SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
MORGAN STANLEY GROUP INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 13-2838811
(State of Incorporation or Organization) (IRS Employer
Identification No.)
1251 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
(Address of Principal Executive Offices) (Zip Code)
If this Form relates to If this Form relates to the
the registration of a registration of a class of debt
class of debt securities securities and is to become
and is effective upon effective simultaneously with
filing pursuant to the effectiveness of a
General Instruction concurrent registration
A(c)(l) please check the statement under the Securities
following box. [X] Act of 1933 pursuant to General
Instruction A(c)(2) please check
the following box. [ ]
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
------------------- ------------------------------
Nikkei 225 Index Call American Stock Exchange
Warrants Expiring
August __, 1997
Securities to be registered pursuant to Section 12(g) of the Act:
None
(Title of class)
Item 1. Description of the Registrant's Securities to be Registered.
-----------------------------------------------------------
The title of the class of securities to be registered
hereunder is: "Nikkei 225 Call Warrants Expiring August __,
1997" (individually, a "Warrant", and in the aggregate, the
"Warrants"). A description of the Warrants is set forth under
the caption "Description of the Warrants" in the prospectus
included within the Registration Statement of the Company on
Form S-3 (registration no. 33-51413) (the "Registration
Statement"), as supplemented by the information under the
caption "Description of the Warrants" in the registrant's
preliminary prospectus supplement filed on the date hereof
pursuant to Rule 424(b)(5) under the Securities Act of 1933, as
amended (the "Act"), which description is incorporated herein
by reference. The description of the Warrants contained in the
final prospectus supplement to be filed pursuant to Rule
424(b)(2) under the Act, which will contain the final terms and
provisions of the Warrants, is hereby deemed to be incorporated
by reference into this Registration Statement and to be a part
hereof.
Item 2. Exhibits.
--------
The following documents are filed as exhibits hereto:
4.1 Form of Warrant Agreement among the Company, Chemical
Bank, as Warrant Agent, and Morgan Stanley & Co.
Incorporated, as Determination Agent, dated as of August
__, 1995.
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized.
MORGAN STANLEY GROUP INC.
(Registrant)
Date: August 9, 1995
By: /s/ RALPH L. PELLECCHIO
______________________________
Name: Ralph L. Pellecchio
Title: Assistant Secretary
INDEX TO EXHIBITS
Exhibit No. Page No.
- ----------- --------
4.1 Form of Warrant Agreement among Morgan
Stanley Group Inc., Chemical Bank, as
Warrant Agent, and Morgan Stanley & Co.
Incorporated, as Determination Agent,
dated as of August __, 1995.
EXHIBIT 4.1
============================================================
MORGAN STANLEY GROUP INC.
and
CHEMICAL BANK, Warrant Agent
and
MORGAN STANLEY & CO. INCORPORATED, Determination Agent
_____________________
WARRANT AGREEMENT
dated as of August __, 1995
____________________
Nikkei 225 Index Call Warrants
Expiring August __, 1997
============================================================
TABLE OF CONTENTS(1)
Page
PARTIES................................................................1
RECITALS...............................................................1
- -------------
(1) The Table of Contents is not a part of the Warrant Agreement.
ARTICLE I
ISSUANCE OF WARRANTS AND FORM,
EXECUTION, DELIVERY AND REGISTRATION
OF WARRANT CERTIFICATES AND
GLOBAL WARRANT CERTIFICATE
SECTION 1.01. Issuance of Warrants...........................1
SECTION 1.02. Form, Execution and Delivery of
Warrant Certificates.........................2
SECTION 1.03. Warrant Certificates...........................3
SECTION 1.04. Registration of Transfers
and Exchanges................................3
SECTION 1.05. Mutilated or Missing Warrant
Certificates.................................5
SECTION 1.06. Registered Holders.............................6
SECTION 1.07. Conversion Option..............................6
SECTION 1.08. Global Warrant Certificate.....................8
ARTICLE II
DURATION AND EXERCISE OF WARRANTS
SECTION 2.01. Duration of Warrants; Minimum
Exercise Amounts; Exercise
Notice......................................11
SECTION 2.02. Exercise, Valuation and Delivery
of Warrants................................12
SECTION 2.03. Automatic Exercise of Warrants;
Exercise upon an Extension Event,
an Extraordinary Event or an
Exercise Limitation Event.....................24
SECTION 2.04. Limitation of Number of Exercisable
Warrants.......................................33
SECTION 2.05. Covenant of the Company.......................34
SECTION 2.06. Return of Money Held Unclaimed for
Two Years...................................34
SECTION 2.07. Return of Global Warrant
Certificate.................................35
ARTICLE III
OTHER PROVISIONS RELATING TO
RIGHTS OF WARRANTHOLDERS
SECTION 3.01. Warrantholder May Enforce Rights..............35
ARTICLE IV
WARRANTS ACQUIRED BY THE COMPANY;
PAYMENT OF TAXES
SECTION 4.01. Warrants Acquired by the Company..............36
SECTION 4.02. Payment of Taxes..............................36
ARTICLE V
CONCERNING THE WARRANT AGENT
SECTION 5.01. Warrant Agent.................................37
SECTION 5.02. Conditions of Warrant Agent's
Obligations.................................37
SECTION 5.03. Resignation and Appointment of
Successor...................................39
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Amendment.....................................41
SECTION 6.02. Notices and Demands to the Company,
the Warrant Agent and the
Determination Agent.........................42
SECTION 6.03. Addresses for Notices.........................42
SECTION 6.04. Notices to Holders............................42
SECTION 6.05. Obtaining of Approvals........................42
SECTION 6.06. Persons Having Rights Under This
Agreement...................................43
SECTION 6.07. Inspection of Agreement.......................43
SECTION 6.08. Headings......................................43
SECTION 6.09. Counterparts..................................43
SECTION 6.10. Applicable Law................................44
TESTIMONIUM...........................................................44
SIGNATURES............................................................44
EXHIBIT A - Form of Warrant Certificate
EXHIBIT A-1 - Form of Global Warrant Certificate
EXHIBIT A-2 - Exercise Notice
For Warrants Represented by the Global
Warrant Certificate
EXHIBIT B - Confirmation of Exercise For Warrants
Represented by Warrant Certificates
EXHIBIT B-1 - Confirmation of Exercise For Warrants
Represented by the Global Warrant
Certificate
EXHIBIT C-1 - Notice of Rejection Relating to Limit
Option For Warrants Represented by
Warrant Certificates
EXHIBIT C-2 - Notice of Rejection Relating to Limit
Option For Warrants Represented by
the Global Warrant Certificate
WARRANT AGREEMENT
THIS AGREEMENT, dated as of August __, 1995, among MORGAN
STANLEY GROUP INC., a corporation organized and existing under the laws of the
State of Delaware (the "Company"), CHEMICAL BANK, a New York banking
corporation (the "Warrant Agent") and MORGAN STANLEY & CO. INCORPORATED, a
corporation organized and existing under the laws of the State of Delaware
(the "Determination Agent").
WHEREAS, the Company proposes to sell from time to time Nikkei
225 Index Call Warrants (the "Warrants" or, individually, a "Warrant") the
amount of which shall be unlimited representing the right to receive from the
Company on exercise (including automatic exercise) an amount in U.S. Dollars
equal to the Cash Settlement Value (as defined below) determined by reference
to increases in the Nikkei 225 Index (as defined herein) or, if a Substitute
Index (as defined herein) is substituted for the Nikkei 225 Index, such
Substitute Index, on the terms and conditions set forth in this Agreement; and
WHEREAS, the Company desires the Warrant Agent to act on behalf
of the Company, and the Warrant Agent is willing so to act, in connection with
the issuance, transfer and exercise of the Warrants, and the Company desires
to set forth herein, among other things, the provisions of the Warrants and
the terms and conditions on which they may be issued, transferred, exercised
and cancelled;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
ISSUANCE OF WARRANTS AND FORM,
EXECUTION, DELIVERY AND REGISTRATION
OF WARRANT CERTIFICATES AND
GLOBAL WARRANT CERTIFICATE
SECTION 1.01. Issuance of Warrants. (a) The Warrants are
unsecured contractual obligations of the Company and will rank on a parity
with the Company's other unsecured contractual obligations and with the
Company's unsecured and unsubordinated debt.
(b) Each Warrant entitles a registered or beneficial holder
(each a "Warrantholder") to receive upon exercise (including automatic
exercise), subject to the provisions contained herein, the Cash Settlement
Value or the Alternative Settlement Amount, as the case may be (each as
defined herein), of such Warrant. A Warrant will not require or entitle a
Warrantholder to purchase or take delivery from the Company of any shares of
any component stocks of the Nikkei 225 Index or, in the case of the
substitution of a Substitute Index for the Nikkei 225 Index, the Substitute
Index or any Successor Index to either the Nikkei 225 Index or the Substitute
Index, as the case may be (the "Underlying Stocks"), or any other securities.
Upon exercise of a Warrant, the Company will make only a U.S. Dollar cash
payment in the amount of the Cash Settlement Value or Alternative Settlement
Amount, if any and as applicable, of such Warrant. The Company is under no
obligation to, nor will it, sell or deliver to any Warrantholder any shares of
any of the Underlying Stocks or any other securities in connection with the
exercise of any Warrants. Warrantholders will not receive any interest on any
Cash Settlement Value or Alternative Settlement Amount, and the Warrants will
not entitle the Warrantholders to any of the rights of holders of any of the
Underlying Stocks or any other securities.
SECTION 1.02. Form, Execution and Delivery of Warrant
Certificates. (a) The Warrants, whenever issued, shall be represented by
certificates in registered form substantially in the form set forth in Exhibit
A hereto (the "Warrant Certificates"), with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Agreement, and may represent any whole number of Warrants. The Warrant
Certificates may have imprinted or otherwise reproduced thereon such letters,
numbers or other marks of identification or designation and such legends or
endorsements as the officers of the Company executing the same may approve
(execution thereof to be conclusive evidence of such approval) and which are
not inconsistent with the provisions of this Agreement, or as may be required
to comply with any law or with any rule or regulation made pursuant thereto,
or with any rule or regulation of any self-regulatory organization (an "SRO")
on which the Warrants may be listed, or of any securities depository, or to
conform to usage. Warrant Certificates shall be signed on behalf of the
Company by its chairman, its president, its chief financial officer, its
treasurer or one of its managing directors and attested by its secretary or an
assistant secretary. The signature of any of such officers may be either
manual or facsimile. Typographical and other minor errors or defects in any
such signature shall not affect the validity or enforceability of any Warrant
Certificate that has been duly countersigned and delivered by the Warrant
Agent.
(b) In case any officer of the Company who shall have signed a
Warrant Certificate, either manually or by facsimile signature, shall cease to
be such officer before such Warrant Certificate shall have been countersigned
and delivered by the Warrant Agent to the Company or delivered by the Company,
such Warrant Certificate nevertheless may be countersigned and delivered as
though the person who signed such Warrant Certificate had not ceased to be
such officer of the Company; and the Warrant Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution
of such Warrant Certificate, shall be a proper officer of the Company to sign
such Warrant Certificate, although at the date of the execution of this
Warrant Agreement any such person was not such officer.
SECTION 1.03. Warrant Certificates. Each Warrant Certificate,
when executed on behalf of the Company in accordance with Section 1.02, shall
be delivered to the Warrant Agent, which shall manually countersign and deliver
the same to or upon the order of the Company. After the initial original
issuance of Warrants hereunder, additional Warrant Certificates may be issued
on original issuance upon two (2) New York Business Days (as defined herein)
prior notice to the Warrant Agent. Each Warrant Certificate shall be dated
the date of its countersignature. A Warrant Certificate shall not be valid
for any purpose, and no Warrant evidenced thereby shall be exercisable, unless
and until such Warrant Certificate has been countersigned by the manual
signature of an authorized officer of the Warrant Agent. Such
countersignature by an authorized officer of the Warrant Agent upon any
Warrant Certificate signed by the Company in accordance with Section 1.02
shall be conclusive evidence that the Warrant Certificate so countersigned has
been duly issued hereunder.
SECTION 1.04. Registration of Transfers and Exchanges. (a)
Except as otherwise provided herein or in the Warrant Certificate, the Warrant
Agent shall from time to time register the transfer of any outstanding Warrant
Certificates upon the records to be maintained by it for that purpose (the
"Warrant Register") at the Warrant Agent's Office (as defined herein), subject
to such reasonable regulations as the Company or the Warrant Agent may
prescribe, upon surrender thereof at the Warrant Agent's Window (as defined
herein), Attention: Transfer Department, duly endorsed by, or accompanied by a
written instrument or instruments of transfer in form satisfactory to the
Warrant Agent and the Company duly executed by, the Registered Holder(s) (as
defined herein) thereof or by the duly appointed legal representative thereof
or by a duly authorized attorney, such signature to be guaranteed by a bank or
trust company with a correspondent office in The City of New York or by a
broker or dealer which is a member of the National Association of Securities
Dealers, Inc. (the "NASD") or by a member of a national securities exchange.
Upon any such registration of transfer, a new Warrant Certificate shall be
issued to the transferee(s) and the surrendered Warrant Certificate shall be
cancelled by the Warrant Agent.
(b) At the option of a Warrantholder, Warrant Certificates may
be exchanged for other Warrant Certificates, representing a like number of
Warrants, upon surrender to the Warrant Agent of the Warrant Certificates to
be exchanged at the Warrant Agent's Window, Attention: Transfer Department.
The "Warrant Agent's Window" shall be the window of the Warrant Agent
maintained for purposes of transfer and tender in the Borough of Manhattan,
The City of New York or at the address of any successor Warrant Agent (as
provided in Section 5.03) and which is, on the date of this Agreement,
Chemical Bank/Geoserve, Corporate Trust Securities Window, 55 Water Street,
Room 234, North Building, New York, New York 10041. Upon surrender of any
unexercised Warrant Certificate for exchange, the Warrant Agent shall cancel
such Warrant Certificate, and the Company shall execute, and the Warrant Agent
shall countersign and deliver, in accordance with Sections 1.02 and 1.03, one
or more new Warrant Certificates of like tenor and representing a like number
of unexercised Warrants.
(c) Warrant Certificates issued upon transfer or exchange
pursuant to Section 1.04(a) or (b) shall be valid obligations of the Company,
evidencing the same obligations of the Company as the Warrant Certificates
surrendered for transfer or exchange, and entitled to the same benefits under
this Agreement as were such Warrant Certificates prior to such surrender.
(d) Except as provided in Section 1.05, no service charge
shall be made for any registration of transfer or exchange of Warrant
Certificates, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with
any registration of transfer or exchange of Warrant Certificates, other than
exchanges pursuant to this Section 1.04 not involving any transfer.
(e) In the event that upon any exercise of Warrants evidenced
by a Warrant Certificate the number of Warrants exercised shall be less than
the total number of Warrants evidenced by such Warrant Certificate, there shall
be issued to the Registered Holder thereof or his assignee a new Warrant
Certificate evidencing the number of Warrants not exercised.
SECTION 1.05. Mutilated or Missing Warrant Certificates. (a)
If any Warrant Certificate is mutilated, lost, stolen or destroyed, the
Company may in its discretion execute, and the Warrant Agent may countersign
and deliver, in exchange and substitution for the mutilated Warrant
Certificate, or in replacement for the Warrant Certificate lost, stolen or
destroyed, a new Warrant Certificate of like tenor and representing an
equivalent number of Warrants, bearing an identification number not
contemporaneously outstanding, but only (in case of loss, theft or
destruction) upon receipt of evidence satisfactory to the Company and the
Warrant Agent of such loss, theft or destruction of such Warrant Certificate
and security or indemnity, if requested, also satisfactory to them.
Applicants for such substitute Warrant Certificates shall also comply with
such other reasonable regulations and pay such other reasonable charges as the
Company or the Warrant Agent may prescribe.
(b) In case any such mutilated, lost, stolen or destroyed
Warrant Certificate has been or is about to be exercised, or deemed to be
exercised, the Company in its absolute discretion may, instead of issuing a
new Warrant Certificate, direct the Warrant Agent to treat the same as if it
had received the Warrant Certificate together with an irrevocable Exercise
Notice (as defined herein) in proper form in respect thereof, as provided
herein, or as being subject to automatic exercise, as the case may be.
(c) Each new Warrant Certificate issued pursuant to this
Section 1.05 in lieu of any lost, stolen or destroyed Warrant Certificate
shall be an original, additional contractual obligation of the Company, and
shall be entitled to the same benefits under this Agreement as the Warrant
Certificate that was lost, stolen or destroyed.
(d) Upon the issuance of any new Warrant Certificate in
accordance with this Section 1.05, the Company may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees and
expenses of the Warrant Agent) connected therewith.
(e) The provisions of this Section 1.05 are exclusive and
shall preclude (to the extent lawful) any other rights and remedies with
respect to the replacement or payment of mutilated, lost, stolen or destroyed
Warrant Certificates.
SECTION 1.06. Registered Holders. Prior to due presentment
for registration of transfer, the Company, the Warrant Agent, and any agent of
the Company or the Warrant Agent, may deem and treat the person in whose name
a Warrant Certificate shall be registered in the Warrant Register (a
"Registered Holder") as the absolute owner of the Warrants evidenced thereby
(notwithstanding any notation of ownership or other writing on the Warrant
Certificate) for any purpose whatsoever, and as the person entitled to
exercise the rights represented by the Warrants evidenced thereby, and neither
the Company nor the Warrant Agent, nor any agent of the Company or the Warrant
Agent, shall be affected by any notice to the contrary. This Section 1.06
shall be without prejudice to the rights of Warrantholders as described
elsewhere herein.
SECTION 1.07. Conversion Option. (a) Commencing on the
forty-fifth calendar day following the initial original issuance of the
Warrants, each Warrantholder will have the option (the "Conversion Option") to
convert the form in which such Warrantholder holds his Warrants from
definitive to book-entry form. The Company shall notify each Warrantholder as
soon as practicable after the initial original issuance of the Warrants (i)
that Warrant Certificates (as defined herein) must be delivered to an entity
(a "Participant") entitled to execute, clear and settle transactions through
The Depository Trust Company, New York, New York (the "Depository", which
term, as used herein, includes any successor securities depository selected by
the Company) in proper form for deposit in order for Warrants to be converted
into book-entry form), (ii) the date on which such conversions will commence
(which shall be such 45th calendar day (the "Initial Conversion Date"), (iii)
the date on which such conversions will end (which date shall be the
forty-fifth calendar day after the Initial Conversion Date (the "Final
Conversion Date")) and (iv) the CUSIP number assigned to the Warrants. The
Warrant Agent, at the request and expense of the Company and on behalf of the
Company, shall mail such notice to each Warrantholder. The period from the
Initial Conversion Date to and including the Final Conversion Date is referred
to herein as the "Conversion Option Period". Warrants in book-entry form
shall not be exchangeable for Warrant Certificates, except as provided herein.
(b) During the Conversion Option Period, the Depository will
credit the account of each Participant that deposits Warrant Certificates with
the quantity of Warrants evidenced by such Warrant Certificates either by the
close of business on the New York Business Day on which such Warrant
Certificates are deposited (if received by the Depository by its then
applicable cut-off time for same-day credit) or on the following New York
Business Day (if received by the Depository by its then applicable cut-off
time for next-day credit), all in accordance with the provisions of the Letter
of Representations relating to the Warrants, among the Company, the Warrant
Agent and the Depository (the "Representations Letter").
(c) As more fully described in the Representations Letter, the
Depository will deliver daily to the Warrant Agent Warrant Certificates
deposited at the Depository on the previous New York Business Day. If the
Warrant Agent accepts such Warrant Certificates for conversion, it shall
promptly cancel such Warrant Certificates, debit the accounts of the
Warrantholders registered on its books, and credit the account of the
Depository with the aggregate quantity of Warrants evidenced by the cancelled
Warrant Certificates. On the first day during the Conversion Option Period
that the Warrant Agent credits Warrants to the Depository's account, the
Warrant Agent shall countersign a global certificate evidencing such Warrants
(the "Global Warrant Certificate") in the manner provided herein. On each
subsequent day during the Conversion Option Period that the Warrant Agent
credits Warrants to the Depository's account, the Warrant Agent may (i) as
provided in the Fast Automated Securities Transfer Balance Certificate
Agreement between Chemical Bank and the Depository (the "FAST Agreement"),
countersign a new Global Warrant Certificate or (ii) endorse the existing
Global Warrant Certificate to evidence the increased quantity of Warrants
credited to the Depository's account. If the Warrant Agent countersigns a new
Global Warrant Certificate, it shall cancel the existing Global Warrant
Certificate. Only one Global Warrant Certificate evidencing Warrants credited
to the Depository's account shall be outstanding at any time.
(d) If (i) the Depository is at any time unwilling or unable
to continue as securities depository for the Warrants and a successor
Depository is not appointed by the Company within 90 days, or (ii) the Company
shall be adjudged a bankrupt or insolvent or make an assignment for the
benefit of its creditors or institute proceedings to be adjudicated a bankrupt
or shall consent to the filing of a bankruptcy proceeding against it, or shall
file a petition or answer or consent seeking reorganization under Federal
bankruptcy laws or any other similar applicable Federal or State law, or shall
consent to the filing of any such petition, or shall consent to the
appointment of a receiver or custodian of all or any substantial part of its
property, or shall admit in writing its inability to pay or meet its debts as
they mature, or if a receiver or custodian of it or all or any substantial
part of its property shall be appointed, or if a public officer shall have
taken charge or control of the Company or of its property or affairs, for the
purpose of rehabilitation, conservation or liquidation, the Company will
reissue Warrant Certificates in exchange for the Global Warrant Certificate
registered in the names provided by the Depository to the Warrant Agent in
writing. In addition, the Company may at any time determine not to have the
Warrants represented by a Global Warrant Certificate and, in such event, will
issue Warrant Certificates in exchange for the Global Warrant Certificate
registered in the names provided by the Depository to the Warrant Agent in
writing. In any such instance, and in accordance with the provisions of this
Agreement, each Warrantholder will be entitled to have a number of Warrants
equivalent to such Warrantholder's beneficial interest in the Global Warrant
Certificate registered in the name of the Warrantholder and will be entitled
to physical delivery of such Warrants in definitive form. The provisions of
Section 1.08 shall apply only if and when the Conversion Option is utilized
and a Global Warrant Certificate is issued hereunder. Unless the context
shall otherwise require, and subject to the provisions of Section 1.08, all
references in this Agreement to the Warrant Certificates (other than in
Sections 1.02, 1.03, 1.04 and 1.08) shall include the Global Warrant
Certificate in the event that the Global Warrant Certificate is issued.
SECTION 1.08. Global Warrant Certificate. (a) Any Global
Warrant Certificate issued in accordance with this Section 1.08 shall be
substantially in the form set forth in Exhibit A-1 hereto, with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Agreement, and may represent any number of whole
Warrants. Each Global Warrant Certificate may have imprinted or otherwise
reproduced thereon such letters, numbers or other marks of identification or
designation and such legends or endorsements as the officers of the Company
executing the same may approve (execution thereof to be conclusive evidence of
such approval) and which are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto, or with any rule or regulation of any stock
exchange on which the Warrants may be listed or of any Depository referred to
herein, or to conform to usage. Each Global Warrant Certificate shall be
signed on behalf of the Company upon the same conditions, in substantially the
same manner and with the same effect as the Warrant Certificates.
(b) The Warrant Agent is authorized, from time to time during
the Conversion Option Period, upon receipt of a Global Warrant Certificate
from the Company, duly executed on behalf of the Company, to countersign such
Global Warrant Certificate. The Global Warrant Certificate shall be manually
countersigned and dated the date of its countersignature by the Warrant Agent
and shall not be valid for any purpose unless so countersigned. The Warrant
Agent shall deliver the Global Warrant Certificate to or upon the order of the
Depository against receipt of an appropriate amount of Definitive Warrants (as
defined herein) (such Definitive Warrants shall be disposed of in accordance
with instructions provided by the Company). One or more Global Warrant
Certificates may be executed by the Company and delivered to the Warrant Agent
on or after the date of execution of this Agreement; provided that only one
Global Warrant Certificate shall be outstanding at any one time.
The Company reserves the right to issue, from time to time
after the date of execution of this Agreement, additional Warrants, and in
connection therewith the Global Warrant Certificate may be exchanged for a new
Global Warrant Certificate to reflect the issuance by the Company of such
additional Warrants. To effect such an exchange the Company shall deliver to
the Warrant Agent a new Global Warrant Certificate duly executed on behalf of
the Company as provided in Section 1.02. The Warrant Agent shall countersign
the new Global Warrant Certificate as provided in this Section and shall
deliver the new Global Warrant Certificate to the Depository in exchange for,
and upon receipt of, the Global Warrant Certificate then held by the
Depository. The Warrant Agent shall cancel the Global Warrant Certificate
delivered to it by the Depository, dispose of such Global Warrant Certificate
and provide a certificate of disposition to the Company.
(c) The Global Warrant Certificate will initially be
registered in the name of a nominee of the Depository. The Warrant holdings
of the Participants will be recorded on the books of the Depository. The
holdings of customers of the Participants and the identity of the
Warrantholders will be reflected on the books and records of such Participants
and will not be known to the Warrant Agent, the Company or the Depository.
The Global Warrant Certificate will be held by the Depository or its agent.
Neither the Company nor the Warrant Agent will have any
responsibility or liability for any aspect of the records relating to
beneficial ownership interests in the Global Warrant Certificate or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
The Company may from time to time select a new entity to act as
Depository with respect to the Warrants and, if such selection is made, the
Company shall promptly give the Warrant Agent notice to such effect
identifying the new Depository, and the Global Warrant Certificate shall be
delivered to the Warrant Agent and shall be transferred to the new Depository
as provided below as promptly as possible. Appropriate changes may be made in
the forms of the Global Warrant Certificate, the Exercise Notice and the
related notices to be delivered in connection with an exercise to reflect the
selection of the new Depository.
(d) Except as otherwise provided herein or in the Global
Warrant Certificate, the Warrant Agent shall from time to time register the
transfer of the Global Warrant Certificate in its records (which may be
maintained electronically), subject to such reasonable regulations as the
Company or the Warrant Agent may prescribe, only to the Depository, to another
nominee of the Depository, to a successor Depository or to a nominee of a
successor Depository, upon surrender of such Global Warrant Certificate, duly
endorsed, or accompanied by a written instrument or instruments of transfer in
form satisfactory to the Warrant Agent and the Company, duly executed by the
Registered Holder thereof or by the duly appointed legal representative
thereof, or by its duly authorized attorney. Such signature shall be
guaranteed by a bank or trust company with a correspondent office in The City
of New York or by a broker or dealer which is a member of the NASD or by a
member of a national securities exchange. Upon any such registration of
transfer, a new Global Warrant Certificate shall be issued to the transferee
and the surrendered Global Warrant Certificate shall be cancelled by the
Warrant Agent.
The Global Warrant Certificate may be transferred as provided
in paragraph (d) above, when surrendered to the Warrant Agent's Window,
Attention: Transfer Department, or at the address of any successor Warrant
Agent (as provided in Section 5.03), for another Global Warrant Certificate of
like tenor and representing a like number of unexercised Warrants.
ARTICLE II
DURATION AND EXERCISE OF WARRANTS
SECTION 2.01. Duration of Warrants; Minimum Exercise
Amounts; Exercise Notice. (a) Subject to the limitations set
forth herein and in Sections 2.02 and 2.03, each Warrant may be irrevocably
exercised in whole but not in part, immediately upon issuance. Subject to the
limitations set forth herein and except in the case of automatic exercise or
following an Extension Event, each Warrant shall be irrevocably exercised
either (A) in the case of Warrants represented by Warrant Certificates
("Definitive Warrants"), on any New York Business Day during the period from
the date of issuance until 3:00 P.M., New York City time, on the earlier of
(i) the New York Business Day immediately preceding the Expiration Date (as
defined below) and (ii) any Delisting Date (as defined herein) by delivering
or causing to be delivered to the Warrant Agent (at the Warrant Agent's
Window, Attention: Tender Department) the Warrant Certificate representing such
Warrant, with the Exercise Notice duly completed and executed by the
Registered Holder of such Warrant or (B) in the case of Warrants represented
by a Global Warrant Certificate ("Book-entry Warrants"), on any New York
Business Day during the period from the Initial Conversion Date until 3:00
P.M., New York City time, on the earlier of (i) the New York Business Day
immediately preceding the Expiration Date and (ii) any Delisting Date, by
causing (x) such Warrants to be transferred free to the Warrant Agent on the
records of the Depository in accordance with the Depository's
Deposit/Withdrawal at Custodian procedures, as provided in the Representations
Letter, and (y) a duly completed and executed Exercise Notice to be received
by the Warrant Agent (the Warrant Agent's facsimile transmission number for
such purpose is (212) 946-7682) from a Participant acting, directly or
indirectly, on behalf of the Warrantholder (such form of Exercise Notice may
be obtained from the Warrant Agent); provided, however, that Exercise Notices
are subject to rejection by the Warrant Agent as provided herein. The
"Expiration Date" shall be August __, 1997. Neither the Warrant Agent nor the
Determination Agent will be responsible for any losses resulting from a failure
of a brokerage firm or a Participant to properly exercise Warrants on behalf
of a Warrantholder.
(b) No fewer than 500 Warrants may be exercised by or on
behalf of any one Warrantholder at any one time, except that no such minimum
exercise amount shall apply in the case of automatic exercise on or following
the Expiration Date or on any Delisting Date, or in the case of cancellation
of the Warrants as a result of an Extraordinary Event (as defined herein). A
Warrantholder shall not combine Definitive Warrants and Book-entry Warrants or
Book-entry Warrants held through more than one Participant to meet the 500
Warrant minimum exercise requirement provided herein. With the exception of
the Limit Option, an Exercise Notice shall be unconditional. Except as
provided in Section 2.02(c), the Warrant Agent shall be entitled, with no duty
of inquiry, to rely conclusively on any Exercise Notice received by it and on
any representation of the exercising Warrantholder contained therein.
(c) "Exercise Notice" means an irrevocable notice of exercise
to the Warrant Agent at the Warrant Agent's Window, Attention: Tender
Department (or by facsimile transmission in accordance with Section
2.01(a)(B)(y) in the case of Exercise Notices for Book-entry Warrants), which
notice (A) for Definitive Warrants, shall be on the reverse of the Warrant
Certificate or such other form as the Company and the Warrant Agent may
approve and (B) for Book-entry Warrants, shall be substantially in the form
set forth in Exhibit A-2 hereto or such other form as the Company and the
Warrant Agent may approve and may be given by facsimile transmission.
SECTION 2.02. Exercise, Valuation and Delivery of Warrants.
(a) Except for Warrants subject to automatic exercise, or Warrants subject to
the Limit Option or following an Extension Event, the "Exercise Date" for a
Warrant will be (i) the New York Business Day on which the Warrant Agent
receives at the Warrant Agent's Window, Attention: Tender Department, the
Warrant (or transfer of such Warrant through the Depository in the case of
Book-entry Warrants) and Exercise Notice (by facsimile transmission in
accordance with Section 2.01(a)(B)(y) in the case of Exercise Notices for
Book-entry Warrants) in proper form with respect to such Warrant, if received
at or prior to 3:00 P.M., New York City time, on such day, or (ii) if the
Warrant Agent receives such Warrant (or transfer of such Warrant through the
Depository in the case of Book-entry Warrants) or Exercise Notice after 3:00
P.M., New York City time, on a New York Business Day, then the New York
Business Day next succeeding the New York Business Day on which such Warrant
or Exercise Notice is received.
(b) Except following an Extension Event, the "Valuation Date"
for a Warrant shall be the first Index Calculation Day (as defined herein)
following the applicable Exercise Date (subject to postponement upon the
occurrence of an Extraordinary Event or Exercise Limitation Event (as defined
herein) or as a result of the exercise of a number of Warrants exceeding the
limits on exercise set forth herein. For purposes of this Agreement, "Index
Calculation Day" means any day the Nikkei 225 Index (or if a Substitute Index
has been substituted for the Nikkei 225 Index, such Substitute Index) or any
Successor Index (as defined herein) is calculated and published.
(c) The Warrant Agent shall, following receipt of proper and
timely delivery of a Warrant in accordance with Section 2.02(a) accompanied by
a completed Exercise Notice:
(i) promptly (1) for Definitive Warrants, determine whether
such Exercise Notice has been duly completed and is in proper form
duly executed by the Registered Holder thereof or by the duly
appointed legal representative thereof or by a duly authorized
attorney, (2) for Book-entry Warrants, determine whether such
Exercise Notice has been duly completed and is in proper form; and if
the Warrant Agent determines that the Exercise Notice has not been
duly completed or is not in proper form or, in the case of Definitive
Warrants, has not been so executed, the Warrant Agent (A) promptly
shall reject such Exercise Notice and shall send to the entity that
executed such Exercise Notice a notice of rejection substantially in
the form set forth in Exhibit B or Exhibit B-1 hereto, as the case
may be, and, in the case of Definitive Warrants, shall return to the
Registered Holder that submitted such Exercise Notice, by first class
mail, the Warrant Certificates evidencing such Warrants, or, in the
case of Book-entry Warrants, shall re-deliver such Warrants free
through the facilities of the Depository to the account from which
they were transferred to the Warrant Agent and (B) shall not take the
actions required by clauses (ii)-(vii) below with respect to such
Exercise Notice or the related Warrants; provided, however, that the
Warrant Agent shall deliver a copy of the Exercise Notice relating to
such Warrants to the Company as required by Section 2.02(c)(vii)
below and the Company may waive any defect in the form of such
Exercise Notice;
(ii) notify the Company and the Determination Agent (and such
other parties (not to exceed two) as the Company shall designate in
writing) by 5:00 P.M., New York City time, on the New York Business
Day that such Exercise Notice has been received (or shall be deemed
to have been received) of (A) the total number of Warrants covered by
such Exercise Notice, (B) the number of such Warrants subject to the
Limit Option (as defined herein) ("Contingently Tendered Warrants")
and (C) the number of such Warrants not subject to the Limit Option;
(iii) if any of the Warrants covered by such Exercise Notice
constitute Contingently Tendered Warrants, by 12:00 Noon, New York
City time, on the Valuation Date or if such date is not a New York
Business Day, then the next succeeding New York Business Day, (A)
except as provided in Section 2.02(j)(i), determine the Limit Option
Reference Index (as defined herein) for such Warrants (based on the
applicable Limit Option Reference Index provided by the Determination
Agent pursuant to Section 2.02(g)); (B) determine in accordance with
Section 2.02(j) (based on the applicable Spot Nikkei 225 Index
provided by the Determination Agent pursuant to 2.02(g)) whether such
Contingently Tendered Warrants will be subject to exercise after
giving effect to the Limit Option and, if such Warrants will not be
subject to exercise, send, in the case of Definitive Warrants, to the
Registered Holder or, in the case of Book-entry Warrants to the
Participant, that submitted such Exercise Notice a notice of
rejection substantially in the form set forth in Exhibit C-1 or
Exhibit C-2 hereto, as appropriate, with respect to such Warrants and
return to the Registered Holder that submitted such Exercise Notice,
by first class mail, the Warrant Certificates evidencing such
Warrants, or, in the case of Book-entry Warrants, redeliver the
Warrants free through the facilities of the Depository to the account
of such Participant; and (C) notify the Company and the Determination
Agent as to whether such Contingently Tendered Warrants will be
subject to exercise;
(iv) by 12:00 Noon, New York City time, on the Valuation Date
or if such date is not a New York Business Day, then the next
succeeding New York Business Day, (A) determine the sum of (1) the
number of such Warrants not subject to the Limit Option (i.e., the
number of Warrants determined pursuant to clause (ii)(C) above) plus
(2) the number of such Warrants that are Contingently Tendered
Warrants that will be subject to exercise notwithstanding the Limit
Option (i.e., the number of Warrants so identified pursuant to clause
(iii)(B) above) (all of such Warrants, the "Exercised Warrants") and
(B) notify the Company and the Determination Agent of the total
number of Exercised Warrants so determined (if such number is zero,
the Warrant Agent shall not take the actions required by clauses (v),
(vi) and (vii) of this Section 2.02(c) with respect to such Exercise
Notice or the related Warrants);
(v) by 10:00 A.M., New York City time, on the New York Business
Day next succeeding the Valuation Date (unless the Cash Settlement
Value shall be calculated by the Determination Agent) determine the
Cash Settlement Value of the Exercised Warrants based on the Spot
Nikkei 225 Index values provided by the Determination Agent pursuant
to Section 2.02(g) and in the manner set forth in Section 2.02(e);
(vi) notify the Company (and such other parties (not to exceed
two) as the Company shall designate in writing) by 12:00 noon, New
York City time, on the New York Business Day next succeeding the
Valuation Date of the aggregate Cash Settlement Value payable in
respect of the Exercised Warrants (unless the Cash Settlement Value
shall be calculated by the Determination Agent), and send notices of
confirmation substantially in the form included in Exhibit B or
Exhibit B-1 hereto, as the case may be, to the Registered Holder or
Participant; and
(vii) promptly deliver a copy of each Exercise Notice to the
Company and advise the Company of such other matters relating to the
Exercised Warrants as the Company shall reasonably request. Any
notice to be given to the Company by the Warrant Agent pursuant to
this Section 2.02 or Section 2.03 shall be by telephone (promptly
confirmed in writing) or facsimile transmission.
Except in the case of Warrants subject to automatic exercise,
Warrants that upon exercise entitle the holder thereof to receive an
Alternative Settlement Amount and Warrants deemed worthless following an
Extension Event, if on any Valuation Date the Cash Settlement Value for any
Warrants then exercised would be zero, then the attempted exercise of any such
Warrants shall be void and of no effect and (i) for Definitive Warrants, the
Warrant Certificate evidencing such Warrants shall be promptly returned by the
Warrant Agent to the Registered Holder by first class mail at the Company's
expense or (ii) for Book-entry Warrants, the Warrants will be transferred by
the Warrant Agent back to the Participant that submitted them free on the
records of the Depository and, in either case such Warrantholder shall be
permitted to re-exercise such Warrants prior to the Expiration Date or any
Delisting Date, as the case may be.
(d) Except for Warrants subject to automatic exercise,
Warrants that upon exercise entitle the holder thereof to receive an
Alternative Settlement Amount and Warrants deemed worthless following an
Extension Event, if the Company has made adequate New York Clearing House or
next day funds available to the Warrant Agent in a timely manner, which shall
in no event be later than 3:00 P.M., New York City time, on the fourth New
York Business Day following a Valuation Date (or, if the Valuation Date is not
a New York Business Day, on the fourth New York Business Day following the New
York Business Day next succeeding the Valuation Date) (the "Funding Date"),
the Warrant Agent will be responsible for making its payment available (i) for
Definitive Warrants, to each Registered Holder of an Exercised Warrant in the
form of a cashier's check or an official bank check, or (in the case of
payments of at least $100,000) by wire transfer to a U.S. Dollar account
maintained by such Registered Holder in the United States (at such Registered
Holder's election as specified in the applicable Exercise Notice) prior to the
close of business on the first New York Business Day immediately succeeding
such Funding Date (the "Settlement Date") or (ii) for Book-entry Warrants, to
each appropriate Participant in the form of a cashier's check or an official
bank check, or (in the case of payments of at least $100,000) by wire transfer
to a U.S. Dollar account maintained by such Participant in the United States
(at the Participant's election as specified in the Exercise Notice) prior to
the close of business on the Settlement Date. For either clause (i) or (ii)
above, such payment shall be in the amount of the aggregate Cash Settlement
Value in respect of the Warrant Certificates or Warrants that were delivered
to the Warrant Agent (together with the related Exercise Notice) as provided
in Sections 2.01 and 2.02(a), (b) and (c). Each Participant will be
responsible for disbursing such payments to the Warrantholders that it
represents and to each brokerage firm for which it acts as agent.
(e) Except in the case of the substitution of a Substitute
Index for the Nikkei 225 Index, the "Cash Settlement Value" of an Exercised
Warrant will be an amount in U.S. Dollars equal to the quotient (rounded down
to the nearest cent) of (A) the amount, if any, by which the Spot Nikkei 225
Index for the applicable Valuation Date for such Warrant exceeds the Strike
Level (as defined herein), divided by (B) the product of 4.0 and the fixed
Japanese Yen/U.S. Dollar exchange rate of ______ Yen per U.S. $1.00. The Cash
Settlement Value is calculated using the following formula:
Cash Settlement Value = the greater of
(i) $0 and (ii) $1 x (Spot Nikkei 225 Index --- Strike Level)
--------------------------------------------
4 x (__Yen/U.S. $1.00)
The "Strike Level" is ______, which was determined by the Determination Agent
and was the closing value (afternoon session) of the Nikkei 225 Index on
August __, 1995, but is subject to adjustment as provided below. In the event
that a Substitute Index is substituted (as provided in Section 2.02(h)) for
the Nikkei 225 Index, the Strike Level will be adjusted as follows:
Strike Level x Current Value of Substitute Index
- ---------------------------------
Current Value of Nikkei 225 Index
and the Cash Settlement Value of a Warrant shall be the amount in U.S. Dollars
equal to the quotient (rounded down to the nearest cent) of the amount, if
any, by which the Spot Nikkei 225 Index for the applicable Valuation Date for
such Warrant exceeds the Strike Level (as adjusted pursuant to the formula
above), divided by the Adjusted Divisor. The "Adjusted Divisor" shall be an
amount equal to 4 multiplied by the fixed Japanese Yen/U.S. Dollar exchange
rate of Yen__/U.S. $1.00 multiplied by a fraction, the numerator of which
shall be the Current Value of the Substitute Index and the denominator of
which shall be the Current Value of the Nikkei 225 Index.
The "Current Value" of the Nikkei 225 Index and of the
Substitute Index shall equal their respective levels reported by the relevant
exchange at the close of business on the day that the Determination Agent
substitutes the Substitute Index for the Nikkei 225 Index or, if such day is
not a Tokyo Business Day, the Tokyo Business Day immediately preceding such
day. In the event of such substitution, the Determination Agent shall
promptly notify the Warrant Agent of the new Strike Level and of said Current
Values.
For purposes of this Agreement, the "Nikkei 225 Index" means
the Nikkei 225 Index designed, developed, maintained and operated by the Nihon
Keizai Shimbum, Inc. (the "NKS"). The "Spot Nikkei 225 Index" for any date
means the closing value (afternoon session) on such date of the Nikkei 225
Index (or, in the event of a substitution of a Substitute Index for the Nikkei
225 Index, the closing level on such date of such Substitute Index) or any
Successor Index. For purposes of this Agreement, "New York Business Day"
means any day other than a Saturday, Sunday or a day on which either the
American Stock Exchange, Inc. (the "AMEX") or the New York Stock Exchange is
not open for securities trading or commercial banks in New York City are
required or authorized by law or executive order to remain closed. "Tokyo
Business Day" means any day other than (i) a Saturday, Sunday or day on which
banks are not open for a full day of business in Tokyo or (ii) a day on which
the Tokyo Stock Exchange (the "TSE"), the Singapore International Monetary
Exchange Ltd. (the "SIMEX") or the Osaka Securities Exchange (the "OSE") are
not open for business. "Tokyo Trading Day" means any day on which the TSE is
open for business. References in this Agreement to "U.S. Dollars", "U.S.$" or
"$" are to the lawful currency of the United States of America and references
to "Japanese Yen" or "Yen" are to the lawful currency of Japan.
(f) In the case of exercise of Book-Entry Warrants, the
Warrant Agent shall cause its records, which may be kept electronically, to be
marked to reflect the reduction in the number of Warrants represented by the
Global Warrant Certificate by the number of Warrants that were delivered to
the Warrant Agent and for which payment has been made as provided in Section
2.02(d) promptly after such delivery and payment. Absent manifest error, the
Warrant Agent's records shall be conclusive evidence of such matters.
(g) The Company hereby appoints Morgan Stanley & Co.
Incorporated, and Morgan Stanley & Co. Incorporated accepts such appointment,
to be the Company's Determination Agent to determine the Spot Nikkei 225 Index
in accordance with this Section 2.02(g) and to make such calculations as may
be required upon the occurrence of any of the circumstances described in
Section 2.02(i) or 2.03, including, without limitation, calculation of the Cash
Settlement Value or the Alternative Settlement Amount, as applicable, of a
Warrant. The Determination Agent shall act as an independent expert and not
as an agent of the Company, and, unless otherwise provided by this Agreement,
its calculations and determinations under this Agreement shall, absent
manifest error, be final and binding on the Company, the Warrant Agent, the
Warrantholders and any Participant. Any such calculations will be made
available to a Warrantholder for inspection at the Warrant Agent's Office.
The Company agrees, for the benefit of the Warrantholders that
there shall at all times be a Determination Agent hereunder until all the
Warrants are no longer outstanding or until monies for the payment of all
outstanding Warrants, if any, shall have been paid to the Warrant Agent and
shall have been returned to the Company as provided in Section 2.06, whichever
occurs earlier. Resignation, removal and appointment of the Determination
Agent shall be in accordance with the procedures set forth for the
resignation, removal and appointment of the Warrant Agent, as provided in
Section 5.03, except that a successor Determination Agent need not be a
banking institution with offices in the Borough of Manhattan, The City of New
York, and may only be appointed if such successor has been nominated by the
Company and approved by the predecessor Determination Agent.
The Company agrees promptly to pay the Determination Agent the
compensation to be agreed upon with the Company for all services rendered by
the Determination Agent hereunder. The Company also agrees to indemnify the
Determination Agent for, and to hold it harmless against, any loss, liability,
cost or expense (including reasonable attorneys' fees and expenses) incurred
by the Determination Agent by reason of its being made a party to a suit or
claim arising out of this Agreement; provided, however, that such indemnity
shall in no event apply to the extent that any such loss, liability, cost or
expense is a result of the negligence, bad faith or breach of this Agreement
on its part in connection with the services rendered by it hereunder. The
indemnity obligation of the Company shall continue notwithstanding the
termination of this Agreement or the resignation or removal of the
Determination Agent.
Provided that the Determination Agent has received the Warrant
Agent's notice pursuant to Section 2.02(c)(ii), the Determination Agent shall
provide to the Warrant Agent by 10:00 A.M., New York City time, on the
Valuation Date or if such date is not a New York Business Day, then the next
succeeding New York Business Day, the Limit Option Reference Index applicable
to any of the Warrants specified in such notice and the Spot Nikkei 225 Index
for the Index Calculation Day that but for the provisions of Section 2.02(j),
if any of the Warrants covered by the Exercise Notice delivered to the Warrant
Agent constitute Contingently Tendered Warrants, would be the Valuation Date
for the Warrants specified in such notice.
(h) Upon the occurrence of a Substitution Event, the Company
shall promptly give notice to the Warrantholders, by publication in a United
States newspaper with a national circulation (currently expected to be the
Wall Street Journal), specifying: (i) the date on which the Substitution
Event was deemed to occur pursuant to this Section 2.02(h), (ii) that a
Substitute Index will be substituted for the Nikkei 225 Index on the
Substitution Date (as defined herein), (iii) the name of the Substitute Index,
(iv) the Substitution Date, (v) the Strike Level as adjusted pursuant to
Section 2.02(e) and (vi) the Adjusted Divisor. The Warrant Agent at the
request and expense of the Company and on behalf of the Company shall mail such
notice to each Warrantholder. On the Substitution Date, the Substitute Index
will be substituted for the Nikkei 225 Index. From and after the Substitution
Date, the index used to determine the Spot Nikkei 225 Index used to calculate
the Cash Settlement Value or Alternative Settlement Amount, as the case may
be, of the Warrants will be such Substitute Index. The "Substitution Date"
shall be the thirtieth calendar day (or, if such day is not a New York Business
Day, the next succeeding New York Business Day) following such giving of
notice of the Substitution Event.
A "Substitution Event" will occur if, as determined by the
Determination Agent (whose opinion shall be conclusive and binding on the
Company and on the holders of the Warrants) the following conditions are
fulfilled:
(i) Either of the following has occurred:
(A) The AMEX or another United States securities
exchange publishes (on a basis not less regularly than each day
on which such exchange and the TSE are open for trading) an
index (the "New Japan Index") which: for a period of 90 days
immediately preceding the date of the Substitution Event has a
correlation based on daily, closing value to closing value,
percentage changes of not less than 90% with the Nikkei 300
Index (as defined in the Prospectus Supplement dated August __,
1995 relating to the Warrants (the "Prospectus Supplement"));
and warrants with payments determined by reference to the New
Japan Index have been approved to be listed on the AMEX or such
other exchange by the Securities and Exchange Commission; or
(B) Warrants with payments determined by reference to
the Nikkei 300 Index have been approved to be listed on the
AMEX or such other exchange by the Securities and Exchange
Commission; and
(ii) Either of the following has occurred:
(A) the Nikkei 225 Index (as defined in the Prospectus
Supplement) is no longer published and/or the Nikkei 225
Futures Contracts (as defined in the Prospectus Supplement)
have been delisted from trading on the OSE; or
(B) the Adjusted Trading Volume and the Adjusted Open
Interest (in each case, as defined herein) for the two Nikkei
300 Futures Contracts (as defined in the Prospectus Supplement)
with expiration dates closest in time to the Substitution Event
exceed the Adjusted Trading Volume and the Adjusted Open
Interest, respectively, for the two Nikkei 225 Futures
Contracts with expiration dates closest in time to the
Substitution Event, each for any three-month period prior to
the date of any Substitution Event; and
(iii) To the extent required, the Company, the AMEX and/or such
exchange shall have obtained any license necessary to use the New
Japan Index or the Nikkei 300 Index.
Notwithstanding the above, unless the Nikkei 225 Index is no
longer published and/or the Nikkei 225 Futures Contracts shall have been
delisted from trading on the OSE, a Substitution Event will not be deemed to
have occurred on any of the 60 calendar days immediately preceding the
Expiration Date.
A "Substitute Index" means, in the event that the circumstances
described in clause (i)(A) above have occurred, a New Japan Index or, in the
event that the circumstances described in clause (i)(B) above have occurred,
the Nikkei 300 Index.
"Adjusted Trading Volume" for the Nikkei 300 Futures Contracts
or the Nikkei 225 Futures Contracts means the arithmetic mean, for any period,
of the amounts on each trading day equal to the product of: (x) the number of
such futures contracts traded on such day and (y) the closing level on such
day of the index to which such futures contracts relate, multiplied by
Yen10,000, in the case of the Nikkei 300 Futures Contracts, or Yen1,000, in
the case of the Nikkei 225 Futures Contracts (the "Contract Multiplier").
"Adjusted Open Interest" for the Nikkei 300 Futures Contracts or the Nikkei
225 Futures Contracts means the arithmetic mean, for any period, of the
amounts on each trading day equal to the product of: (x) the open interest
in such futures contracts on such day and (y) the closing level on such day of
the index to which such futures contracts relate, multiplied by the Contract
Multiplier.
(i) In the event that the Nikkei 225 Index (or if a Substitute
Index has been substituted for the Nikkei 225 Index, such Substitute Index) is
not published by NKS but is published by another person not affiliated with
the Company and acceptable to the Company (the "Third Party"), then the Spot
Nikkei 225 Index for any date thereafter will be determined based on the
closing value (afternoon session) of the Nikkei 225 Index (or such Substitute
Index, as the case may be) as published by such Third Party. If NKS or any
Third Party discontinues publication of the Nikkei 225 Index (or if a
Substitute Index has been substituted for the Nikkei 225 Index, such
Substitute Index) and publishes a successor or substitute index that the
Company determines, in its sole discretion, to be comparable to the Nikkei 225
Index (or such Substitute Index, as the case may be) (any such index being a
"Successor Index"), then the Spot Nikkei 225 Index for any date thereafter
will be determined by the Determination Agent on behalf of the Company based
on the closing level of the Successor Index on such date. If the NKS or any
Third Party makes a material change in the formula for, or the method of
calculating, the Nikkei 225 Index, any Substitute Index or any Successor
Index, the Determination Agent shall make such calculations as may be required
to determine the applicable Cash Settlement Value using the formula and method
of calculating the Nikkei 225 Index, any Substitute Index or any Successor
Index as in effect prior to such change or modification. If NKS and/or any
Third Party discontinues publication of the Nikkei 225 Index, any Substitute
Index and/or Successor Index, the Determination Agent will determine the
applicable Cash Settlement Value based on the formula and method used in
calculating the Nikkei 225 Index, any Substitute Index or any Successor Index
as in effect on the date the Nikkei 225 Index, such Substitute Index or such
Successor Index was last published.
If calculation or publication of the Nikkei Index, Substitute
Index or a Successor Index is modified, discontinued or suspended, as provided
in this Section 2.02(i), other than as provided in Section 2.02(h), then the
Determination Agent shall promptly notify the Warrant Agent, and the Warrant
Agent shall in turn promptly notify the Warrantholders in accordance with
Section 6.04 hereof, of such modification, discontinuance, suspension or
substitution and of any modification or adjustment to be made with respect to
calculation of the Cash Settlement Value or Alternative Settlement Amount, as
applicable.
The Determination Agent will have no responsibility for good
faith errors or omissions in calculating or disseminating information
regarding the Nikkei 225 Index, any Substitute Index or any Successor Index,
adjustments or calculations by the Determination Agent (as provided above) in
order to arrive at a calculation of a stock index comparable to the Nikkei 225
Index, any Substitute Index or any Successor Index, or the Cash Settlement
Value or the Alternative Settlement Amount, as applicable.
(j) Except for Warrants subject to automatic exercise,
Warrants with respect to which payments of any Alternative Settlement Amount
are made and Warrants deemed worthless following an Extension Event (all as
described in Section 2.03 below) each Warrantholder, in connection with any
exercise of Warrants (including an exercise with a postponed Valuation Date
following an Extraordinary Event or an Exercise Limitation Event), shall have
the option (the "Limit Option") to specify in the related Exercise Notice that
such exercise be subject to the condition that the Spot Nikkei 225 Index that
would otherwise be used to determine the Cash Settlement Value of such
Warrants not be five hundred (500) or more points lower than the Limit Option
Reference Index for such Warrants. "Limit Option Reference Index", with
respect to any Contingently Tendered Warrants, means, subject to adjustment as
described below, the closing value (afternoon session) of the Nikkei 225 Index
on the relevant Exercise Date (or, if such Exercise Date is not an Index
Calculation Day, on the immediately preceding Index Calculation Day). In the
event that a Substitute Index is substituted (as provided in Section 2.02(h))
for the Nikkei 225 Index, the Limit Option Reference Index will be the number
of points lower than the closing level of such Substitute Index determined as
follows:
500 x Current Value of Substitute Index
- ---------------------------------
Current Value of Nikkei 225 Index
If a Warrantholder elects the Limit Option in connection with any exercise of
Warrants, the following provisions shall apply:
(i) To be valid, such election must be specified in the
related Exercise Notice. Each of the Warrant Agent and the Company
shall be entitled to rely conclusively on such Exercise Notice, as
received by the Warrant Agent, in determining whether such election
has been validly made. In connection with any exercise of 1,000 or
more Warrants, a Warrantholder may elect to subject only a portion of
such Warrants to the Limit Option; provided that the number of such
Warrants subject to the Limit Option and the number of such Warrants
not subject to the Limit Option shall in each case not be less than
500; provided, further that, a Warrantholder shall not combine
Definitive Warrants and Book-entry Warrants or Book-entry Warrants
held through more than one Participant to meet the 500 Warrant
minimum exercise requirement. Registered Holders and Participants
shall be required to certify that the number of Warrants exercised on
behalf of any Warrantholder pursuant to the related Exercise Notice
that are subject to the Limit Option is an amount that is not less
than 500.
(ii) Except as provided in Section 2.02(j)(i), the Limit Option
Reference Index shall be determined by the Warrant Agent, which
determination shall be conclusive and binding for all purposes
relating to such exercise.
(iii) In the event that the Spot Nikkei 225 Index for the first
Index Calculation Day following the relevant Exercise Date is five
hundred (500) or more points lower than the Limit Option Reference
Index (such number of points being subject to adjustment as provided
above) for such Warrants, such Warrants (A) shall not be subject to
exercise and shall be treated for all purposes of this Agreement and
the Warrant Certificates and Global Warrant Certificate as if the
related Exercise Notice had never been received by the Warrant Agent,
and (B) shall not constitute "Exercised Warrants" for purposes of
Section 2.02(c). If such Spot Nikkei 225 Index is not five hundred
(500) or more points lower than such Limit Option Reference Index
(such number of points being subject to adjustment as provided
above), such Warrants shall be subject to exercise as provided in
this Section 2.02 and shall be deemed to be "Exercised Warrants" for
such purposes. The Warrant Agent's determination shall be conclusive
and binding for all purposes relating to such Warrants.
(iv) Except as provided in Section 2.03(b), the Limit Option
(based on the Limit Option Reference Index as determined for the
relevant Exercise Date or, if applicable, the first Index Calculation
Day preceding such Exercise Date) shall continue to be applicable to
any Exercised Warrant for which the Valuation Date has been postponed
as a result of the occurrence of an Extraordinary Event or an
Exercise Limitation Event until the Warrants are cancelled as
provided in Section 2.03(b) or until the Expiration Date or any
Delisting Date.
SECTION 2.03. Automatic Exercise of Warrants; Exercise upon an
Extension Event, an Extraordinary Event or an Exercise Limitation Event. (a)
Subject to the provisions of Section 2.03(b) regarding Extension Events, all
Warrants for which the Warrant Agent has not received a valid Exercise Notice
in proper form at or prior to 3:00 P.M., New York City time, on (i) the New
York Business Day immediately preceding the Expiration Date or (ii) with
respect to any date prior to the Expiration Date, the last New York Business
Day prior to the effective date on which the Warrants are delisted from, or
permanently suspended from trading (within the meaning of the Securities
Exchange Act of 1934 (the "Exchange Act") and the rules and regulations of the
Securities and Exchange Commission thereunder) on the AMEX, and not accepted
prior thereto or at the same time for trading pursuant to the rules of another
SRO that are filed with the Securities and Exchange Commission under the
Exchange Act (such New York Business Day being a "Delisting Date") or for
which the Warrant Agent has received a valid Exercise Notice in proper form
but with respect to which timely delivery of the relevant Warrants has not
been made by such time, or the Valuation Date for which has as of such time
been postponed as provided in Section 2.03, shall be deemed to be
automatically exercised as of such date without any requirement of delivery of
an Exercise Notice to the Warrant Agent. If such Delisting Date occurs after
the Expiration Date and prior to any Extended Expiration Date (as defined in
Section 2.03(b)(ii)), the Warrants will be deemed worthless. However, if the
Company first receives notice of the delisting or suspension of the Warrants
on the same day on which such Warrants are delisted or suspended, such day will
be deemed a Delisting Date for purposes of this Agreement. The Exercise Date
for such Warrants shall be the Expiration Date or Delisting Date, as the case
may be, or, if such date is not a New York Business Day, the next succeeding
New York Business Day and the Valuation Date for such Warrants shall be the
first Index Calculation Day following such date.
The Warrant Agent shall by 5:00 P.M., New York City time, on
the Expiration Date or any earlier date on which the Warrant Agent receives
notice of any delisting of the Warrants, as the case may be, notify the
Company and the Determination Agent (and such other parties (not to exceed
two) as the Company shall designate in writing) of the number of Warrants to
be automatically exercised. On the Valuation Date for such Warrants (or, if
such Valuation Date is not a New York Business Day, on the next succeeding New
York Business Day), the Warrant Agent shall (i) except as provided in Section
2.02(i), determine the Cash Settlement Value (in the manner provided in
Section 2.02(e)) of the Warrants to be automatically exercised; (ii) by 5:00
P.M., New York City time, on the New York Business Day next succeeding such
Valuation Date, notify the Company (and such other parties (not to exceed two)
as the Company shall designate in writing) of the Cash Settlement Value payable
in respect of such exercised Warrants (unless the Cash Settlement Value shall
be calculated by the Determination Agent); and (iii) advise the Company of
such other matters relating to the exercised Warrants as the Company shall
reasonably request.
The Determination Agent shall by 1:00 P.M., New York City time,
on the applicable Valuation Date, notify the Warrant Agent of the Spot Nikkei
225 Index applicable to the Warrants to be automatically exercised.
In the case of Definitive Warrants subject to automatic
exercise (other than Definitive Warrants subject to postponed exercise
following the occurrence of an Extraordinary Event, Exercise Limitation Event
or Extension Event as described in Section 2.03(b)), if the Company has made
adequate New York Clearing House or next day funds available to the Warrant
Agent in a timely manner, which shall in no event be later than 3:00 P.M., New
York City time, on the fourth New York Business Day following the Valuation
Date for automatically exercised Warrants (or if such Valuation Date is not a
New York Business Day, on the fourth New York Business Day following the New
York Business Day next succeeding such Valuation Date) (in any such case, the
"Automatic Funding Date"), the Warrant Agent will be responsible for making
its payment available to the appropriate Registered Holder in the form of a
cashier's check or an official bank check, or (in the case of payments of at
least $100,000) by wire transfer to a U.S. Dollar account maintained by such
Registered Holder in the United States (at such Registered Holder's election
upon written notice to the Company and the Warrant Agent) prior to the close
of business on the Automatic Funding Date (or, in the case of payments made by
wire transfer, prior to the close of business on the New York Business Day
next succeeding the Automatic Funding Date), against receipt by the Warrant
Agent at the Warrant Agent's Window, Attention: Tender Department, from such
Registered Holder of its Warrant Certificates. Such payment shall be in the
amount of the aggregate Cash Settlement Value in respect of the Warrants,
evidenced by such Warrant Certificates, that were exercised automatically on
the Expiration Date or on any Delisting Date, as the case may be. Warrant
Certificates delivered to the Warrant Agent shall thereafter be promptly
cancelled by the Warrant Agent.
In the case of Book-entry Warrants subject to automatic
exercise (other than Warrants subject to postponed exercise following the
occurrence of an Extraordinary Event, Exercise Limitation Event or Extension
Event as described in Section 2.03(b)), if the Company has made adequate New
York Clearing House or next day funds available to the Warrant Agent in a
timely manner, which shall in no event be later than 3:00 P.M., New York City
time, on the Automatic Funding Date, the Warrant Agent will be responsible for
making funds available to the Depository, against receipt of the Global
Warrant Certificate, prior to the close of business, on the Automatic Funding
Date. Such funds are to be in an amount equal to the aggregate Cash
Settlement Value of the Warrants subject to such automatic exercise.
The Company will advise the Warrant Agent as soon as
practicable of the date of any expected delisting or permanent suspension of
trading of the Warrants and will immediately inform the Warrant Agent after
the Company has received notice that such delisting or suspension is
occurring, but in no event will notice of such delisting or suspension be
given to the Warrant Agent later than 9:30 A.M., New York City time, on the
first New York Business Day following the date on which such delisting or
suspension occurs. The Company will use its best efforts to notify the
Warrantholders, or cause the Warrantholders to be notified, as promptly as
practicable of any expected delisting or suspension of trading of the Warrants.
(b) (i) Subject to the provisions of Section 2.03(b)(ii), if
the Company determines that an Extraordinary Event or Exercise Limitation
Event has occurred and is continuing on the Tokyo Business Day with respect to
which the Spot Nikkei 225 Index on a Valuation Date is to be determined (the
"Applicable Tokyo Business Day") then the Cash Settlement Value with respect
to an exercise of Warrants shall be calculated on the basis that the Valuation
Date shall be the next Index Calculation Day following an Applicable Tokyo
Business Day on which there is no Extraordinary Event or Exercise Limitation
Event; if the Valuation Date has not occurred on or prior to the Expiration
Date or any Delisting Date, then the Warrantholders will receive the
Alternative Settlement Amount (as defined herein) in lieu of the Cash
Settlement Value which shall be calculated as if the Warrants had been
cancelled on the Expiration Date or any Delisting Date, as the case may be.
Upon the occurrence of an Extraordinary Event or an Exercise
Limitation Event, the Company shall use its best efforts to notify the Warrant
Agent and the Determination Agent promptly that an Extraordinary Event or
Exercise Limitation Event, as the case may be, has occurred and shall promptly
give notice to the Warrantholders, by publication in a United States newspaper
with a national circulation (currently expected to be the Wall Street
Journal), that an Extraordinary Event or an Exercise Limitation Event has
occurred.
If the Company determines that an Extraordinary Event or an
Exercise Limitation Event has occurred and is continuing on the Expiration
Date or on any earlier Delisting Date, the Company shall so notify the Warrant
Agent and the Determination Agent, and the Cash Settlement Value with respect
to the exercised Warrants shall be equal to, and be calculated in the same
manner as, an "Alternative Settlement Amount", in accordance with Section
2.03(d) herein (treating the Expiration Date or any Delisting Date, as the
case may be, as the date on which the Warrants were cancelled for the purposes
of this Section 2.03(b)).
If the Company determines that an Extraordinary Event has
occurred and is continuing, and if that Extraordinary Event is expected by the
Company to continue, the Company, prior to the Expiration Date, may immediately
cancel the Warrants by notifying the Warrant Agent of such cancellation (the
date such notice is given being the "Cancellation Date"), and each
Warrantholder's rights with respect to the Warrants and under this Agreement
shall thereupon cease; provided, that each Warrant shall be exercised (even if
such Warrant would not otherwise be exercisable on such date because of the
Limit Option) on the basis that the Valuation Date for such Warrant shall be
the Cancellation Date and each Warrantholder shall have the right to receive,
in lieu of the Cash Settlement Value of such Warrant, the Alternative
Settlement Amount, determined by the Determination Agent.
If, following the determination by the Company that an
Extraordinary Event or Exercise Limitation Event has occurred and is
continuing, the Company determines that such Extraordinary Event or Exercise
Limitation Event has ceased and that no additional Extraordinary Event or
Exercise Limitation Event has occurred or is continuing, the Company shall so
notify the Warrant Agent and the Determination Agent.
(ii) If the Company determines that an event described in
clause (i) of the definition of Exercise Limitation Event, below, has occurred
and is continuing on the Expiration Date (an "Extension Event") then the term
of any outstanding Warrants shall be automatically extended for a period of 30
days (the thirtieth day following the Expiration Date being the "Extended
Expiration Date"), provided, however, that if the Cash Settlement Value or the
Intrinsic Value used in calculating the Alternative Settlement Amount, as the
case may be, of such Warrants would have been zero if the Warrants had been
exercised such that the Valuation Date for such exercise was the Measurement
Date (as defined below), then the term of the Warrants shall not be extended,
the Warrants shall be deemed to be worthless and the Company shall not be
required to make any payments in respect thereof. Any such automatic
extension shall be deemed to have been revoked and the Warrants shall expire
on the earlier of (i) the next Index Calculation Day following a Tokyo Trading
Day on which there is no Extension Event (the "Early Extended Expiration Date")
and (ii) any Delisting Date occurring after the Expiration Date. The Company
will give the Warrant Agent prompt notice by telephone or facsimile
transmission and will give prompt notice to the Warrantholders by publication
in a United States newspaper with a national circulation (currently expected
to be The Wall Street Journal) of the occurrence of an Extension Event, any
Extended Expiration Date, any Index Calculation Day referred to in clause (i)
above and any Delisting Date referred to in clause (ii) above, but in no event
will such notice to the Warrant Agent be given later than 9:30 A.M., New York
City time, on the New York Business Day following the Expiration Day, Index
Calculation Day or Delisting Date, as applicable.
Any Warrants that expire as described in clause (i) of the
preceding paragraph will be deemed to be exercised on the Early Extended
Expiration Date (even if such Warrants would not otherwise be exercisable on
such date because of the Limit Option) on the basis that the Valuation Date
for such exercise shall be such Early Extended Expiration Date and the holder
of each such Warrant will receive an Alternative Settlement Amount, whether or
not an Extraordinary Event or an Exercise Limitation Event is continuing on
such Early Extended Expiration Date.
If the term of the Warrants has been extended pursuant to the
second preceding paragraph but the Company determines that an Extension Event
is continuing (A) when the Warrants expire on the Extended Expiration Date or
(B) on any Delisting Date occurring on or after the Expiration Date, the
Warrants shall be deemed to be worthless and the Company shall not be required
to make any payments in respect thereof. The Company shall give prompt notice
of any such determination to the Warrant Agent by telephone or facsimile
transmission and to the Warrantholders by publication in a United States
newspaper with a national circulation (currently expected to be The Wall Street
Journal).
"Measurement Date" means the Tokyo Trading Day occurring most
recently prior to the Expiration Date on which none of the events described in
clause (i) of the definition of Exercise Limitation Event below had occurred
or was continuing.
(c) For purposes of this Agreement, "Extraordinary Event"
means any of the following events:
(i) a suspension or absence of trading on the TSE of all the
Underlying Stocks which then comprise the Nikkei 225 Index, any
Substitute Index or a Successor Index (the "Underlying Stocks");
(ii) the enactment, publication, decree or other promulgation
of any statute, regulation, rule or order of any court of any
jurisdiction, any administrative agency or any other U.S. or non-U.S.
governmental authority that would make it unlawful for the Company
to perform any of its obligations under this Agreement or the
Warrants or that has had or is reasonably expected to have a material
adverse effect on the ability of (A) the Company to perform its
obligations under the Warrants or to hedge or modify the hedge of its
position with respect to the Nikkei 225 Index, any Substitute Index
or a Successor Index; or (B) any affiliate of the Company to hedge or
modify the hedge of its position with respect to any hedging
transaction entered into with the Company in connection with the
Company's obligations under the Warrants; or
(iii) any outbreak or escalation of hostilities or other
national or international calamity or crises (including, without
limitation, natural calamities that in the opinion of the Company may
materially and adversely affect the economy of Japan or the trading of
securities generally on the TSE) that had or is reasonably expected
to have a material adverse effect on the ability of (A) the Company
to perform its obligations under the Warrants or to modify the hedge
of its position with respect to the Nikkei 225 Index, any Substitute
Index or a Successor Index or (B) any affiliate of the Company to
hedge or modify the hedge of its position with respect to any hedging
transaction entered into with the Company in connection with the
Company's obligations under the Warrants.
For the purpose of determining whether an Extraordinary Event
has occurred: (1) a limitation on the hours or number of days of trading will
not constitute an Extraordinary Event if it results from an announced change
in the regular business hours of the TSE and (2) an "absence of trading" on
the TSE will not include any time when the TSE is closed for trading under
ordinary circumstances.
(d) For purposes of this Agreement, "Exercise Limitation
Event" means either of the following events:
(i) a suspension, material limitation or absence of trading
on the TSE of 20% or more in number of the Underlying Stocks; or
(ii) the suspension or material limitation on the SIMEX, OSE
or AMEX or any other major futures, options or securities market
(which as of the date of the Prospectus Supplement includes only
SIMEX, OSE or AMEX, but which in the Company's judgment may change in
the future) of trading in futures or options contracts related to the
Nikkei 225 Index (or, in the event of a substitution of a Substitute
Index for the Nikkei 225 Index, the Nikkei 300 Index) or a Successor
Index.
For the purposes of determining whether an Exercise Limitation
Event has occurred: (1) a limitation on the hours or number of days of
trading will not constitute an Exercise Limitation Event if it results from an
announced change in the regular business hours of the relevant exchange, (2) a
decision to permanently discontinue trading in the relevant futures or options
contract will not constitute an Exercise Limitation Event, (3) a suspension of
trading in an Underlying Stock or in a futures or options contract referred to
in clauses (i) and (ii) above, by reason of (x) a price change violating
limits set by the TSE, SIMEX, OSE or AMEX or other futures or securities
market on which futures or options contracts related to the Nikkei 225 Index
or, (in the event of a substitution of a Substitute Index, the Nikkei 300
Index), the American Stock Exchange Japan Index (the "Japan Index"), any New
Japan Index or a Successor Index are traded or such other futures or
securities market or (y) an imbalance of orders relating to an Underlying
Stock or such contracts will constitute a suspension or material limitation of
trading, (4) an "absence of trading" on the TSE will not include any time when
the TSE is closed for trading under ordinary circumstances and (5) the
occurrence of an Extraordinary Event described in clause (i) of the definition
of Extraordinary Event will not constitute, and will supersede the occurrence
of, an Exercise Limitation Event.
The "Alternative Settlement Amount" is the amount calculated
using the formula set forth below:
Alternative Settlement Amount = Intrinsic Value + ( T x A )
- -
2 B
where
Intrinsic Value = the Cash Settlement Value of the Warrants
determined as described under Section 2.02(e), but
calculated with a Spot Nikkei 225 Index determined
by the Determination Agent which, subject to
approval by the Company (such approval not to be
unreasonably withheld), in the reasonable opinion
of the Determination Agent, fairly reflects the
value of the Underlying Stocks on the Cancellation
Date, Expiration Date, Delisting Date or Early
Extended Expiration Date, whichever has given rise
to the payment of the Alternative Settlement Amount;
T = U.S. $ the maximum initial offering price per
Warrant;
A = the total number of days from but excluding the
Cancellation Date, Expiration Date, or Delisting
Date, whichever has given rise to the payment of
the Alternative Settlement Amount for such
Warrants, to and including the Expiration Date; and
B = the total number of days from, but excluding the
date on which sales of the Warrants were initially
confirmed, to and including the Expiration Date.
For the purposes of determining "Intrinsic Value" in the above
formula, in the event that the Determination Agent and the Company are
required, but have not, after good faith consultation with each other and
within five days following the first day on which such Alternative Settlement
Amount may be calculated in accordance with the above formula, agreed upon a
Spot Nikkei 225 Index which fairly reflects the value of the Underlying Stocks
on the Cancellation Date, Expiration Date, Delisting Date or Early Extended
Expiration Date, whichever gives rise to the payment of the Alternative
Settlement Amount, then the Determination Agent shall promptly nominate a
third party, subject to approval by the Company (such approval not to be
unreasonably withheld), to determine such figure and calculate the Alternative
Settlement Amount in accordance with the above formula. Such party shall act
as an independent expert and not as an agent of the Company or the
Determination Agent, and its calculation and determination of the Alternative
Settlement Amount shall, absent manifest error, be final and binding on the
Company, the Warrant Agent, the Determination Agent and the Warrantholders.
Any such calculations will be made available to a Warrantholder for inspection
at the Warrant Agent's Office. Neither the Company nor such third party shall
have any responsibility for good faith errors or omissions in calculating the
Alternative Settlement Amount.
(e) With respect to all Warrants as to which the Valuation
Date has been postponed (other than Warrants that have been deemed worthless
following an Extensive Event) or which have been cancelled as described above,
the Company shall make available to the Warrant Agent in a timely manner,
which shall in no event be later than 3:00 P.M., New York City time, on the
third New York Business Day following the date on which the Cash Settlement
Value or Alternative Settlement Amount, as the case may be, has been calculated
(the "Alternative Funding Date"), New York Clearing House Funds or next day
funds in an amount equal to, and for the payment of, the aggregate Cash
Settlement Value or Alternative Settlement Amount, as applicable, of such
Warrants. Subject to such funds having been made available as provided in the
preceding sentence, the Warrant Agent will thereafter be responsible for
making its payment available in the manner set forth in Section 2.03(a), (i) in
the case of Definitive Warrants, to each Registered Holder that submitted a
Warrant Certificate for exercise (and in the case of cancellation as described
above, to each Registered Holder) or (ii) in the case of Book-entry Warrants,
to the Depository, prior to the close of business on the Alternative Funding
Date, in an amount equal to the aggregate Cash Settlement Value or Alternative
Settlement Amount (as applicable) of such exercised Warrants (and in the case
of cancellation as described above, of all previously unexercised Warrants).
SECTION 2.04. Limitation of Number of Exercisable Warrants.
All exercises of Warrants (other than on automatic exercise or following an
Extension Event) are subject, at the Company's option, to the limitation that
not more than 750,000 Warrants in total may be exercised on any Exercise Date
and not more than 250,000 Warrants may be exercised by or on behalf of any
beneficial owner, either individually or in concert with any other beneficial
owner, on any Exercise Date. If any New York Business Day would otherwise,
under the terms hereof, be the Exercise Date in respect of more than 750,000
Warrants, then at the Company's election (by giving notice thereof to the
Warrant Agent not later than 11:00 a.m., New York City time, on the New York
Business Day immediately following such Exercise Date), 750,000 of such
Warrants shall be deemed exercised on such Exercise Date (selected by the
Warrant Agent on a pro rata basis, but if, as a result of such pro rata
selection, any Registered Holders would be deemed to have exercised less than
500 Warrants, then the Warrant Agent shall first select an additional amount
of such holders' Warrants so that no holder shall be deemed to have exercised
less than 500 Warrants), and the remainder of such Warrants (the "Remaining
Warrants") shall be deemed exercised on the following New York Business Day
(notwithstanding the provisions of Section 2.01(b) and subject to successive
applications of this Section 2.04); provided that any Remaining Warrants for
which an Exercise Notice was delivered on a given Exercise Date shall be
deemed exercised before any other Warrants in respect of which an Exercise
Notice was delivered on a later Exercise Date. If any beneficial owner of
Warrants attempts to exercise more than 250,000 Warrants on any New York
Business Day individually or in concert, then at the Company's election (as
notified to the Warrant Agent by giving notice thereof to the Warrant Agent
not later than 11:00 a.m., New York City time, on the New York Business Day
following such New York Business Day) 250,000 of such Warrants shall be deemed
exercised on such New York Business Day and the remainder shall be deemed
exercised on the following New York Business Day (notwithstanding the
provisions of Section 2.01(b) and subject to successive applications of this
Section 2.04). The date on which any Warrant is deemed exercised under the
preceding two sentences shall for all purposes of this Agreement be the
"Exercise Date" in respect of such Warrants.
SECTION 2.05. Covenant of the Company. The Company covenants,
for the benefit of the Warrantholders, that it will not seek the delisting of
the Warrants from, or suspension of their trading on, the AMEX unless the
Company has, at the same time, arranged for listing of the Warrants on another
SRO. The Company further covenants that it will use reasonable efforts to
obtain any license necessary for the use and reference of a Substitute Index
in connection with the Warrants.
SECTION 2.06. Return of Money Held Unclaimed for Two Years.
Except as otherwise provided herein, any money deposited with or paid to the
Warrant Agent for the payment of the Cash Settlement Value or Alternative
Settlement Amount of any Warrants and not applied but remaining unclaimed for
two years after the date upon which such Cash Settlement Value or Alternative
Settlement Amount shall have become due and payable shall be repaid by the
Warrant Agent to the Company, at the Company's request, and the holders of
such Warrants shall thereafter look only to the Company for any payment which
such holders may be entitled to collect and all liability of the Warrant Agent
with respect to such money shall thereupon cease; provided that the Warrant
Agent, before making any such repayment, may at the expense of the Company
notify (i) in the case of Definitive Warrants, the Registered Holders or (ii)
in the case of Book-entry Warrants, the Participants concerned, that said
money has not been so applied and remains unclaimed and that after a date
named in the notification any unclaimed balance of said money then remaining
will be returned to the Company.
SECTION 2.07. Return of Global Warrant Certificate. In the
event a Global Warrant Certificate is issued, at such time as all of the
Warrants evidenced by such Certificate have been exercised (including pursuant
to an automatic exercise) or otherwise cancelled and all payments to the
Participants made as provided herein, the Warrant Agent shall dispose of the
cancelled Global Warrant Certificate in accordance with its customary
procedures (unless instructed by the Company to deliver the Global Warrant
Certificate to the Company) and shall provide a certificate of disposition to
the Company.
ARTICLE III
OTHER PROVISIONS RELATING TO
RIGHTS OF WARRANTHOLDERS
SECTION 3.01. Warrantholder May Enforce Rights.
Notwithstanding any of the provisions of this Agreement, any Warrantholder,
without the consent of the Warrant Agent, may, in and for its own behalf,
enforce, and may institute and maintain, any suit, action or proceeding
against the Company suitable to enforce, or otherwise in respect of, its right
to exercise, and to receive payment for, its Warrants as provided in this
Agreement.
ARTICLE IV
WARRANTS ACQUIRED BY THE COMPANY;
PAYMENT OF TAXES
SECTION 4.01. Warrants Acquired by the Company. In the event
the Company shall purchase or otherwise acquire Warrants, such Warrants may,
at the option of the Company, be (i) in the case of Definitive Warrants,
delivered to the Warrant Agent, and if so delivered, the Warrant Agent shall
promptly cancel such Warrants on the records of the Warrant Agent or (ii) in
the case of Book-entry Warrants, surrendered free through a Participant to the
Depository for credit to the account of the Warrant Agent maintained at the
Depository, and if so credited, the Warrant Agent shall promptly note the
cancellation of such Warrants by notation on the records of the Warrant Agent
and the Warrant Agent shall cause its records to be marked to reflect the
reduction in the number of Warrants represented by the Global Warrant
Certificate by the number of Warrants so cancelled promptly after such account
is credited. In the case of Book-entry Warrants, such Warrants may also, at
the option of the Company, be resold by the Company directly or to or through
any of its affiliates in lieu of being surrendered to the Depository. No
Warrant Certificate shall be countersigned in lieu of or in exchange for any
Warrant which is cancelled as provided herein, except as otherwise expressly
permitted by this Agreement.
Any cancelled Warrant Certificate held by the Warrant Agent
under this Agreement shall be disposed of by the Warrant Agent in accordance
with its customary procedures unless otherwise directed by the Company, and the
Warrant Agent shall deliver a certificate of disposition to the Company
evidencing the same.
SECTION 4.02. Payment of Taxes. The Company will pay all
stamp, withholding and other duties, if any, attributable to the initial
issuance of Warrants; provided, however, that, anything in this Agreement to
the contrary notwithstanding, the Company shall not be required to pay any tax
or other governmental charge which may be payable in respect of any transfer
involving any beneficial or record interest in, or ownership interest of, any
Warrants, Warrant Certificates or Global Warrant Certificate.
ARTICLE V
CONCERNING THE WARRANT AGENT
SECTION 5.01. Warrant Agent. The Company hereby appoints
Chemical Bank as Warrant Agent of the Company in respect of the Warrants upon
the terms and subject to the conditions set forth herein; and Chemical Bank
hereby accepts such appointment. The Warrant Agent shall have the powers and
authority granted to and conferred upon it in this Agreement and such further
powers and authority to act on behalf of the Company as the Company may
hereafter grant to or confer upon it with its consent. All of the terms and
provisions with respect to such powers and authority contained in any Warrant
Certificates or the Global Warrant Certificate are subject to and governed by
the terms and provisions hereof.
SECTION 5.02. Conditions of Warrant Agent's Obligations. The
Warrant Agent accepts its obligations herein set forth upon the terms and
conditions hereof, including the following, to all of which the Company agrees
and to all of which the rights hereunder of the holders from time to time of
the Warrants shall be subject:
(a) The Company agrees promptly to pay the Warrant Agent the
compensation to be agreed upon with the Company for all services
rendered by the Warrant Agent and to reimburse the Warrant Agent for
its reasonable out-of-pocket expenses (including attorneys' fees and
expenses) incurred by the Warrant Agent without negligence, bad faith
or breach of this Agreement on its part in connection with the
services rendered by it hereunder. The Company also agrees to
indemnify the Warrant Agent for, and to hold it harmless against, any
loss, liability or expense (including reasonable attorneys' fees and
expenses) incurred without negligence, bad faith or breach of this
Agreement on the part of the Warrant Agent, arising out of or in
connection with its acting as such Warrant Agent hereunder, as well
as the reasonable costs and expenses of defending against any claim of
liability in the premises. The obligations of the Company under this
Section 5.02(a) shall survive the termination of this Agreement.
(b) In acting under this Agreement, the Warrant Agent is
acting solely as agent of the Company and does not assume any
obligation or relationship of agency or trust for or with any of the
owners or holders of the Warrants.
(c) The Warrant Agent may consult with counsel satisfactory
to it (including counsel to the Company), and the opinion of such
counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in
good faith and in accordance with the opinion of such counsel.
(d) The Warrant Agent shall be protected and shall incur no
liability for or in respect of any action taken or thing suffered by
it in reliance upon any notice, direction, consent, certificate,
affidavit, statement or other paper or document reasonably believed
by it to be genuine and to have been presented or signed by the
proper parties.
(e) The Warrant Agent, and its officers, directors and
employees, may become the owner of, or acquire any interest in, any
Warrants or other obligations of the Company, with the same rights
that it or they would have if it were not the Warrant Agent hereunder
and, to the extent permitted by applicable law, it or they may engage
or be interested in any financial or other transaction with the
Company and may act on behalf of, or as depository, trustee or agent
for, any committee or body of owners or holders of Warrants or other
obligations of the Company as freely as if it were not the Warrant
Agent hereunder.
(f) The Warrant Agent shall not be under any liability for
interest on any monies at any time received by it pursuant to any of
the provisions of this Agreement nor shall it be obligated to
segregate such monies from other monies held by it, except as
required by law. The Warrant Agent shall not be responsible for
advancing funds on behalf of the Company.
(g) The Warrant Agent shall not be under any responsibility
with respect to the validity or sufficiency of this Agreement or the
execution and delivery hereof (except the due authorization,
execution and delivery hereof by the Warrant Agent) or with respect
to the validity or execution of the Warrant Certificates or the
Global Warrant Certificate (except its countersignature thereof).
(h) The recitals contained herein and in the Warrant
Certificates or the Global Warrant Certificate (except as to the
Warrant Agent's countersignature thereon) shall be taken as the
statements of the Company, and the Warrant Agent assumes no
responsibility for the correctness of the same.
(i) The Warrant Agent shall be obligated to perform such
duties as are herein specifically set forth, and no implied duties or
obligations shall be read into this Agreement against the Warrant
Agent. The Warrant Agent shall not be under any obligation to take
any action hereunder likely to involve it in any expense or
liability, the payment of which is not, in its reasonable opinion,
assured to it. The Warrant Agent shall not be accountable or under
any duty or responsibility for the application by the Company of any
proceeds. The Warrant Agent shall have no duty or responsibility in
case of any default by the Company in the performance of its
covenants or agreements contained in this Agreement or in any Warrant
Certificate or the Global Warrant Certificate or in the case of the
receipt of any written demand from a holder of a Warrant with respect
to such default, including, without limiting the generality of the
foregoing, any duty or responsibility to initiate or attempt to
initiate any proceedings at law or otherwise or, except as provided
in Section 6.02 hereof, to make any demand upon the Company.
SECTION 5.03. Resignation and Appointment of Successor. (a)
The Company agrees, for the benefit of the holders from time to time of the
Warrants, that there shall at all times be a Warrant Agent hereunder until all
the Warrants are no longer outstanding or until monies for the payment of all
outstanding Warrants, if any, shall have been paid to the Warrant Agent and
shall have been returned to the Company as provided in Section 2.06, whichever
occurs earlier.
(b) The Warrant Agent may at any time resign as such agent by
giving written notice to the Company of such intention on its part, specifying
the date on which its desired resignation shall become effective, subject to
the appointment of a successor Warrant Agent and acceptance of such
appointment by such successor Warrant Agent as hereinafter provided. The
Warrant Agent hereunder may be removed at any time by the filing with it of an
instrument in writing signed by or on behalf of the Company and specifying
such removal and the date when it shall become effective. Such resignation or
removal shall take effect upon the appointment by the Company, as hereinafter
provided, of a successor Warrant Agent (which shall be a banking institution
organized under the laws of the United States of America or one of the states
thereof, have a combined capital and surplus of at least $100,000,000 (as set
forth in its most recent reports of condition published pursuant to law or to
the requirements of any United States federal or state regulatory or
supervisory authority) and having an office in the Borough of Manhattan, The
City of New York) and the acceptance of such appointment by such successor
Warrant Agent. In the event a successor Warrant Agent has not been appointed
and accepted its duties within 90 days of the Warrant Agent's notice of
resignation, the Warrant Agent may apply to any court of competent
jurisdiction for the designation of a successor Warrant Agent. The obligation
of the Company under Section 5.02(a) shall continue to the extent set forth
therein notwithstanding the resignation or removal of the Warrant Agent.
(c) In case at any time the Warrant Agent shall give notice
of its intent to resign, or shall be removed, or shall become incapable of
acting, or shall be adjudged a bankrupt or insolvent, or make an assignment
for the benefit of its creditors, or consent to the appointment of a receiver
or custodian of all or any substantial part of its property, or shall admit in
writing its inability to pay or meet its debts as they mature, or if a
receiver or custodian of it or of all or any substantial part of its property
shall be appointed, or if any public officer shall have taken charge or
control of the Warrant Agent or of its property or affairs, for the purpose of
rehabilitation, conservation or liquidation, a successor Warrant Agent,
qualified as aforesaid, shall be promptly appointed by the Company by an
instrument in writing, filed with the successor Warrant Agent. Upon the
appointment as aforesaid of a successor Warrant Agent and acceptance by the
latter of such appointment, the Warrant Agent so superseded shall cease to be
Warrant Agent hereunder.
(d) Any successor Warrant Agent appointed hereunder shall
execute, acknowledge and deliver to its predecessor and to the Company an
instrument accepting such appointment hereunder, and thereupon such successor
Warrant Agent, without any further act, deed or conveyance, shall become
vested with all the authority, rights, powers, trusts, immunities, duties and
obligations of such predecessor with like effect as if originally named as
Warrant Agent hereunder, and such predecessor, upon payment of its charges and
disbursements then unpaid, shall thereupon become obligated to transfer,
deliver and pay over, and such successor Warrant Agent shall be entitled to
receive, all monies, securities and other property on deposit with or held by
such predecessor (including, without limitation, the Warrant Register), as
Warrant Agent hereunder.
(e) Any corporation into which the Warrant Agent hereunder
may be merged or converted or any corporation with which the Warrant Agent may
be consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Warrant Agent shall be a party or any corporation
to which the Warrant Agent shall sell or otherwise transfer all or
substantially all the corporate agency assets and business of the Warrant
Agent, provided that it shall be qualified as aforesaid, shall be the
successor Warrant Agent under this Agreement without the execution or filing
of any paper or any further act on the part of any of the parties hereto.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Amendment. (a) This Agreement and the terms of
the Warrants may be amended by the Company, the Warrant Agent and the
Determination Agent, without the consent of the Warrantholders, for the
purpose of curing any ambiguity, or of curing, correcting or supplementing any
defective or inconsistent provision contained herein or therein or in any
other manner which the Company may deem necessary or desirable and which will
not materially and adversely affect the interests of the owners or holders of
the Warrants.
(b) The Company, the Warrant Agent and the Determination
Agent may modify or amend this Agreement, with the consent of Warrantholders
(by vote of Registered Holders or, in the case of Warrants held through the
Depository, acting through a Participant or the Depository) holding not less
than a majority in number of the then outstanding Warrants affected by such
modification or amendment, for any purpose; provided, however, that no such
modification or amendment that increases the Strike Level, shortens the period
of time during which the Warrants may be exercised, or otherwise materially
and adversely affects the exercise rights of the Warrantholders or reduces the
percentage of the number of outstanding Warrants, the consent of whose holders
is required for modification or amendment of this Agreement, may be made
without the consent of each Warrantholder affected thereby. In the case of
Warrants evidenced by a Global Warrant Certificate, the Company and the
Warrant Agent shall be entitled to rely upon certification in form
satisfactory to each of them that any requisite consent has been obtained from
holders of beneficial ownership interests in the relevant Global Warrant
Certificate. Such certification may be provided by Participants acting on
behalf of such beneficial owners of Warrants, provided that any such
certification is accompanied by a certification from the Depository as to the
Warrant holdings of such Participants.
SECTION 6.02. Notices and Demands to the Company, the Warrant
Agent and the Determination Agent. If the Warrant Agent or the Determination
Agent shall receive any notice or demand addressed to the Company by any
Registered Holder or Participant pursuant to the provisions of this Agreement,
the Warrant Agent or the Determination Agent, as the case may be, shall
promptly forward such notice or demand to the Company.
SECTION 6.03. Addresses for Notices. Any communications to
the Warrant Agent with respect to this Agreement shall be addressed to 450
West 33rd Street, New York, New York 10001, Attention: Corporate and Municipal
Agency Department (the "Warrant Agent's Office") and any communications to the
Company with respect to this Agreement shall be addressed to Morgan Stanley
Group Inc., 1251 Avenue of the Americas, New York, New York 10020, Attention:
Corporate Treasurer, and any communications to the Determination Agent with
respect to this Agreement shall be addressed to Morgan Stanley & Co.
Incorporated, 1251 Avenue of the Americas, New York, New York 10020 (or such
other address as shall be specified in writing by the Warrant Agent, the
Company or the Determination Agent, respectively).
SECTION 6.04. Notices to Holders. The Company may cause to
have notice given to the holders of Warrants by providing the Warrant Agent
with a form of notice to be distributed by (i) in the case of Definitive
Warrants, the Warrant Agent to Registered Holders or (ii) in the case of
Book-entry Warrants, the Depository to be distributed by the Depository to
Participants in accordance with the custom and practices of the Depository.
SECTION 6.05. Obtaining of Approvals. The Company will from
time to time take all action which may be necessary to obtain and keep
effective (a) any and all permits, consents and approvals of governmental
agencies and authorities and the AMEX or any successor SRO and (b) any and all
filings or notices under United States Federal and State securities laws,
which may be or become required in connection with the issuance, sale,
trading, transfer or delivery of the Warrant Certificates, the Global Warrant
Certificate or the exercise of the Warrants.
SECTION 6.06. Persons Having Rights Under This Agreement.
Nothing in this Agreement expressed or implied and nothing that may be
inferred from any of the provisions hereof is intended, or shall be construed,
to confer upon, or give to, any person or corporation other than the Company,
the Warrant Agent, the Registered Holder of the Global Warrant Certificate and
the Warrantholders any right, remedy or claim under or by reason of this
Agreement or of any covenant, condition, stipulation, promise or agreement
hereof; and all covenants, conditions, stipulations, promises and agreements
contained in this Agreement shall be for the sole and exclusive benefit of the
Company, the Warrant Agent, and their respective successors, the Registered
Holder of the Global Warrant Certificate and of the Warrantholders.
SECTION 6.07. Inspection of Agreement. A copy of this
Agreement shall be available at all reasonable times at the Warrant Agent's
Office for inspection by the Warrantholders, Participants or any person
certified by any Participant to be an indirect participant of the Depository
or any person certified by any Participant to be a Warrantholder, in each
case, on behalf of whom such Participant holds Warrants.
SECTION 6.08. Headings. The descriptive headings of the
several Articles and Sections of this Agreement are inserted for convenience
only and shall not control or affect the meaning or construction of any of the
provisions hereof.
SECTION 6.09. Counterparts. This Agreement may be executed
in any number of counterparts, each of which so executed shall be deemed to be
an original; but such counterparts shall together constitute but one and the
same instrument.
SECTION 6.10. Applicable Law. This Agreement and each
Warrant shall be deemed to be a contract under the laws of the State of New
York, and for all purposes shall be construed in accordance with the laws of
said State, excluding choice of law provisions.
IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto as of the day and year first above written.
MORGAN STANLEY GROUP INC.
By
Name:
Title:
CHEMICAL BANK
By
Name:
Title:
MORGAN STANLEY & CO. INCORPORATED
By
Name:
Title:
EXHIBIT A
FORM OF WARRANT CERTIFICATE
FACE
NO. C- CUSIP _________
MORGAN STANLEY GROUP INC.
Nikkei 225 Index Call Warrants
Expiring August __, 1997
This Warrant Certificate certifies that _____, or registered
assigns, is the Registered Holder of ______________ Nikkei 225 Index Call
Warrants Expiring August __, 1997 (the "Warrants"). Upon receipt by the
Warrant Agent of this Warrant Certificate and the Exercise Notice on the
reverse hereof (or an Exercise Notice in substantially identical form
delivered herewith), duly completed and executed, at the Warrant Agent's
Window, Attention: Tender Department, in the Borough of Manhattan, The City of
New York, each Warrant evidenced hereby entitles the registered owner hereof
(each a "Warrantholder") to receive, subject to the terms and conditions set
forth herein and in the Warrant Agreement, from Morgan Stanley Group Inc. (the
"Company") the Cash Settlement Value of such Warrant, except that, under the
circumstances described below, such Warrantholder may instead receive the
Alternative Settlement Amount for such Warrant or, in certain circumstances
following an Extension Event, the Warrants will be deemed to be worthless.
Except in the case of the substitution of a Substitute Index for the Nikkei 225
Index, the Cash Settlement Value of an Exercised Warrant will be an amount in
U.S. Dollars (the "Cash Settlement Value") equal to the quotient (rounded down
to the nearest cent) of (A) the amount, if any, by which the Spot Nikkei 225
Index for the applicable Valuation Date (as defined herein) for such Warrant
exceeds the Strike Level, divided by (B) the product of 4.0 and the fixed
Japanese Yen/U.S. Dollar exchange rate of __Yen per U.S. $1.00.
The Cash Settlement Value is calculated using the following formula:
Cash Settlement Value = the greater of
(i) $0 and (ii) $1 x (Spot Nikkei 225 Index --- Strike Level)
--------------------------------------------
4 x (__Yen U.S. $1.00)
The "Strike Level" is ______, which was determined by the Determination Agent
and was the closing value (afternoon session) of the Nikkei 225 Index on
August __, 1995 but is subject to adjustment as described below. In the event
that a Substitute Index is substituted for the Nikkei 225 Index, the Strike
Level will be adjusted as follows:
Strike Level x Current Value of Substitute Index
- ---------------------------------
Current Value of Nikkei 225 Index
and the Cash Settlement Value of an Exercised Warrant shall be the amount in
U.S. Dollars equal to the quotient (rounded down to the nearest cent) of the
amount, if any, by which the Spot Nikkei 225 Index for the applicable
Valuation Date for such Warrant exceeds the Strike Level (adjusted pursuant
to the formula above), divided by the Adjusted Divisor. The "Adjusted
Divisor" shall be an amount equal to 4 multiplied by the fixed Japanese
Yen/U.S. Dollar exchange rate of Yen__/U.S. $1.00 multiplied by a fraction,
the numerator of which will be the Current Value of the Substitute Index and
the denominator of which will be the Current Value of the Nikkei 225 Index.
The "Current Value" of the Nikkei 225 Index and of the
Substitute Index shall equal their respective levels reported by the relevant
exchange at the close of business on the day that the Determination Agent
substitutes the Substitute Index for the Nikkei 225 Index or, if such day is
not a Tokyo Business Day, the Tokyo Business Day immediately preceding such
day. In the event of such substitution, the Determination Agent shall promptly
notify the Warrant Agent of the new Strike Level and of said Current Values.
A Warrant will not require or entitle a Warrantholder to sell
or deliver to the Company any shares of any component stocks of the Nikkei 225
Index or, in the case of the substitution of a Substitute Index for the Nikkei
225 Index, the Substitute Index or any Successor Index to either the Nikkei
225 Index or the Substitute Index, as the case may be (the "Underlying
Stocks"), or any other securities. Upon exercise of a Warrant, the Company
will make only a U.S. Dollar cash payment in the amount of the Cash Settlement
Value or Alternative Settlement Amount, if any and as applicable, of such
Warrant. The Company is under no obligation to, nor will it, purchase or take
delivery from any Warrantholder of any shares of any of the Underlying Stocks
or any other securities in connection with the exercise of any Warrants.
Warrantholders will not receive any interest on any Cash Settlement Value, and
the Warrants will not entitle the Warrantholders to any of the rights of
holders of any of the Underlying Stocks or other securities.
Subject to the terms and conditions set forth herein and in the
Warrant Agreement, each Warrant may be exercised, on any New York Business Day
during the period from its date of issuance until 3:00 P.M., New York City
time, on the earlier of (i) the New York Business Day immediately preceding
the Expiration Date (as defined below) and (ii) any Delisting Date. The
"Expiration Date" shall be August __, 1997. Except under certain circumstances
following an Extension Event, any Warrant not exercised (including by reason
of any postponed exercise as described on the reverse hereof or in the Warrant
Agreement) at or before 3:00 P.M., New York City time, on the earlier of (i)
the New York Business Day immediately preceding the Expiration Date and (ii)
any Delisting Date, will be automatically exercised.
Reference is hereby made to the further provisions of this
Warrant Certificate set forth on the reverse hereof and such further
provisions shall for all purposes have the same effect as though fully set
forth in this place.
This Warrant Certificate shall not be valid unless
countersigned by the Warrant Agent.
IN WITNESS WHEREOF, Morgan Stanley Group Inc. has caused this
instrument to be duly executed.
Dated: MORGAN STANLEY GROUP INC.
By
Name:
Title:
Attest:
By
Secretary
Countersigned as of the
date above written:
CHEMICAL BANK
as Warrant Agent
By
Authorized Officer
[REVERSE]
MORGAN STANLEY GROUP INC.
The Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Warrants issued by the Company pursuant to a
Warrant Agreement, dated as of August __, 1995 (the "Warrant Agreement"),
among the Company, Chemical Bank (the "Warrant Agent") and Morgan Stanley &
Co. Incorporated (the "Determination Agent") and are subject to the terms and
provisions contained in the Warrant Agreement, to all of which terms and
provisions each Warrantholder consents by acceptance of this Warrant
Certificate and which Warrant Agreement is hereby incorporated by reference in
and made a part of this Warrant Certificate. A copy of the Warrant Agreement
is on file at the Warrant Agent's Office.
The Warrants are unsecured contractual obligations of the
Company and rank on a parity with the Company's other unsecured contractual
obligations and with the Company's unsecured and unsubordinated debt.
Subject to the provisions hereof and the Warrant Agreement,
each Warrant may be exercised during the period from its date of issuance
until 3:00 P.M., New York City time, on the earlier of (i) the New York
Business Day immediately preceding the Expiration Date and (ii) any Delisting
Date by delivering or causing to be delivered this Warrant Certificate and
attached Exercise Notice (or an Exercise Notice in substantially identical
form), duly completed and executed, to the Warrant Agent's Window, in the
Borough of Manhattan, The City of New York (the "Warrant Agent's Window"),
which is, on the date hereof (unless otherwise specified herein), Chemical
Bank/Geoserve, Corporate Trust Securities Window, 55 Water Street, Room 234,
North Building, New York, New York 10041, Attention: Tender Department, or at
such other address as the Warrant Agent may specify from time to time.
Each Warrant entitles the Warrantholder to receive, upon
exercise (including automatic exercise), the Cash Settlement Value of such
Warrant, except that, under the circumstances described below, such
Warrantholder may instead receive the Alternative Settlement Amount for such
Warrant or, in certain circumstances following an Extension Event, the
Warrants will be deemed to be worthless. Except in the case of the
substitution of a Substitute Index for the Nikkei 225 Index, the "Cash
Settlement Value" of an Exercised Warrant will be an amount in U.S. Dollars
equal to the quotient (rounded down to the nearest cent) of (A) the amount, if
any, by which the Spot Japan Index for the applicable Valuation Date for such
Warrant exceeds the Strike Level (as defined herein), divided by (B) the
product of 4.0 and the fixed Japanese Yen/U.S. Dollar exchange rate of __Yen
per U.S. $1.00.
The Company has appointed Morgan Stanley & Co. Incorporated to
be its Determination Agent to determine the Spot Nikkei 225 Index as provided
in the Warrant Agreement and herein and to make such calculations as may be
required upon the occurrence of certain circumstances, as described in the
Warrant Agreement and herein. The Determination Agent shall act as an
independent expert and not as an agent of the Company, and, unless otherwise
provided by the Warrant Agreement, its calculations and determinations under
the Warrant Agreement and this Warrant Certificate shall, absent manifest
error, be final and binding on the Company, the Warrant Agent and the
Warrantholders. Any such calculations will be made available to a
Warrantholder for inspection at the Warrant Agent's office. The Determination
Agent will have no responsibility for good faith errors or omissions in
calculating or disseminating information regarding the Nikkei 225 Index, any
Substitute Index or any Successor Index, adjustments or calculations by the
Determination Agent in order to arrive at a calculation of a stock index
comparable to the Nikkei 225 Index, any Substitute Index or any Successor
Index, the Cash Settlement Value or the Alternative Settlement Amount, as
applicable.
In the event that the Nikkei 225 Index (or if a Substitute
Index has been substituted for the Nikkei 225 Index, such Substitute Index) is
not published by NKS but is published by another person not affiliated with
the Company and acceptable to the Company (the "Third Party"), then the Spot
Nikkei 225 Index for any date thereafter will be determined based on the
closing value (afternoon session) of the Nikkei 225 Index (or such Substitute
Index, as the case may be) as published by such Third Party. If NKS or any
Third Party discontinues publication of the Nikkei 225 Index (or if a
Substitute Index has been substituted for the Nikkei 225 Index, such
Substitute Index) and publishes a successor or substitute index that the
Company determines, in its sole discretion, to be comparable to the Nikkei 225
Index (or such Substitute Index, as the case may be) (any such index being a
"Successor Index"), then the Spot Nikkei 225 Index for any date thereafter
will be determined by the Determination Agent on behalf of the Company based
on the closing level of the Successor Index on such date. If NKS or any Third
Party makes a material change in the formula for, or the method of
calculating, the Nikkei 225 Index, any Substitute Index or any Successor
Index, the Determination Agent shall make such calculations as may be required
to determine the applicable Cash Settlement Value using the formula and method
of calculating the Nikkei 225 Index, any Substitute Index or any Successor
Index as in effect prior to such change or modification. If NKS and/or any
Third Party discontinues publication of the Nikkei 225 Index, any Substitute
Index and/or any Successor Index, the Determination Agent will determine the
applicable Cash Settlement Value based on the formula and method used in
calculating the Nikkei 225 Index, any Substitute Index or any Successor Index
as in effect on the date the Nikkei 225 Index, such Substitute Index or such
Successor Index was last published.
Upon the occurrence of a Substitution Event, the Company shall
promptly give notice to the Warrantholders, by publication in a United States
newspaper with a national circulation (currently expected to be the Wall Street
Journal), specifying: (i) the date on which the Substitution Event was deemed
to occur pursuant to Section 2.02(h) of the Warrant Agreement, (ii) that a
Substitute Index will be substituted for the Nikkei 225 Index on the
Substitution Date (as defined herein), (iii) the name of the Substitute Index,
(iv) the Substitution Date, (v) the Strike Level as adjusted pursuant to
Section 2.02(e) of the Warrant Agreement and (vi) the Adjusted Divisor. The
Warrant Agent at the request and expense of the Company and on behalf of the
Company shall mail such notice to each Warrantholder. On the Substitution
Date, the Substitute Index will be substituted for the Nikkei 225 Index. From
and after the Substitution Date, the index used to determine the Spot Nikkei
225 Index used to calculate the Cash Settlement Value or Alternative
Settlement Amount, as the case may be, of the Warrants will be such Substitute
Index. The "Substitution Date" shall be the thirtieth calendar day (or, if
such day is not a New York Business Day, the next succeeding New York Business
Day) following such giving of notice of the Substitution Event.
A "Substitution Event" will occur if, as determined by the
Determination Agent (whose opinion shall be conclusive and binding on the
Company and on the holders of the Warrants) the following conditions are
fulfilled:
(i) Either of the following has occurred:
(A) The AMEX or another United States securities
exchange publishes (on a basis not less regularly than each day
on which such exchange and the TSE are open for trading) an
index (the "New Japan Index") which: for a period of 90 days
immediately preceding the date of the Substitution Event has a
correlation based on daily, closing value to closing value,
percentage changes of not less than 90% with the Nikkei 300
Index (as defined in the Prospectus Supplement dated August __,
1995 relating to the Warrants (the "Prospectus Supplement"));
and warrants with payments determined by reference to the New
Japan Index have been approved to be listed on the AMEX or such
other exchange by the Securities and Exchange Commission; or
(B) Warrants with payments determined by reference to
the Nikkei 300 Index have been approved to be listed on the
AMEX or such other exchange by the Securities and Exchange
Commission; and
(ii) Either of the following has occurred:
(A) the Nikkei 225 Index (as defined in the Prospectus
Supplement) is no longer published and/or the Nikkei 225
Futures Contracts (as defined in the Prospectus Supplement)
have been delisted from trading on the OSE; or
(B) the Adjusted Trading Volume and the Adjusted Open
Interest (in each case, as defined herein) for the two Nikkei
300 Futures Contracts (as defined in the Prospectus Supplement)
with expiration dates closest in time to the Substitution Event
exceed the Adjusted Trading Volume and the Adjusted Open
Interest, respectively, for the two Nikkei 225 Futures
Contracts with expiration dates closest in time to the
Substitution Event, each for any three-month period prior to
the date of any Substitution Event; and
(iii) To the extent required, the Company, the AMEX and/or such
exchange shall have obtained any license necessary to use the New
Japan Index or the Nikkei 300 Index.
Notwithstanding the above, unless the Nikkei 225 Index is no
longer published and/or the Nikkei 225 Futures Contracts shall have been
delisted from trading on the OSE, a Substitution Event will not be deemed to
have occurred on any of the 60 calendar days immediately preceding the
Expiration Date.
A "Substitute Index" means, in the event that the circumstances
described in (i)(A) above have occurred, a New Japan Index or, in the event
that the circumstances described in clause (i)(B) above have occurred, the
Nikkei 300 Index.
"Adjusted Trading Volume" for the Nikkei 300 Futures Contracts
or the Nikkei 225 Futures Contracts means the arithmetic mean, for any period,
of the amounts on each trading day equal to the product of: (x) the number of
such futures contracts traded on such day and (y) the closing level on such
day of the index to which such futures contracts relate, multiplied by
Yen10,000, in the case of the Nikkei 300 Futures Contracts, or Yen1,000, in
the case of the Nikkei 225 Futures Contracts (the "Contract Multiplier").
"Adjusted Open Interest" for the Nikkei 300 Futures Contracts or the Nikkei
225 Futures Contracts means the arithmetic mean, for any period, of the
amounts on each trading day equal to the product of: (x) the open interest
in such futures contracts on such day and (y) the closing level on such day of
the index to which such futures contracts relate, multiplied by the Contract
Multiplier.
Subject to the Warrant Agreement and this Warrant Certificate,
the "Valuation Date" for a Warrant shall be the first Index Calculation Day
following the applicable Exercise Date, subject to postponement upon the
occurrence of an Extraordinary Event or Exercise Limitation Event or as a
result of the exercise of a number of Warrants exceeding the limits on
exercise, all as described below. Except for Warrants subject to automatic
exercise, or Warrants subject to the Limit Option or following an Extension
Event, the "Exercise Date" for a Warrant will be (i) the New York Business Day
on which the Warrant Agent receives at the Warrant Agent's Window the Warrant
(or transfer of such Warrant through the Depositary in the case of Book-entry
Warrants) and Exercise Notice (by facsimile transmission in accordance with
the Warrant Agreement in the case of Exercise Notices for Book-entry Warrants)
in proper form with respect to such Warrant, if received at or prior to 3:00
P.M., New York City time, on such day, or (ii) if the Warrant Agent receives
such Warrant at the Warrant Agent's Window (or transfer of such Warrant
through the Depositary in the case of Book-entry Warrants) or Exercise Notice
after 3:00 P.M., New York City time, on a New York Business Day, then the New
York Business Day next succeeding the New York Business Day on which such
Warrant or Exercise Notice is received.
Subject to the provisions of the Warrant Agreement relating to
Extension Events, all Warrants for which the Warrant Agent has not received a
valid Exercise Notice in proper form at or prior to 3:00 P.M., New York City
time, on (i) the New York Business Day immediately preceding the Expiration
Date or (ii) any Delisting Date prior to the Expiration Date, as the case may
be, or for which the Warrant Agent has received a valid Exercise Notice but
with respect to which timely delivery of the relevant Warrants has not been
made, together with any Warrants the Valuation Date for which has as of such
time been postponed as described below, will be automatically exercised as of
such date; without any requirement of delivery of an Exercise Notice to the
Warrant Agent. However, if the Company first receives notice of the delisting
or suspension of the Warrants on the same day on which such Warrants are
delisted or suspended, such day will be deemed a Delisting Date. The Exercise
Date for such Warrants will be the Expiration Date or any Delisting Date, as
the case may be, or, if such date is not a New York Business Day, the next
succeeding New York Business Day. The Warrant Agent will obtain the Spot
Nikkei 225 Index (determined as of the first Index Calculation Day following
such date, which will be the Valuation Date for such Warrants except in the
case of a postponed exercise following the occurrence of an Extraordinary
Event or an Exercise Limitation Event) and will determine the Cash Settlement
Value, if any, of such Warrants.
No fewer than 500 Warrants may be exercised by or on behalf of
any one Warrantholder at any one time, except that no such minimum exercise
amount shall apply in the case of automatic exercise on or following the
Expiration Date or on any Delisting Date or in the case of cancellation of the
Warrants as a result of an Extraordinary Event. With the exception of the
Limit Option, an Exercise Notice shall be unconditional. Except as provided
in the Warrant Agreement, the Warrant Agent shall be entitled, with no duty of
inquiry, to rely conclusively on any Exercise Notice received by it and on any
representation of the exercising Warrantholder contained therein. A
Warrantholder shall not combine Definitive Warrants and Book-entry Warrants or
Book-entry Warrants held through more than one Participant to meet the 500
Warrant minimum exercise requirement provided in the Warrant Agreement and
herein.
If the Exercise Notice is not rejected as provided in the
Warrant Agreement, then the Warrant Agent or the Determination Agent, as the
case may be, will determine the Cash Settlement Value of the exercised
Warrants in accordance with the terms of the Warrant Agreement. Except in the
case of Warrants subject to automatic exercise, Warrants that upon exercise
entitle the holder thereof to receive an Alternative Settlement Amount in lieu
of the Cash Settlement Value and Warrants deemed worthless following an
Extension Event, if on any Valuation Date the Cash Settlement Value for any
Warrants then exercised would be zero, then the attempted exercise of any such
Warrants shall be void and of no effect and the Warrant Certificate evidencing
such Warrants will be returned to the Registered Holder of the Warrant by
first class mail at the Company's expense and such holder shall be permitted
to re-exercise such Warrants prior to the Expiration Date or any Delisting
Date, as the case may be.
Except in the case of Warrants subject to automatic exercise,
Warrants that upon exercise entitle the holder thereof to receive an
Alternative Settlement Amount and Warrants deemed worthless following an
Exercise Event, if the Company has made adequate New York Clearing House or
next day funds available to the Warrant Agent in a timely manner, which shall
in no event be later than 3:00 P.M., New York City time on the fourth New York
Business Day following the Valuation Date (or, if the Valuation Date is not a
New York Business Day, on the fourth New York Business Day following the New
York Business Day succeeding the Valuation Date) (the "Funding Date"), the
Warrant Agent will be responsible for making its payment available to each
Registered Holder of an Exercised Warrant in the form of a cashier's check or
an official bank check, or (in the case of payments of at least $100,000) by
wire transfer to a U.S. Dollar account maintained by such Registered Holder in
the United States (at the Registered Holder's election as specified in the
applicable Exercise Notice) prior to the close of business on the first New
York Business Day immediately succeeding such Funding Date (the "Settlement
Date") against receipt by the Warrant Agent at the Warrant Agent's Window, of
such Registered Holder's Warrant Certificates. Such payment shall be in an
amount equal to the aggregate Cash Settlement Value of such holder's exercised
Warrants.
With respect to automatically exercised Warrants (other than
Warrants subject to postponed exercise following the occurrence of an
Extraordinary Event or an Exercise Limitation Event) if the Company has made
adequate New York Clearing House or next day funds available to the Warrant
Agent in a timely manner, which shall in no event be later than 3:00 P.M., New
York City time on the fourth New York Business Day following the Valuation
Date for such automatically exercised Warrants (or if such Valuation Date is
not a New York Business Day, on the fourth New York Business Day following the
New York Business Day next succeeding such Valuation Date) (the "Automatic
Funding Date"), the Warrant Agent will be responsible for making its payment
available to each Registered Holder of an Exercised Warrant in the form of a
cashier's check or an official bank check, or (in the case of payments of at
least $100,000) by wire transfer to a U.S. Dollar bank account maintained by
such Registered Holder in the United States (at such holder's election and
upon proper notice being given to the Company and the Warrant Agent) prior to
the close of business on such Automatic Funding Date (or in the case of
payments made by wire transfer, prior to the close of business on the New York
Business Day next succeeding the Automatic Funding Date), against receipt by
the Warrant Agent at the Warrant Agent's Window of such Registered Holder's
Warrant Certificates. Such payment shall be in the amount equal to the
aggregate Cash Settlement Value in respect of the Warrants evidenced by such
Warrant Certificates. Warrant Certificates delivered to the Warrant Agent
shall thereafter be promptly cancelled by the Warrant Agent.
Neither the Warrant Agent nor the Determination Agent will be
responsible for any losses resulting from a failure of a brokerage firm or a
Participant to properly exercise Warrants on behalf of a Warrantholder.
Subject to the provisions of Section 2.03(b)(ii) of the Warrant
Agreement, if the Company determines that an Extraordinary Event or an
Exercise Limitation Event has occurred and is continuing on the Tokyo Business
Day with respect to which the Spot Nikkei 225 Index on a Valuation Date is to
be determined (the "Applicable Tokyo Business Day"), then the Cash Settlement
Value with respect to an exercise of Warrants shall be calculated on the basis
that the Valuation Date shall be the next Index Calculation Day, following an
Applicable Tokyo Business Day on which there is no Extraordinary Event or
Exercise Limitation Event; provided that if the Valuation Date has not
occurred on or prior to the Expiration Date or any Delisting Date, then the
Warrantholders will receive the Alternative Settlement Amount in lieu of the
Cash Settlement Amount which shall be calculated as if the Warrants had been
cancelled on the Expiration Date or any Delisting Date, as the case may be.
Upon the occurrence of an Extraordinary Event or an Exercise
Limitation Event, the Company shall use its best efforts to notify the Warrant
Agent and the Determination Agent promptly that an Extraordinary Event or
Exercise Limitation Event, as the case may be, has occurred and shall promptly
give notice to the Warrantholders by publication in a United States newspaper
with a national circulation (currently expected to be the Wall Street
Journal), that an Extraordinary Event or an Exercise Limitation Event has
occurred.
If the Company determines that an Extraordinary Event or an
Exercise Limitation Event has occurred and is continuing on the Expiration
Date or on any earlier Delisting Date, the Company shall so notify the Warrant
Agent and the Determination Agent, and the Cash Settlement Value with respect
to the exercised Warrants shall be equal to, and be calculated in the same
manner as, an Alternative Settlement Amount, in accordance with the Warrant
Agreement (treating the Expiration Date or any Delisting Date, as the case may
be, as the date on which the Warrants were cancelled).
If the Company determines that an Extraordinary Event has
occurred and is continuing, and if the Extraordinary Event is expected by the
Company to continue, the Company, prior to the Expiration Date, may immediately
cancel the Warrants by notifying the Warrant Agent of such cancellation (the
date such notice is given being the "Cancellation Date"), and each
Warrantholder's rights under the Warrants and the Warrant Agreement shall
thereupon cease; provided, that, subject to an automatic extension of the term
of the Warrants or to a determination that the Warrants are worthless, each
Warrant shall be exercised (even if such Warrant would not otherwise be
exercisable on such date because of the Limit Option) on the basis that the
Valuation Date for such Warrant shall be the Cancellation Date and the holder
of each such Warrant will receive the Alternative Settlement Amount determined
by the Determination Agent.
With respect to all Warrant Certificates as to which the
Valuation Date has been postponed (other than Warrants that have been deemed
worthless following an Extension Event) or which have been cancelled as
described above, the Company shall make available to the Warrant Agent in a
timely manner, which shall in no event be later than 3:00 P.M., New York City
time, on the third New York Business Day following the date on which the Cash
Settlement Value or Alternative Settlement Amount, as the case may be, has
been calculated (the "Alternative Funding Date") New York Clearing House Funds
or next day funds in an amount equal to, and for the payment of, the aggregate
Cash Settlement Value or Alternative Settlement Amount, as applicable, of such
Warrants. Subject to such funds having been made available as provided in the
preceding sentence, the Warrant Agent will thereafter be responsible for making
its payment available to each Registered Holder of the Warrants that submitted
a Warrant Certificate (and in the case of cancellation to each Registered
Holder) in the form of a cashier's check or an official bank check, or (in the
case of payments of at least $100,000) by wire transfer to a U.S. Dollar bank
account maintained by the Registered Holder in the United States (at such
holder's election and upon proper notice being given to the Company and the
Warrant Agent) prior to the close of business on the Alternative Funding Date
(or, in the case of payments made by wire transfer, prior to the close of
business on the New York Business Day next succeeding the Alternative Funding
Date) against receipt by the Warrant Agent at the Warrant Agent's Window, of
such Registered Holder's Warrant Certificates. Such payment shall be in the
amount equal to the aggregate Cash Settlement Value or Alternative Settlement
Amount, as the case may be, of the Warrants evidenced by such Warrant
Certificates.
If the Company determines that an event described in clause (i)
of the definition of Exercise Limitation Event below has occurred and is
continuing on the Expiration Date (an "Extension Event") then the term of any
outstanding Warrants shall be automatically extended for a period of 30 days
(the thirtieth day following the Expiration Date being the "Extended
Expiration Date"), provided, however, that if the Cash Settlement Value or the
Intrinsic Value used in calculating the Alternative Settlement Amount, as the
case may be, of such Warrants would have been zero if the Warrants had been
exercised such that the Valuation Date for such exercise was the Measurement
Date (as defined below), then the term of the Warrants shall not be extended,
the Warrants shall be deemed to be worthless and the Company shall not be
required to make any payments in respect thereof. Any such automatic
extension shall be deemed to have been revoked and the Warrants shall expire
on the earlier of (i) the next Index Calculation Day following a Tokyo Trading
Day on which there is no Extension Event (the "Early Extended Expiration
Date") and (ii) any Delisting Date occurring after the Expiration Date. The
Company will give the Warrant Agent prompt notice by telephone or facsimile
transmission and will give prompt notice to the Warrantholders by publication
in a United States newspaper with a national circulation (currently expected
to be The Wall Street Journal) of the occurrence of an Extension Event, any
Extended Expiration Date, any Index Calculation Day referred to in clause (i)
above and any Delisting Date referred to in clause (ii) above, but in no event
will such notice to the Warrant Agent be given later than 9:30 A.M., New York
City time, on the New York Business Day following the Expiration Day, Index
Calculation Day or Delisting Date, as applicable.
Any Warrants that expire as described in clause (i) of the
preceding paragraph will be deemed to be exercised on the Early Extended
Expiration Date (even if such Warrants would not otherwise be exercisable on
such date because of the Limit Option) on the basis that the Valuation Date
for such exercise shall be such Early Extended Expiration Date and the holder
of each such Warrant will receive an Alternative Settlement Amount, whether or
not an Extraordinary Event or an Exercise Limitation Event is continuing on
such Early Extended Expiration Date.
If the term of the Warrants has been extended pursuant to the
second preceding paragraph but the Company determines that an Extension Event
is continuing (A) when the Warrants expire on the Extended Expiration Date or
(B) on any Delisting Date occurring on or after the Expiration Date, the
Warrants shall be deemed to be worthless and the Company shall not be required
to make any payments in respect thereof. The Company shall give prompt notice
of any such determination to the Warrant Agent by telephone or facsimile
transmission and to the Warrantholders by publication in a United States
newspaper with a national circulation (currently expected to be The Wall Street
Journal).
"Measurement Date" means the Tokyo Trading Day occurring most
recently prior to the Expiration Date on which none of the events described in
clause (i) of the definition of Exercise Limitation Event below had occurred
or was continuing.
The "Alternative Settlement Amount" is the amount calculated
using the formula set forth below:
Alternative Settlement Amount = Intrinsic Value + ( T x A )
- -
2 B
where
Intrinsic the Cash Settlement Value of the
Value = Warrants determined as described above, but
calculated with a Spot Nikkei 225 Index determined
by the Determination Agent which, subject to
approval by the Company (such approval not to be
unreasonably withheld), in the reasonable opinion
of the Determination Agent, fairly reflects the
value of the Underlying Stocks on the Cancellation
Date, Expiration Date, Delisting Date or Early
Extended Expiration Date, whichever has given rise
to the payment of the Alternative Settlement Amount;
T = U.S.$_____, the maximum initial offering price per
Warrant;
A = the total number of days from but excluding the
Cancellation Date, Expiration Date or Delisting
Date, whichever has given rise to the payment of
the Alternative Settlement Amount for such
Warrants, to and including the Expiration Date; and
B = the total number of days from, but excluding the date on
which sales of the Warrants were initially confirmed, to
and including the Expiration Date.
For the purposes of determining "Intrinsic Value" in the above
formula, in the event that the Determination Agent and the Company are
required, but have not, after good faith consultation with each other and
within five days following the first day upon which such Alternative
Settlement Amount may be calculated in accordance with the above formula,
agreed upon a Spot Nikkei 225 Index which fairly reflects the value of the
Underlying Stocks on the Cancellation Date, Expiration Date, Delisting Date or
Early Extended Expiration Date, whichever gives rise to the payment of the
Alternative Settlement Amount then the Determination Agent shall promptly
nominate a third party, subject to approval by the Company (such approval not
to be unreasonably withheld), to determine such figure and calculate the
Alternative Settlement Amount in accordance with the above formula. Such
party shall act as an independent expert and not as an agent of the Company or
the Determination Agent, and its calculation and determination of the
Alternative Settlement Amount shall, absent manifest error, be final and
binding on the Company, the Warrant Agent, the Determination Agent and the
Warrantholders. Any such calculations will be made available to a
Warrantholder for inspection at the Warrant Agent's Office. Neither the
Company nor such third party shall have any responsibility for good faith
errors or omissions in calculating the Alternative Settlement Amount.
An "Extraordinary Event" means any of the following events:
(i) a suspension or absence of trading on the Tokyo
Stock Exchange (the "TSE") of all of the Underlying Stocks which then
comprise the Nikkei 225 Index, any Substitute Index or a Successor
Index;
(ii) the enactment, publication, decree or other
promulgation of any statute, regulation, rule or order of any court
of any jurisdiction, any administrative agency or any other U.S. or
non-U.S. governmental authority that would make it unlawful for the
Company to perform any of its obligations under the Warrant Agreement
or the Warrants or that has had or is reasonably expected to have a
material adverse effect on the ability of (A) the Company to perform
its obligations under the Warrants or to hedge or modify the hedge of
its position with respect to the Nikkei 225 Index, any Substitute
Index or a Successor Index; or (B) any affiliate of the Company to
hedge or modify the hedge of its position with respect to any hedging
transaction entered into with the Company in connection with the
Company's obligations under the Warrants.
(iii) any outbreak or escalation of hostilities or other
national or international calamity or crisis (including, without
limitation, natural calamities that in the opinion of the Company may
materially and adversely affect the economy of Japan or the trading
of securities generally on the TSE) that has had or is reasonably
expected to have a material adverse effect on the ability of (A) the
Company to perform its obligations under the Warrants or to modify
the hedge of its position with respect to the Nikkei 225 Index, any
Substitute Index or a Successor Index; or (B) any affiliate of the
Company to hedge or modify the hedge of its position with respect to
any hedging transaction entered into with the Company in connection
with the Company's obligations under the Warrants.
For the purposes of determining whether an Extraordinary Event
has occurred: (1) a limitation on the hours or number of days of trading will
not constitute an Extraordinary Event if it results from an announced change
in the regular business hours of the TSE and (2) an "absence of trading" on
the TSE will not include any time when the TSE is closed for trading under
ordinary circumstances.
"Exercise Limitation Event" means either of the following
events:
(i) a suspension, material limitation or absence of
trading on the TSE of 20% or more in number of the Underlying Stocks;
or
(ii) the suspension or material limitation on the
Singapore International Monetary Exchange (the "SIMEX"), the Osaka
Securities Exchange (the "OSE") or the AMEX or any other major
futures, options or securities market of trading in futures or options
contracts related to the Nikkei 225 Index (or, in the event of a
substitution of a Substitute Index for the Nikkei 225 Index, the
Nikkei 300 Index) or a Successor Index.
For the purposes of determining whether an Exercise Limitation
Event has occurred: (1) a limitation on the hours or number of days of
trading will not constitute an Exercise Limitation Event if it results from an
announced change in the regular business hours of the relevant exchange, (2) a
decision to permanently discontinue trading in the relevant futures or options
contract will not constitute an Exercise Limitation Event, (3) a suspension of
trading in an Underlying Stock or in a futures or options contract referred to
in clauses (i) and (ii) above, by reason of (x) a price change violating
limits set by the TSE, SIMEX, OSE or AMEX or other futures or securities
market on which futures or options contracts related to the Nikkei 225 Index
(or, in the event of a substitution of a Substitute Index for the Nikkei 225
Index, the Nikkei 300 Index), the American Stock Exchange Japan Index (the
"Japan Index"), any New Japan Index or a Successor Index are traded or such
other futures or securities market or (y) an imbalance of orders relating to
an Underlying Stock or such contracts will constitute a suspension or material
limitation of trading, (4) an "absence of trading" on the TSE will not include
any time when the TSE is closed for trading under ordinary circumstances and
(5) the occurrence of an Extraordinary Event described in clause (i) of the
definition of Extraordinary Event will not constitute, and will supersede the
occurrence of, an Exercise Limitation Event.
All exercises of Warrants (other than on automatic exercise or
following an Extension Event) are subject, at the Company's option, to the
limitation that not more than 750,000 Warrants in total may be exercised on
any Exercise Date and not more than 250,000 Warrants may be exercised by or on
behalf of any beneficial owner, either individually or in concert with any
other beneficial owner, on any Exercise Date. If any New York Business Day
would otherwise, under the terms hereof, be the Exercise Date in respect of
more than 750,000 Warrants, then at the Company's election (by giving notice
thereof to the Warrant Agent not later than by 11:00 A.M., New York City time
on the New York Business Day immediately following such Exercise Date),
750,000 of such Warrants shall be deemed exercised on such Exercise Date
(selected by the Warrant Agent on a pro rata basis, but if, as a result of
such pro rata selection, any Registered Holders of Warrants would be deemed to
have exercised less than 500 Warrants, then the Warrant Agent shall first
select an additional amount of such holders' Warrants so that no holder shall
be deemed to have exercised less than 500 Warrants), and the remainder of such
Warrants (the "Remaining Warrants") shall be deemed exercised on the following
New York Business Day (notwithstanding the minimum exercise requirement and
subject to successive applications of this paragraph); provided that any
Remaining Warrants for which an Exercise Notice was delivered on a given
Exercise Date shall be deemed exercised before any other Warrants for which an
Exercise Notice was delivered on a later Exercise Date. If any beneficial
owner of Warrants attempts to exercise more than 250,000 Warrants on any New
York Business Day individually or in concert, then at the Company's election
(as notified to the Warrant Agent by giving notice thereof to the Warrant
Agent not later than 11:00 A.M., New York City time, on the New York Business
Day following such New York Business Day), 250,000 of such Warrants shall be
deemed exercised on such New York Business Day and the remainder shall be
deemed exercised on the following New York Business Day (notwithstanding the
minimum exercise requirements and subject to successive applications of this
paragraph). The date on which any Warrant is deemed exercised under the
preceding two sentences shall for all purposes of this Warrant Certificate be
deemed to be the "Exercise Date" in respect of such Warrants.
Prior to due presentment for registration of transfer, the
Company, the Warrant Agent, and any agent of the Company or the Warrant Agent,
may deem and treat the registered owner hereof as the absolute owner of the
Warrants evidenced hereby (notwithstanding any notation of ownership or other
writing hereon) for any purpose whatsoever, and as the person entitled to
exercise the rights represented by the Warrants evidenced hereby, and neither
the Company nor the Warrant Agent, nor any agent of the Company or the Warrant
Agent, shall be affected by any notice to the contrary.
The Warrant Agent will, in accordance with the Warrant
Agreement, from time to time register the transfer of this Warrant Certificate
upon surrender hereof at the Warrant Agent's Window, Attention: Transfer
Department, accompanied by a written instrument or instruments of transfer in
form satisfactory to the Warrant Agent and the Company duly executed by the
Registered Holder(s) hereof, a duly appointed legal representative thereof or
by its duly authorized attorney. Such signature shall be guaranteed by a bank
or trust company having a correspondent office in The City of New York or by a
broker or dealer which is a member of the National Association of Securities
Dealers, Inc. (the "NASD") or by a member of a national securities exchange. A
new Warrant Certificate shall be issued to the transferee(s) upon any such
registration of transfer, and this Warrant Certificate shall be cancelled by
the Warrant Agent.
Commencing on the forty-fifth calendar day following the
initial original issuance of the Warrants, each Warrantholder will have the
option (the "Conversion Option") to convert the form in which such
Warrantholder holds his Warrants from definitive to book-entry form. The
Conversion Option will be available for 45 calendar days (the "Conversion
Option Period").
In order to be exchanged for a Warrant in book-entry form, a
Warrant Certificate must be delivered to the Depository Trust Company (the
"Depository"), in proper form for deposit, by a Participant. Accordingly,
unless Warrants are purchased in book-entry form, a Warrantholder who is not
a Participant must deliver his Warrant Certificate, in proper form for
deposit, to a Participant, either directly or through an indirect participant
(such as a bank, brokerage firm, dealer or trust company that clears through,
or maintains a custodial relationship with, a Participant) or brokerage firm
which maintains an account with a Participant, in order to have its Warrant
Certificate exchanged for a Warrant in book-entry form.
Warrant Certificates received by the Depository for exchange
during the Conversion Option Period will be exchanged for Warrants in
book-entry form by the close of business on the New York Business Day that
such Certificates are received by the Depository (if received by the
Depository by its then applicable cut-off time for same day credit) or on the
following New York Business Day (if received by the Depository by its then
applicable cut-off time for next day credit). Warrants surrendered at any time
for exchange for book-entry Warrants may not be exercised or delivered for
settlement or transfer until such exchange has been effected. Once a
Warrantholder has elected the Conversion Option, such Warrantholder may hold
his Warrants only in book-entry form and will not be able to change his
election or withdraw from the book-entry system during the Conversion Option
Period or thereafter.
Except for Warrants subject to automatic exercise, Warrants
with respect to which payments of any Alternative Settlement Amount are made
and Warrants deemed worthless following an Extension Event, each
Warrantholder, in connection with any exercise of Warrants (including a
postponed exercise following an Extraordinary Event or an Exercise Limitation
Event), shall have the option (the "Limit Option") to specify in the related
Exercise Notice that such Warrants are not to be exercised if the Spot Nikkei
225 Index that would otherwise be used to determine the Cash Settlement Value
of such Warrants is five hundred (500) or more points (such number of points
subject to adjustment in accordance with the Warrant Agreement) lower than the
closing value (afternoon session) of the Nikkei 225 Index for the day
specified below (such closing value, the "Limit Option Reference Index"). A
Warrantholder's election of the Limit Option must be specified in the
applicable Exercise Notice delivered to the Warrant Agent. The Limit Option
Reference Index will be the closing value (afternoon session) of the Nikkei
225 Index (or a Substitute Index, as the case may be) on the relevant Exercise
Date (or if such day is not an Index Calculation Day, on the immediately
preceding Index Calculation Day). If an Exercise Notice and the related
Warrants are received after 3:00 P.M., New York City time, on a given day, the
applicable Limit Option Reference Index will be determined as of the next day
that is also a New York Business Day (or, if such day is not an Index
Calculation Day, as of the immediately preceding Index Calculation Day).
Following receipt of an Exercise Notice and the related Warrants
subject to the Limit Option, the Warrant Agent shall obtain from the
Determination Agent the applicable Limit Option Reference Index and will
determine whether such Warrants will not be exercised because of the Limit
Option. Warrants that are not exercised will be treated as not having been
tendered for exercise and the Warrant Certificate evidencing such Warrants
will be returned to the Registered Holder by first class mail at the Company's
expense. To exercise such Warrants, a Warrantholder will be required to cause
an Exercise Notice and the related Warrants to be submitted again to the
Warrant Agent. In the case of a postponed Valuation Date, the Limit Option
will continue to apply once elected by a Warrantholder in connection with an
exercise of Warrants on the basis of the Limit Option Reference Index as
initially determined for such Warrants, except when such Valuation Date is
postponed until the Expiration Date, any Delisting Date or the Cancellation
Date or following an Extension Event. Such Warrants will either (i) be
exercised on a delayed basis if the applicable Spot Nikkei 225 Index on the
postponed Valuation Date is not five hundred (500) or more points (such number
of points subject to adjustment in accordance with the Warrant Agreement) less
than the Limit Option Reference Index or (ii) be excluded from being exercised
if, on any applicable postponed Valuation Date, the applicable Spot Nikkei 225
Index is five hundred (500) or more points (such number of points subject to
adjustment in accordance with the Warrant Agreement) less than the Limit
Option Reference Index. In connection with any exercise of 1,000 or more
Warrants, a Warrantholder may elect to subject the exercise of only a portion
of such Warrants to the Limit Option; provided that the number of Warrants
subject to the Limit Option and the number of Warrants not subject to the
Limit Option shall in each case not be less than 500.
As provided in the Warrant Agreement and subject to certain
limitations, this Warrant Certificate may be exchanged for other Warrant
Certificates, representing a like number of Warrants, upon surrender to the
Warrant Agent at the Warrant Agent's Window, Attention: Transfer Department,
of this Warrant Certificate. The Company will thereupon execute, and the
Warrant Agent will countersign and deliver, one or more new Warrant
Certificates representing such like number of Warrants. Upon surrender of
this Warrant Certificate for exchange, the Warrant Agent shall cancel this
Warrant Certificate.
No service charge will be made for any registration of transfer
or exchange of this Warrant Certificate, but the Company may require the
payment of a sum sufficient to cover any tax or governmental charge that may
be imposed in relation thereto, other than exchanges not involving any
transfer.
Capitalized terms included herein but not defined herein have
the meanings assigned thereto in the Warrant Agreement.
The "Nikkei 225 Index" means the Nikkei 225 Index designed,
developed, maintained and operated by the Nihon Keizai Shimbun, Inc. The
"Spot Nikkei 225 Index" for any date means the closing value (afternoon
session) on such date of the Nikkei 225 Index or, in the event of a
substitution of a Substitute Index or a Successor Index for the Nikkei 225
Index, the closing value (afternoon session) on such date of such Substitute
Index or Successor Index. As used herein, "New York Business Day" means any
day other than a Saturday, Sunday or a day on which either the American Stock
Exchange, Inc. or the New York Stock Exchange is not open for securities
trading or commercial banks in New York City are required or authorized by law
or executive order to remain closed, and "Tokyo Business Day" means any day
other than (i) a Saturday, Sunday or a day on which banks are not open for a
full day of business in Japan or (ii) a day on which the TSE, SIMEX or OSE are
not open for business. "Tokyo Trading Day" means any day on which the TSE is
open for business. References in this Certificate to "U.S. Dollar", "U.S.$"
or "$" are to the lawful currency of the United States of America. References
to "Japanese Yen" or "Yen" are to the lawful currency of Japan. As used
herein, "Index Calculation Day" means any day the Nikkei 225 Index (or if a
Substitute Index has been substituted for the Nikkei 225 Index, such
Substitute Index) or any Successor Index is calculated and published.
The Warrant Agreement and the terms of the Warrants are subject
to amendment, as provided in the Warrant Agreement.
This Warrant Certificate shall be governed by, and interpreted
in accordance with, the laws of the State of New York.
Exercise Notice
Chemical Bank/Geoserve
Corporate Trust Securities Window
55 Water Street, Room 234
North Building
New York, New York 10041
Attention: Tender Department
1. This Notice DOES / DOES NOT relate to
"Contingently Tendered Warrants" subject to a Limit Option, as provided for in
the Warrant Agreement. If this Exercise Notice relates to any Contingently
Tendered Warrants, _____ of such Warrants are Contingently Tendered Warrants
and _____ are not. If the Spot Nikkei 225 Index used to determine the Cash
Settlement Value of Contingently Tendered Warrants is less than the Limit
Option Reference Index by five hundred (500) points or more, an Exercise
Notice with respect to such Contingently Tendered Warrants shall be void and
of no effect (and shall be disregarded for all purposes of the Warrant
Agreement).
2. Subject to paragraph 1, the undersigned (the "Owner")
hereby irrevocably exercises __________ Warrants (the "Exercised Warrants")
and delivers to you herewith a Warrant Certificate or Certificates, registered
in the Owner's name, representing a number of Warrants at least equal to the
number of Exercised Warrants. Each beneficial owner of Warrants that is
exercising Warrants pursuant to this Exercise Notice is exercising no fewer
than 500 Warrants and no beneficial owner is acting in concert with any other
beneficial owner in relation to the exercise of the Exercised Warrants.
3. Each beneficial owner of Warrants that is exercising
Warrants pursuant to this Exercise Notice is exercising no more than 250,000
Warrants on the date of this Exercise Notice individually or in concert.
4. Each beneficial owner that is exercising Warrants
pursuant to this Exercise Notice certifies that the number of Contingently
Tendered Warrants and the number of Warrants not subject to the Limit Option
shall in each case not be less than 500; provided that, such beneficial owner
has not combined Definitive Warrants and Book-entry Warrants or Book-entry
Warrants held through more than one Participant to meet such requirement.
5. The Owner hereby directs the Warrant Agent (a) to pay the
Cash Settlement Value, if any, with respect to the Exercised Warrants:
By cashier's check or an official bank check:
or
By wire transfer to the following U.S. dollar bank
account in the United States:
(Minimum payments of $100,000 only)
Bank: ______________________________
ABA Routing No.: ___________________
Account No.: ______ Reference: _____
and (b) if the number of Exercised Warrants is less than the number of
Warrants represented by the enclosed Warrant Certificate, to deliver a Warrant
Certificate representing the unexercised Warrants to
Dated: , 19
___________________________
(Owner)
by _____________________
Authorized Signature
Address:
Telephone ( )
EXHIBIT A-1
FORM OF GLOBAL WARRANT CERTIFICATE
No. _____-1
CUSIP No. _________
Unless this Global Warrant Certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) to the Company or its agent for registration of transfer, exchange or
payment, and any certificate issued is registered in the name of Cede & Co. or
such other name as requested by an authorized representative of The Depository
Trust Company and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since
the registered owner hereof, Cede & Co., has an interest herein.
MORGAN STANLEY GROUP INC.
Global Warrant Certificate Representing
Nikkei 225 Index Call Warrants
Expiring August __, 1997
This certifies that CEDE & CO., or registered assigns, is the
Registered Holder of the number of Nikkei 225 Index Call Warrants Expiring
August __, 1997 (the "Warrants") set forth from time to time on Schedule A
hereto. Each Warrant entitles the beneficial owner thereof (each a
"Warrantholder") to receive, subject to the conditions set forth herein and in
the Warrant Agreement referred to below, from Morgan Stanley Group Inc. (the
"Company") the Cash Settlement Value of such Warrant, except that, under the
circumstance described below, such Warrantholder may instead receive the
Alternative Settlement Amount for such Warrant or, in certain circumstances
following an Extension Event, the Warrants will be deemed to be worthless.
Except in the case of the substitution of a Substitute Index for the Nikkei
225 Index, the Cash Settlement Value of an Exercised Warrant will be an amount
in U.S. Dollars (the "Cash Settlement Value") equal to the quotient (rounded
down to the nearest cent) of (A) the amount, if any, by which the Spot Nikkei
225 Index on the applicable Valuation Date (as defined herein) for such
Warrant exceeds the Strike Level, divided by (B) the product of 4.0 and the
fixed Japanese Yen/U.S. Dollar exchange rate of __Yen per U.S. $1.00. The
Cash Settlement Value is calculated using the following formula:
Cash Settlement Value = the greater of
(i) $0 and (ii) $1 x (Spot Nikkei 225 Index -- Strike Level)
-------------------------------------------
4 x (__Yen/U.S. $1.00)
The "Strike Level" is ______ which was determined by the Determination Agent
and was the closing value (afternoon session) of the Nikkei 225 Index on
August __, 1995, but is subject to adjustment as described below. In the
event that a Substitute Index is substituted for the Nikkei 225 Index, the
Strike Level will be adjusted as follows:
Strike Level x Current Value of Substitute Index
- ---------------------------------
Current Value of Nikkei 225 Index
and the Cash Settlement Value of an Exercised Warrant shall be the amount in
U.S. Dollars equal to the quotient (rounded down to the nearest cent) of the
amount, if any, by which the Spot Nikkei 225 Index for the applicable
Valuation Date for such Warrant exceeds the Strike Level (as adjusted pursuant
to the formula above), divided by the Adjusted Divisor. The "Adjusted
Divisor" shall be an amount equal to 4 multiplied by the fixed Japanese
Yen/U.S. Dollar exchange rate of Yen__/U.S. $1.00 multiplied by a
fraction, the numerator of which shall be the Current Value of the
Substitute Index and the denominator of which shall be the Current Value of
the Nikkei 225 Index.
The "Current Value" of the Nikkei 225 Index and of the
Substitute Index will equal their respective levels reported by the relevant
exchange at the close of business on the day that the Determination Agent
substitutes the Substitute Index for the Nikkei 225 Index or, if such day is
not a Tokyo Business Day, the Tokyo Business Day immediately preceding such
day. In the event of such substitution, the Determination Agent shall
promptly notify the Warrant Agent of the new Strike Level and of said Current
Values.
A Warrant will not require or entitle a Warrantholder to sell
or deliver to the Company any shares of any component stocks of the Nikkei 225
Index or, in the case of the substitution of a Substitute Index for the Nikkei
225 Index, the Substitute Index or any Successor Index to either the Nikkei
225 Index or the Substitute Index, as the case may be (the "Underlying
Stocks"), or any other securities. Upon exercise of a Warrant, the Company
will make only a U.S. Dollar cash payment in the amount of the Cash Settlement
Value or Alternative Settlement Amount, if any and as applicable, of such
Warrant. The Company is under no obligation to, nor will it, purchase or take
delivery from any Warrantholder of any shares of any of the Underlying Stocks
or any other securities in connection with the exercise of any Warrants.
Warrantholders will not receive any interest on any Cash Settlement Value, and
the Warrants will not entitle the Warrantholders to any of the rights of
holders of any of the Underlying Stocks or other securities.
Subject to the terms and conditions set forth herein and in the
Warrant Agreement, each Warrant may be exercised, on any New York Business Day
during the period from its date of issuance until 3:00 P.M., New York City
time, on the earlier of (i) the New York Business Day immediately preceding
the Expiration Date (as defined below) and (ii) any Delisting Date. Except
under certain circumstances following an Extension Event, any Warrant not
exercised (including by reason of any postponed exercise as described herein
and in the Warrant Agreement) at or before 3:00 P.M., New York City time, on
the earlier of (i) the New York Business Day immediately preceding the
Expiration Date and (ii) any Delisting Date, shall be automatically exercised.
The "Expiration Date" shall be August __, 1997.
This Global Warrant Certificate shall not be valid unless
countersigned by the Warrant Agent.
The Warrants evidenced by this Global Warrant Certificate are
part of a duly authorized issue of Warrants issued by the Company pursuant to
a Warrant Agreement, dated as of August __, 1997 (the "Warrant Agreement")
among the Company, Chemical Bank (the "Warrant Agent") and Morgan Stanley &
Co. Incorporated (the "Determination Agent"), and is subject to the terms and
provisions contained in the Warrant Agreement, to all of which terms and
provisions the Warrantholders, the entities through which such Warrantholders
hold their beneficial interests in the Warrants and the Registered Holder of
this Global Warrant Certificate consent by acceptance of this Global Warrant
Certificate by the Depository and which Warrant Agreement is hereby
incorporated by reference in and made a part of this Global Warrant
Certificate. A copy of the Warrant Agreement is on file at the Warrant
Agent's Office.
The Warrants are unsecured contractual obligations of the
Company and rank on a parity with the Company's other unsecured contractual
obligations and with the Company's unsecured and unsubordinated debt.
Subject to the provisions hereof and the Warrant Agreement,
each Warrant represented by this Global Warrant Certificate (each a
"Book-entry Warrant") may be exercised on any New York Business Day during
the period from the Initial Conversion Date until 3:00 P.M., New York City
time, on the earlier of (i) the New York Business Day immediately preceding
the Expiration Date and (ii) any Delisting Date, by causing (x) such Warrant
to be transferred free to the Warrant Agent on the records of the Depository
in accordance with the Depository's Deposit/Withdrawal at Custodian
procedures, as provided in the Representations Letter, and (y) a duly
completed and executed Exercise Notice to be received by the Warrant Agent
from a Participant acting, directly or indirectly, on behalf of the
Warrantholder; provided, however, that Exercise Notices are subject to
rejection by the Warrant Agent as provided herein and in the Warrant Agreement.
Morgan Stanley & Co. Incorporated, as Determination Agent,
shall determine the Spot Nikkei 225 Index as provided in the Warrant Agreement
and herein and shall make such calculations as may be required upon the
occurrence of certain circumstances, as described in the Warrant Agreement and
herein. The Determination Agent shall act as an independent expert and not as
an agent of the Company, and, unless otherwise provided by the Warrant
Agreement, its calculations and determinations under the Warrant Agreement and
this Global Warrant Certificate shall, absent manifest error, be final and
binding on the Company, the Warrant Agent and the Warrantholders. Any such
calculations will be made available to a Warrantholder for inspection at the
Warrant Agent's Office. The Determination Agent will have no responsibility
for good faith errors or omissions in calculating or disseminating information
regarding the Nikkei 225 Index, any Substitute Index or any Successor Index,
adjustments or calculations by the Determination Agent in order to arrive at a
calculation of a stock index comparable to the Nikkei 225 Index or any
Substitute Index or any Successor Index, or the Cash Settlement Value or the
Alternative Settlement Amount, as applicable.
In the event that the Nikkei 225 Index (or if a Substitute
Index has been substituted for the Nikkei 225 Index, such Substitute Index) is
not published by NKS but is published by another person not affiliated with
the Company and acceptable to the Company (a "Third Party"), then the Spot
Nikkei 225 Index for any date thereafter will be determined based on the
closing value (afternoon session) of the Nikkei 225 Index (or such Substitute
Index, as the case may be) as published by such Third Party. If NKS or any
Third Party discontinues publication of the Nikkei 225 Index (or if a
Substitute Index has been substituted for the Nikkei 225 Index, such
Substitute Index) and publishes a successor or substitute index that the
Company determines, in its sole discretion, to be comparable to the Nikkei 225
Index (or such Substitute Index, as the case may be) (any such index being a
"Successor Index"), then the Spot Nikkei 225 Index for any date thereafter
will be determined by the Determination Agent on behalf of the Company based
on the closing level of the Successor Index on such date. If NKS or any Third
Party makes a material change in the formula for, or the method of
calculating, the Nikkei 225 Index, any Substitute Index or any Successor
Index, the Determination Agent shall make such calculations as may be required
to determine the applicable Cash Settlement Value using the formula and method
of calculating the Nikkei 225 Index, any Substitute Index or any Successor
Index as in effect prior to such change or modification. If NKS and/or any
Third Party discontinues publication of the Nikkei 225 Index, any Substitute
Index and/or any Successor Index, the Determination Agent will determine the
applicable Cash Settlement Value based on the formula and method used in
calculating the Nikkei 225 Index, any Substitute Index or any Successor Index
as in effect on the date the Nikkei 225 Index, such Substitute Index or such
Successor Index was last published.
Upon the occurrence of a Substitution Event, the Company shall
promptly give notice to the Warrantholders, by publication in a United States
newspaper with a national circulation (currently expected to be the Wall Street
Journal), specifying: (i) the date on which the Substitution Event was deemed
to occur pursuant to Section 2.02(h) of the Warrant Agreement, (ii) that a
Substitute Index will be substituted for the Nikkei 225 Index on the
Substitution Date (as defined herein), (iii) the name of the Substitute Index,
(iv) the Substitution Date, (v) the Strike Level as adjusted pursuant to
Section 2.02(e) of the Warrant Agreement and (vi) the Adjusted Divisor. The
Warrant Agent at the request and expense of the Company and on behalf of the
Company shall mail such notice to each Warrantholder. On the Substitution
Date, the Substitute Index will be substituted for the Nikkei 225 Index. From
and after the Substitution Date, the index used to determine the Spot Japan
Index used to calculate the Cash Settlement Value or Alternative Settlement
Amount, as the case may be, of the Warrants will be such Substitute Index.
The "Substitution Date" shall be the thirtieth calendar day (or, if such day
is not a New York Business Day, the next succeeding New York Business Day)
following such giving of notice of the Substitution Event.
A "Substitution Event" will occur if, as determined by the
Determination Agent (whose opinion shall be conclusive and binding on the
Company and on the holders of the Warrants) the following conditions are
fulfilled:
(i) Either of the following has occurred:
(A) The AMEX or another United States securities
exchange publishes (on a basis not less regularly than each day
on which such exchange and the TSE are open for trading) an
index (the "New Japan Index") which: for a period of 90 days
immediately preceding the date of the Substitution Event has a
correlation based on daily, closing value to closing value,
percentage changes of not less than 90% with the Nikkei 300
Index (as defined in the Prospectus Supplement dated August __,
1995 relating to the Warrants (the "Prospectus Supplement"));
and warrants with payments determined by reference to the New
Japan Index have been approved to be listed on the AMEX or such
other exchange by the Securities and Exchange Commission; or
(B) Warrants with payments determined by reference to
the Nikkei 300 Index have been approved to be listed on the
AMEX or such other exchange by the Securities and Exchange
Commission; and
(ii) Either of the following has occurred:
(A) the Nikkei 225 Index as defined in the Prospectus
Supplement is no longer published and/or the Nikkei 225 Futures
Contracts (as defined in the Prospectus Supplement) have been
delisted from trading on the OSE; or
(B) the Adjusted Trading Volume and the Adjusted Open
Interest (in each case, as defined herein) for the two Nikkei
300 Futures Contracts (as defined in the Prospectus Supplement)
with expiration dates closest in time to the Substitution Event
exceed the Adjusted Trading Volume and the Adjusted Open
Interest, respectively, for the two Nikkei 225 Futures
Contracts with expiration dates closest in time to the
Substitution Event, each for any three-month period prior to
the date of any Substitution Event; and
(iii) To the extent required, the Company, the AMEX and/or such
exchange shall have obtained any license necessary to use the New
Japan Index or the Nikkei 300 Index.
Notwithstanding the above, unless the Nikkei 225 Index is no
longer published and/or the Nikkei 225 Futures Contracts shall have been
delisted from trading on the OSE, a Substitution Event will not be deemed to
have occurred on any of the 60 calendar days immediately preceding the
Expiration Date.
A "Substitute Index" means, in the event that the circumstances
described in clause (i)(A) above have occurred, a New Japan Index or, in the
event that the circumstances described in clause (i)(B) above have occurred,
the Nikkei 300 Index.
"Adjusted Trading Volume" for the Nikkei 300 Futures Contracts
or the Nikkei 225 Futures Contracts means the arithmetic mean, for any period,
of the amounts on each trading day equal to the product of: (x) the number of
such futures contracts traded on such day and (y) the closing level on such
day of the index to which such futures contracts relate, multiplied by
Yen10,000, in the case of the Nikkei 300 Futures Contracts, or Yen1,000, in
the case of the Nikkei 225 Futures Contracts (the "Contract Multiplier").
"Adjusted Open Interest" for the Nikkei 300 Futures Contracts or the Nikkei
225 Futures Contracts means the arithmetic mean, for any period, of the
amounts on each trading day equal to the product of: (x) the open interest
in such futures contracts on such day and (y) the closing level on such day of
the index to which such futures contracts relate, multiplied by the Contract
Multiplier.
Subject to the Warrant Agreement and this Warrant Certificate,
the "Valuation Date" for a Warrant shall be the first Index Calculation Day
following the applicable Exercise Date (subject to postponement upon the
occurrence of an Extraordinary Event or Exercise Limitation Event or as a
result of the exercise of a number of Warrants exceeding the limits on
exercise set forth herein).
Except for Warrants subject to automatic exercise, or Warrants
subject to the Limit Option and except following an Extension Event, the
"Exercise Date" for a Warrant will be (i) the New York Business Day on which
the Warrant Agent receives the Warrant and Exercise Notice in proper form with
respect to such Warrant, if received at or prior to 3:00 P.M., New York City
time, on such day, or (ii) if the Warrant Agent receives such Warrant and/or
Exercise Notice after 3:00 P.M., New York City time, on a New York Business
Day, then the New York Business Day next succeeding the New York Business Day
on which such Warrant or Exercise Notice is received.
Subject to the provisions of the Warrant Agreement relating to
Extension Events, all Warrants for which the Warrant Agent has not received a
valid Exercise Notice at or prior to 3:00 P.M., New York City time, on (i) the
New York Business Day immediately preceding the Expiration Date or (ii) any
Delisting Date prior to the Expiration Date or for which the Warrant Agent has
received a valid Exercise Notice but with respect to which timely delivery of
the relevant Warrants has not been made, together with any Warrants the
Valuation Date for which has as of such time been postponed as described
below, shall be automatically exercised as of such date; without any
requirement of delivery of an Exercise Notice to the Warrant Agent. However,
if the Company first receives notice of the delisting or suspension of the
Warrants on the same day on which such Warrants are delisted or suspended,
such day will be deemed a Delisting Date. For purposes of this Global Warrant
Certificate, "Index Calculation Day" means any day the Nikkei 225 Index or if
a Substitute Index has been substituted for the Nikkei 225 Index, such
Substitute Index or any Successor Index is calculated and published. The
Exercise Date for such Warrants will be the Expiration Date or any Delisting
Date, as the case may be, or, if such date is not a New York Business Day, the
next succeeding New York Business Day. The Warrant Agent will obtain the Spot
Nikkei 225 Index (determined as of the first Index Calculation Day following
such date, which will be the Valuation Date for such Warrants except in the
case of a postponed exercise following the occurrence of an Extraordinary
Event or an Exercise Limitation Event) and will determine the Cash Settlement
Value, if any, of such Warrants.
No fewer than 500 Warrants may be exercised by or on behalf of
any one Warrantholder at any one time, except that no such minimum exercise
amount shall apply in the case of automatic exercise on or following the
Expiration Date or on any Delisting Date or in the case of cancellation of the
Warrants as a result of an Extraordinary Event. A Warrantholder shall not
combine Definitive Warrants and Book-entry Warrants or Book-entry Warrants
held through more than one Participant to meet the 500 Warrant minimum
exercise requirement. With the exception of the Limit Option, an Exercise
Notice shall be unconditional. Except as provided in the Warrant Agreement,
the Warrant Agent shall be entitled, with no duty of inquiry, to rely
conclusively on any Exercise Notice received by it and on any representation
of the exercising Warrantholder contained therein.
If the Exercise Notice is not rejected as provided in the
Warrant Agreement, then the Warrant Agent or the Determination Agent, as the
case may be, will determine the Cash Settlement Value of the exercised
Warrants in accordance with the terms of the Warrant Agreement. Except in the
case of Warrants subject to automatic exercise, Warrants that upon exercise
entitle the holder thereof to receive an Alternative Settlement Amount in lieu
of the Cash Settlement Value and Warrants deemed worthless following an
Extension Event, if on any Valuation Date the Cash Settlement Value for any
Warrants then exercised would be zero, then in such case, the attempted
exercise of such Warrants shall be void and of no effect and the Warrants will
be transferred by the Warrant Agent back to the Participant that submitted
them free on the records of the Depository and, in either case such
Warrantholder shall be permitted to re-exercise such Warrants prior to the
Expiration Date or any Delisting Date, as the case may be.
Except in the case of Warrants subject to automatic exercise,
for Warrants that upon exercise entitle the holder thereof to receive an
Alternative Settlement Amount and Warrants deemed worthless following an
Extension Event, if the Company has made adequate New York Clearing House or
next day funds available to the Warrant Agent in a timely manner which shall
in no event be later than 3:00 P.M., New York City time, on the fourth New
York Business Day following a Valuation Date (or, if the Valuation Date is not
a New York Business Day, on the fourth New York Business Day following the New
York Business Day next succeeding the Valuation Date) (the "Funding Date"),
the Warrant Agent will be responsible for making its payment available to each
appropriate Participant in the form of a cashier's check or an official bank
check, or (in the case of payments of at least $100,000) by wire transfer to a
U.S. Dollar account maintained by such Participant in the United States (at the
Participant's election as specified in the Exercise Notice) prior to the close
of business, on the first New York Business Day immediately succeeding such
Funding Date (the "Settlement Date"). Such payment shall be in an amount
equal to the aggregate Cash Settlement Value of such holder's exercised
Warrants;
With respect to automatically exercised Warrants (other than
Warrants subject to postponed exercise following the occurrence of an
Extraordinary Event or an Exercise Limitation Event), if the Company has made
adequate New York Clearing House or next day funds available to the Warrant
Agent in a timely manner, which shall in no event be later than 3:00 P.M., New
York City time, on the Automatic Funding Date, the Warrant Agent will be
responsible for making funds available to the Depository, against receipt of
the Global Warrant Certificate, prior to the close of business, on the
Automatic Funding Date. Such funds are to be in an amount equal to the
aggregate Cash Settlement Value of the Warrants subject to such automatic
exercise.
Neither the Warrant Agent nor the Determination Agent will be
responsible for any losses resulting from a failure of a brokerage firm or a
Participant to properly exercise Warrants on behalf of a Warrantholder.
Subject to the provisions of Section 2.03(b)(ii) of the Warrant
Agreement, if the Company determines that an Extraordinary Event or Exercise
Limitation Event has occurred and is continuing on the Tokyo Business Day with
respect to which the Spot Nikkei 225 Index on a Valuation Date is to be
determined (the "Applicable Tokyo Business Day"), then the Cash Settlement
Value with respect to an exercise of Warrants shall be calculated on the basis
that the Valuation Date shall be the next Index Calculation Day following an
Applicable Tokyo Business Day on which there is no Extraordinary Event or
Exercise Limitation Event; provided, that if the Valuation Date has not
occurred on or prior to the Expiration Date or any Delisting Date, then the
Warrantholders will receive the Alternative Settlement Amount in lieu of the
Cash Settlement Amount, which shall be calculated as if the Warrants had been
cancelled on the Expiration Date or any Delisting Date, as the case may be.
Upon the occurrence of an Extraordinary Event or an Exercise
Limitation Event, the Company shall use its best efforts to notify the Warrant
Agent and the Determination Agent promptly that an Extraordinary Event or
Exercise Limitation Event, as the case may be, has occurred and shall promptly
give notice to the Warrantholders by publication in a United States newspaper
with a national circulation (currently expected to be the Wall Street
Journal), that an Extraordinary Event or an Exercise Limitation Event has
occurred.
If the Company determines that an Extraordinary Event or an
Exercise Limitation Event has occurred and is continuing on the Expiration
Date or on any earlier Delisting Date, the Company shall so notify the Warrant
Agent and the Determination Agent, and the Cash Settlement Value with respect
to the exercised Warrants shall be equal to, and be calculated in the same
manner as, an Alternative Settlement Amount, in accordance with the Warrant
Agreement (treating the Expiration Date or any Delisting Date, as the case may
be, as the date on which the Warrants were cancelled).
If the Company determines that an Extraordinary Event has
occurred and is continuing, and if that Extraordinary Event is expected by the
Company, prior to the Expiration Date to continue, the Company may immediately
cancel the Warrants by notifying the Warrant Agent of such cancellation (the
date such notice is given being the "Cancellation Date"), and each
Warrantholder's rights with respect to the Warrants and under the Warrant
Agreement shall thereupon cease; provided, that, subject to an automatic
extension of the term of the Warrants or to a determination that the Warrants
are worthless, each Warrant shall be exercised (even if such Warrant would not
otherwise be exercisable on such date because of the Limit Option) on the
basis that the Valuation Date for such Warrant shall be the Cancellation Date
and each Warrantholder shall have the right to receive, in lieu of the Cash
Settlement Value of such Warrant, the Alternative Settlement Amount, determined
by the Determination Agent.
An "Extraordinary Event" means any of the following events:
(i) a suspension or absence of trading on the Tokyo Stock
Exchange (the "TSE") of all the Underlying Stocks which then comprise
the Nikkei 225 Index, any Substitute Index or a Successor Index;
(ii) the enactment, publication, decree or other promulgation
of any statute, regulation, rule or order of any court of any
jurisdiction, any administrative agency or any other U.S. or non-U.S.
governmental authority that would make it unlawful for the Company
to perform any of its obligations under the Warrant Agreement or the
Warrants or that has had or is reasonably expected to have a material
adverse effect on the ability of (A) the Company to perform its
obligations under the Warrants or to hedge or modify the hedge of its
position with respect to the Nikkei 225 Index, any Substitute Index
or a Successor Index; or (B) any affiliate of the Company to hedge or
modify the hedge of its position with respect to any hedging
transaction entered into with the Company in connection with the
Company's obligations under the Warrants.
(iii) any outbreak or escalation of hostilities or other
national or international calamity or crises (including, without
limitation, natural calamities that in the opinion of the Company may
materially and adversely affect the economy of Japan or the trading of
securities generally on the TSE) that had or is reasonably expected
to have a material adverse effect on the ability of (A) the Company
to perform its obligations under the Warrants or to modify the hedge
of its position with respect to the Nikkei 225 Index, any Substitute
Index or a Successor Index; or (B) any affiliate of the Company to
hedge or modify the hedge of its position with respect to any hedging
transaction entered into with the Company in connection with the
Company's obligations under the Warrants.
For the purpose of determining whether an Extraordinary Event
has occurred: (1) a limitation on the hours or number of days of trading will
not constitute an Extraordinary Event if it results from an announced change
in the regular business hours of the TSE and (2) an "absence of trading" on
the TSE will not include any time when the TSE is closed for trading under
ordinary circumstances.
An "Exercise Limitation Event" means either of the following
events:
(i) a suspension, material limitation or absence of trading
on the TSE of 20% or more in number of the Underlying Stocks; or
(ii) the suspension or material limitation on The Singapore
International Monetary Exchange (the "SIMEX"), Osaka Stock Exchange
("OSE") or the AMEX or any other major futures, options or securities
market of trading in futures or options contracts related to the
Nikkei 225 Index (or, in the event of a substitution of a Substitute
Index for the Nikkei 225 Index, the Nikkei 300 Index) or a Successor
Index.
For the purposes of determining whether an Exercise Limitation
Event has occurred: (1) a limitation on the hours or number of days of
trading will not constitute an Exercise Limitation Event if it results from an
announced change in the regular business hours of the relevant exchange, (2) a
decision to permanently discontinue trading in the relevant futures or options
contract will not constitute an Exercise Limitation Event, (3) a suspension of
trading in an Underlying Stock or in a futures or options contract referred to
in clauses (i) and (ii) above, by reason of (x) a price change violating
limits set by the TSE, SIMEX, OSE or AMEX or other futures or securities
market on which futures or options contracts related to the Nikkei 225 Index
(or, in the event of a substitution of a Substitute Index for the Nikkei 225
Index, the Nikkei 300 Index), the Japan Index, any New Japan Index or a
Successor Index are traded or such other futures or securities market or (y)
an imbalance of orders relating to an Underlying Stock or such contracts will
constitute a suspension or material limitation of trading, (4) an "absence of
trading" on the TSE will not include any time when the TSE is closed for
trading under ordinary circumstances and (5) the occurrence of an
Extraordinary Event described in clause (i) of the definition of Extraordinary
Event will not constitute, and will supersede the occurrence of, an Exercise
Limitation Event.
The "Alternative Settlement Amount" is the amount calculated
using the formula set forth below:
Alternative Settlement Amount = Intrinsic Value + ( T x A )
- -
2 B
where
Intrinsic Value = the Cash Settlement Value of the Warrants
determined as described above but calculated with a
Spot Nikkei 225 Index determined by the
Determination Agent which, subject to approval by
the Company (such approval not to be unreasonably
withheld), in the reasonable opinion of the
Determination Agent, fairly reflects the value of
the Underlying Stocks on the Cancellation Date,
Expiration Date, Delisting Date or Early Extended
Expiration Date, whichever has given rise to the
payment of the Alternative Settlement Amount;
T = U.S. $_____, the maximum initial offering price per
Warrant;
A = the total number of days from but excluding the
Cancellation Date, Expiration Date, or Delisting
Date, whichever has given rise to the payment of
the Alternative Settlement Amount for such
Warrants, to and including the Expiration Date; and
B = the total number of days from, but excluding the
date on which sales of the Warrants were initially
confirmed, to and including the Expiration Date.
For the purposes of determining "Intrinsic Value" in the above
formula, in the event that the Determination Agent and the Company are
required, but have not, after good faith consultation with each other and
within five days following the first day on which such Alternative Settlement
Amount may be calculated in accordance with the above formula, agreed upon a
Spot Nikkei 225 Index which fairly reflects the value of the Underlying Stocks
on the Cancellation Date, Expiration Date, Delisting Date or Early Extended
Expiration Date, whichever gives rise to the payment of the Alternative
Settlement Amount, then the Determination Agent shall promptly nominate a
third party, subject to approval by the Company (such approval not to be
unreasonably withheld), to determine such figure and calculate the Alternative
Settlement Amount in accordance with the above formula. Such party shall act
as an independent expert and not as an agent of the Company or the
Determination Agent, and its calculation and determination of the Alternative
Settlement Amount shall, absent manifest error, be final and binding on the
Company, the Warrant Agent, the Determination Agent and the Warrantholders.
Any such calculations will be made available to a Warrantholder for inspection
at the Warrant Agent's Office. Neither the Company nor such third party shall
have any responsibility for good faith errors or omissions in calculating the
Alternative Settlement Amount.
If the Company determines that an event described in clause (i)
of the definition of Exercise Limitation Event below has occurred and is
continuing on the Expiration Date (an "Extension Event") then the term of any
outstanding Warrants shall be automatically extended for a period of 30 days
(the thirtieth day following the Expiration Date being the "Extended
Expiration Date"), provided, however, that if the Cash Settlement Value or the
Intrinsic Value used in calculating the Alternative Settlement Amount, as the
case may be, of such Warrants would have been zero if the Warrants had been
exercised such that the Valuation Date for such exercise was the Measurement
Date (as defined below), then the term of the Warrants shall not be extended,
the Warrants shall be deemed to be worthless and the Company shall not be
required to make any payments in respect thereof. Any such automatic
extension shall be deemed to have been revoked and the Warrants shall expire
on the earlier of (i) the next Index Calculation Day following a Tokyo Trading
Day on which there is no Extension Event (the "Early Extended Expiration
Date") and (ii) any Delisting Date occurring after the Expiration Date. The
Company will give the Warrant Agent prompt notice by telephone or facsimile
transmission and will give prompt notice to the Warrantholders by publication
in a United States newspaper with a national circulation (currently expected
to be The Wall Street Journal) of the occurrence of an Extension Event, any
Extended Expiration Date, any Index Calculation Day referred to in clause (i)
above and any Delisting Date referred to in clause (ii) above, but in no event
will such notice to the Warrant Agent be given later than 9:30 A.M., New York
City time, on the New York Business Day following the Expiration Day, Index
Calculation Day or Delisting Date, as applicable.
Any Warrants that expire as described in clause (i) of the
preceding paragraph will be deemed to be exercised on the Early Extended
Expiration Date (even if such Warrants would not otherwise be exercisable on
such date because of the Limit Option) on the basis that the Valuation Date
for such exercise shall be such Early Extended Expiration Date and the holder
of each such Warrant will receive an Alternative Settlement Amount, whether or
not an Extraordinary Event or an Exercise Limitation Event is continuing on
such Early Extended Expiration Date.
If the term of the Warrants has been extended pursuant to the
second preceding paragraph but the Company determines that an Extension Event
is continuing (A) when the Warrants expire on the Extended Expiration Date or
(B) on any Delisting Date occurring on or after the Expiration Date, the
Warrants shall be deemed to be worthless and the Company shall not be required
to make any payments in respect thereof. The Company shall give prompt notice
of any such determination to the Warrant Agent by telephone or facsimile
transmission and to the Warrantholders by publication in a United States
newspaper with a national circulation (currently expected to be The Wall Street
Journal).
"Measurement Date" means the Tokyo Trading Day occurring most
recently prior to the Expiration Date on which none of the events described in
clause (i) of the definition of Exercise Limitation Event below had occurred
or was continuing.
With respect to all Warrants as to which the Valuation Date has
been postponed (other than Warrants that have been deemed worthless following
an Extension Event) or which have been cancelled as described above, the
Company shall make available to the Warrant Agent in a timely manner, which
shall in no event be later than 3:00 P.M., New York City time, on the third
New York Business Day following the date on which the Cash Settlement Value or
Alternative Settlement Amount, as the case may be, has been calculated (the
"Alternative Funding Date") New York Clearing House or next day funds in an
amount equal to, and for the payment of, the aggregate Cash Settlement Value
or Alternative Settlement Amount, as applicable, of such Warrants. Subject
to such funds having been made available as provided in the preceding
sentence, the Warrant Agent will thereafter be responsible for making its
payment to the Depository prior to the close of business on, the Alternative
Funding Date, in an amount equal to the aggregate Cash Settlement Value or
Alternative Settlement Amount (as applicable) of such exercised Warrants (and
in the case of cancellation as described above, of all previously unexercised
Warrants).
All exercises of Warrants (other than on automatic exercise or
following an Extension Event) are subject, at the Company's option, to the
limitation that not more than 750,000 Warrants in total may be exercised on
any Exercise Date and not more than 250,000 Warrants may be exercised by or on
behalf of any beneficial owner, either individually or in concert with any
other beneficial owner, on any Exercise Date. If any New York Business Day
would otherwise, under the terms hereof, be the Exercise Date in respect of
more than 750,000 Warrants, then at the Company's election (by giving notice
thereof to the Warrant Agent not later than 11:00 A.M., New York City time, on
the New York Business Day immediately following such Exercise Date), 750,000
of such Warrants shall be deemed exercised on such Exercise Date (selected by
the Warrant Agent on a pro rata basis, but if, as a result of such pro rata
selection, any Registered Holders would be deemed to have exercised less than
500 Warrants, then the Warrant Agent shall first select additional amounts of
such holders' Warrants so that no holder shall be deemed to have exercised
less than 500 Warrants), and the remainder of such Warrants (the "Remaining
Warrants") shall be deemed exercised on the following New York Business Day
(notwithstanding the minimum exercise requirement and subject to successive
applications of this paragraph); provided that any Remaining Warrants for
which an Exercise Notice was delivered on a given Exercise Date shall be
deemed exercised before any other Warrants in respect of which an Exercise
Notice was delivered on a later Exercise Date. If any beneficial owner of
Warrants attempts to exercise more than 250,000 Warrants on any New York
Business Day individually or in concert, then at the Company's election (as
notified to the Warrant Agent by giving notice thereof to the Warrant Agent
not later than 11:00 A.M., New York City time, on the New York Business Day
following such New York Business Day), 250,000 of such Warrants shall be
deemed exercised on such New York Business Day and the remainder shall be
deemed exercised on the following New York Business Day (notwithstanding the
minimum exercise requirement and subject to successive applications of this
paragraph). The date on which any Warrant is deemed exercised under the
preceding two sentences shall for all purposes of this Global Warrant
Certificate be the "Exercise Date" in respect of such Warrants.
Prior to due presentment for registration of transfer, the
Company, the Warrant Agent, and any agent of the Company or the Warrant Agent,
may deem and treat the registered owner hereof as the absolute owner of the
Warrants evidenced hereby (notwithstanding any notation of ownership or other
writing hereon) for any purpose whatsoever, and as the person entitled to
exercise the rights represented by the Warrants evidenced hereby, and neither
the Company nor the Warrant Agent, nor any agent of the Company or the Warrant
Agent, shall be affected by any notice to the contrary.
The Warrant Agent will, in accordance with the Warrant
Agreement, from time to time register the transfer of this Global Warrant
Certificate in its records (which may be maintained electronically) subject to
such reasonable regulations as the Company or the Warrant Agent may prescribe,
only to the Depository, to another nominee of the Depository, to a successor
Depository or to a nominee of a successor Depository, upon surrender of such
Global Warrant Certificate, duly endorsed, or accompanied by a written
instrument or instruments of transfer in form satisfactory to the Warrant
Agent and the Company, duly executed by the Registered Holder thereof or by
the duly appointed legal representative thereof, or by its duly authorized
attorney. Such signature shall be guaranteed by a bank or trust company with a
correspondent office in The City of New York or by a broker or a dealer, which
is a member of the National Association of Securities Dealers, Inc. (the
"NASD") or by a member of a national securities exchange. Upon any such
registration of transfer, a new Global Warrant Certificate shall be issued to
the transferee and the surrendered Global Warrant Certificate shall be
cancelled by the Warrant Agent.
The Global Warrant Certificate may be transferred as provided
above when surrendered to the Warrant Agent's Window, Attention: Transfer
Department, or at the location of any successor Warrant Agent for another
Global Warrant Certificate of like tenor and representing a like number of
unexercised Warrants.
Except for Warrants subject to automatic exercise, Warrants
with respect to which payments of any Alternative Settlement Amount are made
and Warrants deemed worthless following an Extension Event, each
Warrantholder, in connection with any exercise of Warrants (including a
postponed exercise following an Extraordinary Event or an Exercise Limitation
Event), will have the option (the "Limit Option") to specify that such
Warrants are not to be exercised if the Spot Nikkei 225 Index that would
otherwise be used to determine the Cash Settlement Value of such Warrants is
five hundred (500) or more points (such number of points subject to adjustment
in accordance with the Warrant Agreement) lower than the closing value
(afternoon session) of the Nikkei 225 Index (or any Successor Index or any
Substitute Index, as the case may be) for the day specified below (such
closing value, the "Limit Option Reference Index"). A Warrantholder's
election of the Limit Option must be specified in the applicable Exercise
Notice delivered to the Warrant Agent. The Limit Option Reference Index will
be the closing value (afternoon session) of the Nikkei 225 Index (or a
Substitute Index, as the case may be) on the relevant Exercise Date (or if
such day is not an Index Calculation Day, on the immediately preceding Index
Calculation Day). If an Exercise Notice and the related Warrants are received
after 3:00 P.M., New York City time, on a given day, the applicable Limit
Option Reference Index will be determined as of the next day that is also a New
York Business Day (or, if such day is not an Index Calculation Day, as of the
immediately preceding Index Calculation Day).
Following receipt of an Exercise Notice and the related Warrants
subject to the Limit Option, the Warrant Agent shall obtain from the
Determination Agent the applicable Limit Option Reference Index and will
determine whether such Warrants will not be exercised because of the Limit
Option. Warrants that are not exercised will be treated as not having been
tendered for exercise and the Warrant Certificate evidencing such Warrants
will be returned to the Registered Holder by first class mail at the Company's
expense. To exercise such Warrants, a Warrantholder will be required to cause
an Exercise Notice and the related Warrants to be submitted again to the
Warrant Agent. In the case of a postponed Valuation Date, the Limit Option
will continue to apply once elected by a Warrantholder in connection with an
exercise of Warrants on the basis of the Limit Option Reference Index as
initially determined for such Warrants, except when such Valuation Date is
postponed until the Expiration Date, any Delisting Date or the Cancellation
Date or following an Extension Event. Such Warrants will either (i) be
exercised on a delayed basis if the applicable Spot Nikkei 225 Index on the
postponed Valuation Date is not five hundred (500) or more points (such number
of points subject to adjustment in accordance with the Warrant Agreement) less
than the Limit Option Reference Index or (ii) be excluded from being exercised
if, on any applicable postponed Valuation Date, the applicable Spot Nikkei 225
Index is five hundred (500) or more points (such number of points subject to
adjustment in accordance with the Warrant Agreement) less than the Limit
Option Reference Index. In connection with any exercise of 1,000 or more
Warrants, a Warrantholder may elect to subject the exercise of only a portion
of such Warrants to the Limit Option, provided that the number of Warrants
subject to the Limit Option and the number of Warrants not subject to the
Limit Option shall in each case not be less than 500.
Capitalized terms included herein but not defined herein have
the meanings assigned thereto in the Warrant Agreement.
The "Nikkei 225 Index" means the Nikkei 225 Index designed,
developed, maintained and operated by the AMEX. The "Spot Nikkei 225 Index"
for any date means the closing value (afternoon session) on such date of the
Nikkei 225 Index or, in the event of a substitution of a Substitute Index or a
Successor Index for the Nikkei 225 Index, the closing level on such date of
such Substitute Index or Successor Index. As used herein, "New York Business
Day" means any day other than a Saturday or a Sunday or a day on which
commercial banks in New York City are required or authorized by law or
executive order to remain closed, and "Tokyo Business Day" means any day other
than (i) a Saturday, Sunday or day on which banks are not open for a full day
of business in Tokyo or (ii) a day on which the TSE, the SIMEX or the OSE are
not open for business. "Tokyo Trading Day" means any day on which the TSE is
open for business. References in this Global Certificate to "U.S. Dollars",
"U.S.$" or "$" are to the lawful currency of the United States of America and
references to "Japanese Yen" or "Yen" are to the lawful currency of Japan.
The Warrant Agreement and the terms of the Warrants are subject
to amendment, as provided in the Warrant Agreement.
This Global Warrant Certificate shall be governed by, and
interpreted in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, Morgan Stanley Group Inc. has caused this
instrument to be duly executed.
Dated: , 199_ MORGAN STANLEY GROUP INC.
By____________________
Name:
Title:
Attest:
By____________________
Name:
Title:
Countersigned as of the
date above written:
CHEMICAL BANK
as Warrant Agent
By____________________
Authorized Officer
Schedule A
Number of Warrants Represented by
Date this Global Warrant Certificate
- ---- ---------------------------------
EXHIBIT A-2
EXERCISE NOTICE
For Warrants Represented by the Global Warrant Certificate
Chemical Bank/Geoserve
Corporate Trust Securities Window
55 Water Street
Room 234
North Building
New York, New York 10041
Attention: Tender Department
1. We refer to the Warrant Agreement dated as of August __,
1995 (the "Warrant Agreement"), among Morgan Stanley Group Inc. (the
"Company"), Chemical Bank, as Warrant Agent (the "Warrant Agent"), and Morgan
Stanley & Co. Incorporated, as Determination Agent (the "Determination
Agent"). On behalf of certain beneficial owners, each of whom we certify is
exercising no fewer than 500 Warrants that are covered by this Exercise Notice
and whose Warrants have been, or will be, transferred to the Warrant Agent in
accordance with the provisions of the Representations Letter relating to the
Warrants, we hereby irrevocably exercise _____ Warrants (the "Tendered
Warrants"). We hereby acknowledge that the Warrants being exercised and this
Exercise Notice must be received by you by 3:00 P.M., New York City time, on a
New York Business Day in order for the Valuation Date for the Tendered
Warrants to be the Index Calculation Day following such New York Business Day
and that, if the Warrants being exercised and this Exercise Notice are
received by you after 3:00 P.M., New York City time, on a New York Business
Day the Valuation Date of the Tendered Warrants shall be the Index Calculation
Day next succeeding such New York Business Day, in each case subject to
certain provisions of the Warrant Agreement.
2. If you determine that this Exercise Notice has not been
duly completed or is not in proper form, this Exercise Notice will be void and
of no effect and will be deemed not to have been delivered.
3. We hereby direct you to make payment to us of amounts
payable to our clients as a result of the exercise of the Warrants hereunder
as follows:
By cashier's check or an official bank check;
or
By wire transfer to the following U.S.
Dollar bank account in the United States:
(Minimum payments of $100,000 only)
Bank: _________________________________
Account No.: __________________________
ABA Routing No.: ______________________
Reference: ___________________________
4. [All/PART OF] the Tendered Warrants covered hereby [ARE/ARE
NOT] subject to the Limit Option:
Number of Warrants subject to the Limit Option (the
"Contingently Tendered Warrants"): ______________.
5. Each client on whose behalf we are exercising Warrants
pursuant to this Exercise Notice has certified to us that it is not exercising
in excess of 250,000 Warrants on behalf of any beneficial owner or in concert
with any other beneficial owner on the date of this Exercise Notice.
6. Each client on whose behalf we are exercising Warrants
pursuant to this Exercise Notice has certified that the number of Contingency
Tendered Warrants and the number of Warrants not subject to the Limit Option
shall in each case not be less than 500; provided that, such client has not
combined Definitive Warrants and Book-entry Warrants to meet such requirement.
7. We hereby certify that we are a Participant of The
Depository Trust Company (the "Depository") with the present right to use and
receive its services.
Capitalized terms used but not defined herein have the meanings
assigned thereto in the Warrant Agreement.
Dated: , 19
NAME OF DEPOSITORY
PARTICIPANT
Participant Number
By __________________________
Authorized Signature
Address:
Telephone: ( )
EXHIBIT B
CONFIRMATION OF EXERCISE
For Warrants Represented by Warrant Certificates
We hereby confirm receipt of your Exercise Notice with respect
to Warrants (the "Exercised Warrants") and the related Warrant Certificates,
which we have found to be duly completed and in proper form. The Valuation
Date of the Exercised Warrants was the close of business on ____________, 19__.
We hereby confirm that the aggregate Cash Settlement Value of
the Exercised Warrants is U.S.$______ ($_____ per Warrant), which will be made
available to you in the form of a cashier's check or an official bank check, or
(in the case of payments of at least $100,000) by wire transfer to the U.S.
Dollar bank account specified in your irrevocable Exercise Notice, for payment
on the fourth New York Business Day following the Valuation Date for such
Warrants (or, if such Valuation Date is not a New York Business Day, on the
fourth New York Business Day following the New York Business Day next
succeeding the Valuation Date for such Warrants).
Capitalized terms included herein but not defined have the
meanings assigned thereto in the Warrant Agreement, dated as of August __,
1995, among Morgan Stanley Group Inc., Chemical Bank, and Morgan Stanley & Co.
Incorporated.
Dated: , 19
CHEMICAL BANK, as Warrant
Agent,
By_______________________
Authorized Signature
NOTICE OF REJECTION
You are hereby notified that the Exercise Notice delivered by
you was determined by us not to have been duly completed in proper form.
Accordingly, we have rejected your Exercise Notice as being unsatisfactory as
to form.
Capitalized terms used but not defined herein have the meanings
assigned thereto in the Warrant Agreement.
Dated: , 19
CHEMICAL BANK, as Warrant
Agent
By_______________________
Authorized Signature
EXHIBIT B-1
CONFIRMATION OF EXERCISE
For Warrants Represented by the Global Warrant Certificate
Name of Depository Participant
Address
We hereby confirm receipt of your Exercise Notice with respect
to Warrants (the "Exercised Warrants") which were transferred by you (or on
your behalf) to our DTC Participant Account No. _______. Such Notice we have
found to be duly completed and in proper form. The Valuation Date of the
Exercised Warrants was the close of business on ____________, 19__.
[As set forth in your Exercise Notice, none of the Warrants
covered thereby is subject to the Limit Option. Accordingly, for purposes
hereof, all such Warrants shall constitute Exercised Warrants, which number we
hereby confirm to be _______________.] [Your Exercise Notice stated that the
Warrants covered thereby are subject to the Limit Option. The applicable
Limit Option Reference Index for such Warrants is ________ and the Spot Nikkei
225 Index for the date that would otherwise be the Valuation Date for such
Warrants is ________. Such Spot Nikkei 225 Index is not lower than such Limit
Option Reference Index by five hundred (500) or more points. Accordingly, for
purposes hereof, all such Warrants shall constitute Exercised Warrants. We
hereby confirm the number of such Exercised Warrants to be ________.]
We hereby confirm that the aggregate Cash Settlement Value of
the Exercised Warrants is U.S.$______ (U.S.$_____ per Warrant), which will be
made available to you in the form of a cashier's check or an official bank
check or by wire transfer to the bank account designated in your irrevocable
Exercise Notice for payment on the fourth New York Business Day following the
Valuation Date for such Warrants (or, if such Valuation Date is not a New York
Business Day, on the fourth New York Business Day following the New York
Business Day next succeeding the Valuation Date for such Warrants).
Capitalized terms included herein but not defined have the
meanings assigned thereto in the Warrant Agreement dated as of August __,
1995, among Morgan Stanley Group Inc., Chemical Bank, as Warrant Agent, and
Morgan Stanley & Co. Incorporated, as Determination Agent.
Dated: , 19
CHEMICAL BANK, as Warrant
Agent
By________________________
Authorized Signature
NOTICE OF REJECTION
Name of Depository Participant
Address
You are hereby notified that the Exercise Notice delivered by
you was determined by us not to have been duly completed in proper form. Such
Warrants were not transferred to our DTC Participant Account No. ________.
Accordingly, we have rejected your Exercise Notice as being unsatisfactory as
to form.
Capitalized terms used but not defined herein have the meanings
assigned thereto in the Warrant Agreement.
Dated: , 19
CHEMICAL BANK, as Warrant
Agent
By________________________
Authorized Signature
EXHIBIT C-1
NOTICE OF REJECTION
RELATING TO LIMIT OPTION
For Warrants Represented
by Warrant Certificates
We refer to your Exercise Notice dated __________, 199_, with
respect to Warrants that were subject to the Limit Option. The applicable
Limit Option Reference Index for such Warrants is __________ and the Spot
Nikkei 225 Index for the date that would otherwise be the Valuation Date for
such Warrants is ____________. Such Spot Nikkei 225 Index is lower than the
Limit Option Reference Index on the Exercise Date (or if such date was not an
Index Calculation Day, on the Index Calculation Day prior to the Exercise Date
for such Warrants) by five hundred (500) points or more. Accordingly, we have
rejected such Exercise Notice pursuant to your exercise of the Limit Option.
Capitalized terms included herein but not defined have the
meanings assigned thereto in the Warrant Agreement dated as of August __,
1995, among Morgan Stanley Group Inc., Chemical Bank and Morgan Stanley & Co.
Incorporated.
Dated: , 19
CHEMICAL BANK, as Warrant
Agent,
By________________________
Authorized Signature
EXHIBIT C-2
NOTICE OF REJECTION
RELATING TO LIMIT OPTION
For Warrants Represented
by the Global Warrant
Certificate
Name of Depository Participant
Address
We refer to your Exercise Notice dated ________, 199_, with
respect to Warrants that were subject to the Limit Option. The applicable
Limit Option Reference Index for such Warrants is ____________ and the Spot
Nikkei 225 Index for the date that would otherwise be the Valuation Date for
such Warrants is ____________. Such Spot Nikkei 225 Index is lower than the
Limit Option Reference Index on the Exercise Date (or if such date was not an
Index Calculation Day, on the Index Calculation Day prior to the Exercise Date
for such Warrants) by five hundred (500) points or more. Accordingly, we have
rejected such Exercise Notice pursuant to your exercise of the Limit Option.
Capitalized terms included herein but not defined have the
meanings assigned thereto in the Warrant Agreement dated as of August __,
1995, among Morgan Stanley Group Inc., Chemical Bank, and Morgan Stanley & Co.
Incorporated.
Dated: , 199_
CHEMICAL BANK, as Warrant Agent,
By_____________________________
Authorized Signature
