Conditional advancing of indemnification monies may be made if the
director or officer undertakes to repay the advance unless it is ultimately
determined that he or she is entitled to the indemnification and only if
the following conditions are met: (1) the director or officer provides a
security for the undertaking; (2) the Company is insured against losses
arising from lawful advances; or (3) a majority of a quorum of the
Company's disinterested, non-party directors, or an independent legal
counsel in a written opinion, shall determine based upon a review of
readily available facts, that a recipient of the advance ultimately will be
found entitled to indemnification.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Securities Act") may be permitted to
directors, officers and controlling persons of the Company pursuant to the
foregoing provisions or otherwise, the Company has been advised that in the
opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Company of expense incurred or paid by the director,
officer, or controlling person of the Company in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the shares being registered, the
Company will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
Item 30. Business and Other Connections of Investment Adviser.
See "Management of the Company" in Part A and "Management of the
Company" in the Statement of Additional Information for information
regarding the business of the Adviser. For information as to the business,
profession, vocation and employment of a substantial nature of directors
and officers of the Adviser, reference is made to the Adviser's current
Form ADV (File No. 801-29862) filed under the Invest Advisers Act of 1940,
as amended, incorporated herein by reference.
Item 31. Location of Accounts and Records.
All accounts, books and other documents required by Section 31(a)
of the 1940 Act and the rules thereunder to be maintained (i) by the
Company will be maintained at its offices, located at 575 Lexington Avenue,
New York, New York 10022, at Bear Stearns Asset Management, 575 Lexington
Avenue, New York, New York 10022, or at Custodian Trust Company, 101
Carnegie Center, Princeton, New Jersey 08540 or at the Transfer Agent at
PFPC Inc., Bellevue Corporate Center, 400 Bellevue Parkway, Wilmington,
Delaware 19809; and (ii) by the Adviser, will be maintained at its offices,
located at 575 Lexington Avenue, New York, New York 10022.
Item 32. Management Services.
INAPPLICABLE
Item 33. Undertakings.
INAPPLICABLE
SIGNATURE
Pursuant to the requirements of the Investment Company Act of
1940, Managed Securities Plus Fund, Inc. has duly caused this Amendment to
the Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of New York, and State of New York, on
the 28th day of April , 1999.
MANAGED SECURITIES PLUS FUND, INC.
By /s/ Frank J. Maresca
---------------------------------
Frank J. Maresca, Vice President
and Treasurer
MANAGED SECURITIES PLUS FUND, INC.
INDEX TO EXHIBITS TO FORM N-2
AS SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSION
ON April 30, 1999
Exhibit No. Description of Exhibit
----------- ----------------------
a.i. Amendment to Certificate of Incorporation
d.v. Amended Certificate of Designation
Exhibit a.i.
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
MANAGED INCOME SECURITIES PLUS FUND, INC
_________________________________________
Pursuant to Section 242 of the General
Corporation Law of the State of Delaware
_________________________________________
Managed Income Securities Plus Fund, Inc., a Delaware corporation
(hereinafter called the "Corporation"), does hereby certify as follows:
FIRST: Article FIRST of the Corporation's Certificate of
Incorporation is hereby amended to read in its entirety as set forth below:
FIRST: The name of the corporation is Managed Securities Plus
Fund, Inc.(hereinafter the "Corporation").
SECOND: The foregoing amendment was duly adopted in accordance
with Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate
to be duly executed in its corporate name this 28th day of April, 1999.
MANAGED INCOME SECURITIES
PLUS FUND, INC.
By:/s/ Vincent L. Pereira
-------------------------------------
Name: Vincent L. Pereira
Title: Vice President; Assistant
Treasurer and Assistant Secretary
Exhibit d.v.
CERTIFICATE OF AMENDMENT
TO THE
AMENDED CERTIFICATE OF DESIGNATION
OF
MANAGED SECURITIES PLUS FUND, INC.
Pursuant to Section 242 of the
General Corporation Law of the State of Delaware
MANAGED SECURITIES PLUS FUND, INC. (the "Corporation"), a corporation
organized and existing under and by virtue of the General Corporation Law
of the State of Delaware (the "DGCL"), does hereby certify as follows:
FIRST: On February 5, 1997, the Corporation filed with the Secretary
of State a Certificate of Designation of Preferred Stock (the "Certificate
of Designation"), which Certificate of Designation sets forth the rights,
powers and preferences of 1,740 shares of the Corporation's preferred
stock, par value $.01 per share, designated by the Board of Directors as
"Preferred Stock".
SECOND: On February 6, 1997, the Corporation filed with the Secretary
of State a Corrected Certificate of Designation of Preferred Stock.
THIRD: On February 18, 1997, the Corporation filed with the Secretary
of State an Amended Certificate of Designation of Preferred Stock (the
"Amended Certificate of Designation") increasing the number of authorized
shares of Preferred Stock to 2,000 shares.
FOURTH: On July 24, 1997, the Corporation filed with the Secretary of
State a Amended Certificate of Designation of Preferred Stock (the "Second
Amended Certificate of Designation") amending the Amended Certificate of
Designation.
FIFTH: This Certificate of Amendment has been duly adopted by the
unanimous written consent of the Board of Directors of the Corporation
pursuant to Section 141(f) of the DGCL and the written consent of the
holders of the outstanding Common Stock and Preferred Stock of the
Corporation pursuant to Section 228(a) of the DGCL.
SIXTH: This Certificate of Amendment hereby amends the Second Amended
Certificate of Designation to read in its entirety as follows:
1. DESIGNATION. The designation of this Class shall be
Preferred Stock (referred to as this "Class"), and the number of
shares constituting this Class shall be 2,000. Shares of this Class
shall have a liquidation preference of $100,000 per share.
2. DIVIDENDS. (a) Each holder of shares of this Class shall be
entitled to receive, when, as and if declared by the Board of
Directors, out of funds legally available therefor, cumulative cash
dividends, for each quarterly dividend period (each a "Dividend
Period"), in an amount equal to $13,270 per share per annum (the
"Initial Rate") divided by four (representing an annual dividend
yield of 13.270%) until and including December 30, 2006 (the "Initial
Term"), and thereafter in an amount equal to $1,000 per share per
annum (the "Special Rate") divided by four (representing an annual
dividend yield of 1.00%). Dividends shall be cumulative from the date
of original issue and shall be payable, when and as declared by the
Board of Directors or by a duly authorized committee thereof, on
March 30, June 30, September 30 and December 30 of each
year(provided, however, that if such day is not a Business Day (as
defined in Section 11 hereof) such payment shall be made on the next
succeeding Business Day). Each such dividend shall be paid to the
holders of record of shares of this Class as they appear on the stock
register of the Corporation on such record date, not exceeding 45
days preceding the payment date thereof, as shall be fixed by the
Board of Directors of the Corporation or by a duly authorized
committee thereof. Dividends on account of arrears for any past
Dividend Periods may be declared and paid at any time, without
reference to any regular dividend payment date, to holders of record
on such date, not exceeding 45 days preceding the payment date
thereof, as may be fixed by the Board of Directors of the Corporation
or by a duly authorized committee thereof.
(b) Dividends payable on this Class for any period greater or
less than a full Dividend Period shall be computed on the basis of a
360-day year consisting of twelve 30-day months and the actual number
of days elapsed in the period.
(c) So long as any shares of this Class are outstanding, no
dividends (other than dividends or distributions paid in shares of,
or options, warrants or rights to subscribe for or purchase shares of
Common Stock or other capital stock of the Corporation ranking junior
to this Class as to dividends and upon liquidation) shall be declared
or paid or set aside for payment or other distribution declared or
made upon the Common Stock or upon any other capital stock of the
Corporation ranking junior to or on a parity with this Class as to
dividends or amounts upon liquidation, nor shall any Common Stock or
any other capital stock of the Corporation ranking junior to or on a
parity with this Class as to dividends or amounts upon liquidation be
redeemed, purchased or otherwise acquired for any consideration (or
any moneys be paid to or made available for a sinking fund for the
redemption of any shares of any such stock) by the Corporation
(except by conversion into or exchange for stock of the Corporation
ranking junior to this Class as to dividends and amounts upon
liquidation) unless, in each case, (i) full cumulative dividends on
all outstanding shares of this Class shall have been paid or declared
and set aside for payment for all past Dividend Periods, and (ii) for
so long as the Corporation is registered as an investment company
under the 1940 Act, at the time of the declaration of such dividend
or distribution or at the time of any such purchase of shares of
Common Stock, this Class has a 1940 Act Asset Coverage of at least
200% after deducting the amount of such dividend, distribution or
purchase price, as the case may be.
(d) When dividends are not paid in full (or a sum sufficient
for such full payment is not set apart), as aforesaid in paragraph
(c) above, upon the shares of this Class and any other series of
capital stock of the Corporation ranking on a parity as to dividends
with this Class, all dividends declared upon shares of this Class and
any other series of capital stock of the Corporation ranking on a
parity as to dividends with this Class shall be declared pro rata so
that the amount of dividends declared per share on this Class and
such other series of capital stock of the Corporation ranking on a
parity as to dividends with this Class shall in all cases bear to
each other the same ratio that accrued and unpaid dividends per share
on the shares of this Class and such other series of capital stock of
the Corporation bear to each other. Holders of shares of this Class
shall not be entitled to any dividend, whether payable in cash,
property or stock, in excess of full cumulative dividends, as herein
provided, on this Class. No interest, or sum of money in lieu of
interest, shall be payable in respect of any dividend payment or
payments on this Class which may be in arrears.
3. REDEMPTION. (a) The shares of this Class are not redeemable
at the option of the Corporation, except upon the occurrence of a
Tax Event (as defined in Section 11 hereof).
(b) The Corporation may, commencing 30 days and ending 120 days
after the occurrence of a Tax Event, redeem the shares of this Class,
in whole, but not in part, at a redemption price equal to the Tax
Event Redemption Price (as defined in Section 11 hereof) (a "Tax
Event Redemption").
(c) In the event the Corporation shall redeem shares of this
Class, notice of such redemption shall be given by first class mail,
postage prepaid, and mailed not less than 30 nor more than 60 days
prior to the date set for redemption, to each holder of record of the
shares to be redeemed, at such holder's address as the same appears
on the stock register of the Corporation. Each such notice shall
state: (i) the redemption date; (ii) that all of the shares of this
Class are being redeemed pursuant to a Tax Event Redemption; (iii)
the redemption price; (iv) the place or places where certificates for
such shares are to be surrendered for payment of the redemption
price; and (v) that dividends on the shares to be redeemed will cease
to accrue on the redemption date.
(d) Notice having been mailed as provided in paragraph (c),
from and after the redemption date (unless default shall be made by
the Corporation in providing money for the payment of the redemption
price), dividends on the shares of this Class so called for
redemption shall cease to accrue, and said shares shall no longer be
deemed to be outstanding, and all rights of the holders thereof as
stockholders of the Corporation (except the right to receive from the
Corporation the redemption price) shall cease. Upon surrender in
accordance with said notice of the certificates for any shares so
redeemed (properly endorsed or assigned for transfer, if the Board of
Directors of the Corporation or a duly authorized committee thereof
shall so require and the notice shall so state), such shares shall be
redeemed by the Corporation at the Tax Event Redemption Price.
(e) Any shares of this Class which shall at any time have been
redeemed shall, after such redemption, have the status of authorized
but unissued shares of Authorized Preferred Stock, without
designation as to class or series until such shares are once more
designated as part of a particular series by the Board of Directors
of the Corporation or a duly authorized committee thereof.
4. CONVERSION. The holders of shares of this Class shall not
have any rights to convert or exchange such shares into shares of any
other class or series of capital stock of the Corporation.
5. LIQUIDATION RIGHTS. (a) Upon the voluntary or involuntary
dissolution, liquidation or winding up of the Corporation, the
holders of the shares of this Class shall be entitled to receive and
to be paid out of the assets of the Corporation available for
distribution to its stockholders, before any payment or distribution
shall be made on the Common Stock or on any other class of stock
ranking junior to this Class upon liquidation, the amount of $100,000
per share.
(b) After the payment to the holders of the shares of this
Class of the full preferential amounts provided for in this Section
5, the holders of this Class as such shall have no right or claim to
any of the remaining assets of the Corporation.
(c) If, upon any voluntary or involuntary dissolution,
liquidation, or winding up of the Corporation, the amounts payable
with respect to the par value of the shares of this Class and any
other series of shares of stock of the Corporation ranking as to any
such distribution on a parity with the shares of this Class are not
paid in full, the holders of the shares of this Class and of such
other series of shares will share ratably in any such distribution of
assets of the Corporation in proportion to the full respective
liquidating distributions to which they are entitled.
(d) Neither the sale of all or substantially all the property
or business of the Corporation, nor the merger or consolidation of
the Corporation into or with any other corporation or the merger or
consolidation of any other corporation into or with the Corporation,
shall be deemed to be a dissolution, liquidation or winding up,
voluntary or involuntary.
(e) Upon the dissolution, liquidation or winding up of the
Corporation, the holders of shares of this Class then outstanding
shall be entitled to be paid out of the assets of the Corporation
available for distribution to its stockholders all amounts to which
such holders are entitled pursuant to paragraph (a) of this Section 5
before any payment shall be made to the holder of any class of
capital stock of the Corporation ranking junior to this Class as to
dividends or upon liquidation.
6. RANKING. For purposes of this Certificate, any capital stock
of any class or series of the Corporation shall be deemed to rank:
(a) prior to the shares of this Class, either as to dividends
or upon liquidation, if the holders of such class or series shall be
entitled to the receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation, as the
case may be, in preference or priority to the holders of shares of
this Class;
(b) on a parity with shares of this Class, either as to
dividends or upon liquidation, whether or not the dividend rates or
amounts, dividend payment dates or redemption or liquidation prices
per share or sinking fund provisions, if any, be different from those
of this Class, if the holders of such stock shall be entitled to the
receipt of dividends or of amounts distributable upon dissolution,
liquidation or winding up of the Corporation, as the case may be,
without preference or priority, one over the other, as between the
holders of such stock and the holders of shares of this Class; and
(c) junior to shares of this Class, either as to dividends or
upon liquidation, if such class shall be Common Stock or if the
holders of shares of this Class shall be entitled to receipt of
dividends or of amounts distributable upon dissolution, liquidation
or winding up of the Corporation, as the case may be, in preference
or priority to the holders of shares of such class or series.
7. VOTING RIGHTS. (a) Each share of this Class shall have one
vote per share on all matters submitted to the Corporation's
stockholders generally and shall vote together on such matters as a
single class with holders of shares of Common Stock, except in those
circumstances specified in Sections 7(b), 7(c) and 7(d) below.
(b) At all times that shares of this Class are outstanding and
the Corporation is registered as an investment company under the 1940
Act, the holders of shares of this Class shall have the right to
elect two directors to the Board of Directors of the Corporation (the
"Initial Preferred Directors"). Whenever the dividends on the shares
of this Class have been in arrears and unpaid for eight consecutive
Dividend Periods, the holders of the shares of this Class shall have
the right to elect a majority of the directors constituting the Board
of Directors of the Corporation (a "Right of Election"). Within one
(1) business day of the accrual of such Right of Election, one of the
members of the Corporation's Board of Directors (or such other number
necessary to permit the holders of shares of this Class to elect a
majority of the Board of Directors at such time), shall resign from
the Board of Directors (the "Resigning Directors") and the holders of
the shares of this Class, voting as a separate class to the exclusion
of the holders of Common Stock, shall elect such number of
directors (the "Additional Preferred Directors", and collectively
with the Initial Preferred Directors, the "Preferred Directors") to
replace each of the Resigning Directors. Such election shall occur by
written consent, at a special meeting of the holders of the stock of
this Class called for that purpose (if such Right of Election exists
more than 90 days prior to the next annual meeting of stockholders),
or at the next annual meeting of stockholders. The term of such
Additional Preferred Directors shall continue until there are no
dividends in arrears upon the shares of this Class. Any Preferred
Director may be removed by, and shall not be removed except by, the
vote of the holders of record of at least a majority of the
outstanding shares of this Class, at a meeting of the Corporation's
stockholders, or of the holders of shares of this Class, called for
that purpose. Except as provided in the next sentence, any vacancy in
the office of a Preferred Director shall be filled by a person
appointed by the remaining Preferred Director(s) pursuant to an
instrument in writing signed by the remaining Preferred Director(s)
and filed with the Corporation. In the case of the removal of any
Preferred Director or if required by the 1940 Act, a vacancy in the
office of a Preferred Director shall be filled by the vote of the
holders of at least a majority of the outstanding shares of this
Class, at the same meeting at which such removal shall be voted. Upon
termination of the term of the Additional Preferred Directors as
provided above, the stockholders of the Corporation shall elect the
directors constituting the Board of Directors, in the manner set
forth in the Corporation's By-Laws.
(c) During the Initial Term, without the consent of the holders
of at least a majority of the votes entitled to be cast by the
holders of the total number of shares of this Class then outstanding,
the Corporation may not: (i) sell all or substantially all of the
property or business of the Corporation, or merge or consolidate the
Corporation into or with any other corporation or merge or
consolidate any other corporation into or with the Corporation; or
(ii) liquidate, dissolve or wind-up the Corporation.
The foregoing matters shall, during the Initial Term, also
require the consent of the holders of at least a majority of the
votes entitled to be cast by holders of the shares of Common Stock
then outstanding, voting separately as a class and, after the Initial
Term, will require the consent of the holders of at least a majority
of the votes entitled to be cast by holders of the shares of Common
Stock then outstanding and this Class then outstanding, voting
together as a single class; provided, however, that the affirmative
vote or consent of the holders of at least a majority of the
outstanding shares of this Class, voting separately as a class, shall
be necessary to sell all or substantially all of the property or
business of the Corporation, or merge or consolidate the Corporation
into or with any other corporation or merge or consolidate any other
corporation into or with the Corporation, if such sale, merger or
consolidation would result in consideration being paid to the holders
of the shares of this Class which is less than (i) the sum of the
present values of all future dividend payments due on the shares of
this Class (rounded to the nearest cent per share), discounted on a
quarterly basis at the "Class Vote Discount Rate" to the dividend
payment date immediately preceding the date of such sale, merger or
consolidation, plus (ii) any accrued but unpaid dividends up to and
including the date of such sale, merger or consolidation. "Class Vote
Discount Rate" shall mean 2.47% per quarter (which equates to a
semi-annual equivalent rate per annum of 10.00%).
(d) Without the consent of the holders of at least a majority
of the votes entitled to be cast by the holders of the total number
of shares of this Class then outstanding, the Corporation may not:
(i) create any additional class or series of stock of the
Corporation; (ii) create, incur, assume or directly or indirectly
guarantee or in any other manner become directly or indirectly liable
for any Indebtedness (as defined below) of the Corporation in excess
of $100,000; (iii) alter or amend the Corporation's investment
objective or fundamental investment limitations; or (iv) alter or
amend the provisions of the Corporation's Certificate of
Incorporation (including this Certificate of Designation) so as to
affect adversely the voting powers, preferences or special rights of
the holders of shares of this Class (including without limitation
Section 9 hereof); provided, however, that any sale of all or
substantially all of the property or business of the Corporation, any
merger or consolidation of the Corporation into or with any other
corporation or merger or consolidation of any other corporation into
or with the Corporation or the liquidation, dissolution or winding-up
of the Corporation shall not be deemed to be such an alteration or
amendment. The affirmative vote or consent of the holders of at least
a majority of the votes entitled to be cast by holders of the shares
of Common Stock then outstanding, voting separately as a class, will
also be required for any such actions.
Solely for purposes of the voting rights as described in this
Section 7 and Section 8 hereof, any share of this Class registered in
the name of the Corporation or any of its Affiliates (as defined
under Rule 405 of the Securities Act) shall be deemed not to be
outstanding and the vote evidenced thereby shall not be taken into
account in determining whether the requisite vote necessary to take
such action or effect any such consent has been obtained provided
however that this paragraph shall not be operative if all of the
outstanding shares of this Class is held by one or more Affiliates of
the Corporation.
8. AMENDMENTS. Any amendment to the Corporation's Certificate
of Incorporation to change any provision of Section 7 or Section 9 of
this Certificate of Designation or this Section 8 shall require the
consent of holders of a majority of the outstanding shares of the
Common Stock and a majority of the votes of this Class, in each case
voting separately as a class. All other amendments to the
Corporation's Certificate of Incorporation shall require the consent
of holders entitled to cast at least a majority of the votes of
Common Stock and Preferred Stock voting as a single class.
9. ASSET COVERAGE. (a) For so long as the Corporation is
registered as an investment company under the 1940 Act, the shares of
this Class will have a 1940 Act Asset Coverage of at least 200% and,
for so long as the Corporation is registered as an investment company
under the 1940 Act, at the time of the declaration of any dividend or
distribution or at the time of any purchase of shares of Common
Stock by the Corporation, this Class will have a 1940 Act Asset
Coverage of at least 200% after deducting the amount of such
dividend, distribution or purchase price, as the case may be.
10. RESTRICTIONS ON TRANSFER. The minimum amount of Preferred
Stock that may be transferred to, or held by, any one beneficial
owner is $4,000,000.
11. DEFINITIONS. For purposes of this Class, the following
terms shall have the meanings indicated:
"Board of Directors" shall mean the Board of Directors of the
Corporation.
"Business Day" shall mean any day other than a Saturday, Sunday
or other day on which banks are authorized to be closed in New York,
New York.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, or any successor statute thereto. Reference to any
provision of the Code shall mean such provision as in effect from
time to time, as the same may be amended, and any successor thereto,
as interpreted by any applicable regulations or other administrative
pronouncements as in effect from time to time.
"Common Stock" shall mean the common stock of the Corporation,
par value $.01 per share, or any successor class of common equity
into which such class may hereafter be converted.
"Dividend Periods" shall have the meaning set forth in Section
2 hereof.
"Indebtedness" shall mean, with respect to the Corporation
without duplication, and whether or not contingent, (i) all
indebtedness of the Corporation for borrowed money or which is
evidenced by a note, bond, debenture or similar instrument, including
any indebtedness provided by a bank that is not an affiliate of the
Corporation (ii) all obligations of the Corporation in respect of
letters of credit or bankers' acceptances issued or created for the
account of the Corporation, (iii) all liabilities of others of the
kind described in the preceding clause (i) secured by any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind on
any property owned by the Corporation even though the Corporation has
not assumed or become liable for the payment of such liabilities,
(iv) to the extent not otherwise included, any guarantee by the
Corporation of any indebtedness of any other individual, corporation,
partnership, joint venture, association, joint-stock company, limited
liability company, trust, unincorporated organization or government
or any agency or political subdivision thereof, or other obligations
described in clauses (i) through (iii) above, and (v) any
"acquisition indebtedness" or indebtedness which would give rise to
unrelated trade or business income within the meaning of Section 514
of the Code.
"Initial Rate" shall have the meaning set forth in Section 2
hereof.
"Initial Term" shall have the meaning set forth in Section 2
hereof.
"1940 Act Asset Coverage" means the ratio which the value of
the total assets of the Corporation, less all liabilities and
indebtedness not represented by "senior securities" (within the
meaning of the 1940 Act), bears to the aggregate amount of senior
securities representing indebtedness of the Corporation plus the
aggregate of the involuntary liquidation preference of this Class.
The involuntary liquidation preference of this class shall be deemed
to mean the amount to which such class of senior security would be
entitled on involuntary liquidation of the issuer in preference to a
security junior to it.
"Preferred Stock" shall have the meaning set forth in the
recitals hereof.
"Special Rate" shall have the meaning set forth in Section 2
hereof.
"Tax Event" shall mean the receipt by the Corporation of an
opinion of a nationally recognized tax counsel to the Corporation
which is experienced in such matters ("Tax Counsel"), to the effect
that, as a result of (i) any amendment to, clarification of, or
change (including any announced prospective
change) in the laws or treaties (or any regulations thereunder) of
the United States or any political subdivision or taxing authority
thereof or therein affecting taxation, (ii) any judicial decision,
official administrative pronouncement, published or private ruling,
regulatory procedure, notice or announcement (including any notice or
announcement of intent to adopt such procedures or regulations)
("Administrative Action") or (iii) any amendment to, clarification
of, or change in the official position or the interpretation of such
Administrative Action or any interpretation or pronouncement that
provides for a position with respect to such Administrative Action
that differs from the theretofore generally accepted position, in
each case, by any legislative body, court, governmental authority,
taxing authority or regulatory body, irrespective of the manner in
which such amendment, clarification or change is made known, which
amendment, clarification, change or Administrative Action is
effective or such pronouncement or decision is announced on or after
the date of the initial issuance of the shares of this Class, there
is a substantially increased likelihood (determined in the case of
any amendment to, clarification of, or change in laws affecting
taxation, as if any such proposal were enacted into law) (as compared
to immediately prior to the initial issuance of the shares of this
Class) that (a) dividends paid or to be paid by the Corporation with
respect to the shares of Common Stock and/or this Class are not, or
will not be, fully deductible by the Corporation for United States
federal income tax purposes and/or (b) the Corporation is, or will
be, subject to more than a de minimis amount of taxes (including,
without limitation, income taxes), duties or other governmental
charges and assessments.
"Tax Event Redemption Price" shall mean the (i) the sum of the
present values of all future dividend payments due on a share of this
Class (rounded to the nearest whole cent per share), discounted on a
quarterly basis at the "Redemption Discount Rate" to the dividend
payment date immediately preceding the redemption date, plus (ii) any
accrued but unpaid dividends up to and including the redemption date.
Redemption Discount Rate shall equal the Benchmark Treasury Rate plus
95 basis points (converted to a quarterly equivalent). Prior to
August 15, 2004, the Benchmark Treasury Rate shall equal the yield to
maturity of the 7 1/4% U.S. Treasury Note due August 2004 on the
redemption date. On that date and thereafter, the Benchmark Treasury
Rate shall equal the yield to maturity of the "1 Year CMT."
"1 Year CMT" which, with respect to any date of redemption, (in
the following order of priority) shall mean:
(i) the yield on 1 year United States Treasury Securities at
constant maturity on the second Business Day prior to any date of
redemption, as estimated from the United States Department of the
Treasury's daily yield curve, as published in the Federal Reserve
statistical release H.15(519) (the "H.15") (or any successor or
similar publication selected by the Calculation Agent published by
the Board of Governors of the Federal Reserve Bank or affiliated
entity) for the date of redemption opposite the caption "Treasury
Constant Maturities, 1-year".
(ii) if 1 Year CMT, or any successor thereto, as described in
clause (i) is not publicly available by the date of redemption, then
1 Year CMT will be a yield to maturity for direct non-callable fixed
rate obligations of the United States ("Treasury Notes") most
recently issued with a remaining term to maturity closest to 1 year
based on the yield (which yield is based on bid prices) for such
issue of Treasury Notes for the date of redemption, as published by
the Federal Reserve Bank of New York in its daily statistical release
entitled "Composite 3:30 P.M. Quotations for U.S. Government
Securities" (or any successor or similar publication selected by the
Calculation Agent published by the Federal Reserve System, the
Federal Reserve Bank of New York, or any other Federal Reserve Bank
or affiliated entity).
(iii) if 1 Year CMT as described in clause (ii) is not
available on the date of such calculation pertaining to such date of
redemption, 1 Year CMT will be calculated by the Calculation Agent
and will be a yield to maturity (expressed as a bond equivalent and
as a decimal on the basis of a year of 365 days and applied on a
daily basis) based on the arithmetic mean of the secondary market bid
prices as of approximately 3:00 P.M. (New York City time) on the date
of redemption of three leading primary United States government
securities dealers in The City of New York (from five such dealers
selected by the Calculation Agent and eliminating the highest
quotation (or, in the event of equality, one of the highest) and the
lowest quotation (or, in the event of equality, one of the lowest),
for Treasury Notes most recently issued with a remaining term to
maturity closest to 1 year. If three or four (and not five) of such
dealers are quoting as described in this clause (iii), then 1 Year
CMT will be based on the arithmetic mean of the bid price obtained
and neither the highest nor the lowest of such quotations will be
eliminated. The Calculation Agent shall be Bear, Stearns & Co. Inc.
"Transfer" shall have the meaning set forth in Section 10
hereof.
IN WITNESS WHEREOF, the Corporation has caused this Certificate
of Amendment to be signed on this 28th day of April, 1999.
MANAGED SECURITIES PLUS FUND, INC.
By: /s/ Vincent L. Pereira
------------------------------------------
Name: Vincent L. Pereira
Title: Vice President; Assistant Treasurer
and Assistant Secretary
