<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly period ended August 31, 1995
Commission file number 1-9085
MORGAN STANLEY GROUP INC.
---------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-2838811
- ---------------------------------------------- -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1585 Broadway, New York, New York 10036
- ---------------------------------------------- -----------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 761-4000
-----------------------
-------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes (X) No ( )
As of September 30, 1995, there were 77,647,391 shares of Common Stock,
$1 par value, outstanding.
Page 1
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statement of Financial Condition at
August 31, 1995 (Unaudited) and January 31, 1995
Condensed Consolidated Statement of Income (Unaudited) for
the Three, Six and Seven Months Ended August 31, 1995 and the
Three and Six Months Ended July 31, 1994
Condensed Consolidated Statement of Cash Flows (Unaudited)
for the Six and Seven Months Ended August 31, 1995 and the
Six Months Ended July 31, 1994
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
Signatures
</TABLE>
Page 2
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
MORGAN STANLEY GROUP INC.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
(IN MILLIONS)
<TABLE>
<CAPTION>
ASSETS
August 31,
1995 January 31,
(Unaudited) 1995
-------------- -------------
<S> <C> <C>
Cash and interest-bearing equivalents $ 4,236 $ 2,510
Cash and securities deposited with clearing
organizations or segregated under federal
and other regulations (securities at market
value of $104 in fiscal 1995 and $1,507
in fiscal 1994) 618 2,116
Financial instruments owned:
U.S. government and agency securities 10,008 9,107
Other sovereign government obligations 13,844 12,931
Corporate and other debt 10,128 10,545
Corporate equities 7,980 5,483
Derivative contracts 7,712 8,623
Physical commodities 275 420
Securities purchased under agreements to resell 47,849 35,913
Securities borrowed 21,055 20,042
Receivables:
Customers 4,100 4,823
Brokers, dealers and clearing organizations 1,113 1,376
Interest and dividends 1,047 731
Fees and other 506 548
Property, equipment and leasehold improvements,
at cost, net of accumulated depreciation and
amortization of $425 in fiscal 1995 and $364
in fiscal 1994 1,228 1,061
Other assets 565 465
-------- --------
Total assets $132,264 $116,694
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
Page 3
<PAGE> 4
MORGAN STANLEY GROUP INC.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
(IN MILLIONS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
August 31,
1995 January 31,
(Unaudited) 1995
-------------- --------------
<S> <C> <C>
Short-term borrowings $ 6,707 $ 10,273
Financial instruments sold, not yet purchased:
U.S. government and agency securities 8,028 6,177
Other sovereign government obligations 9,910 7,251
Corporate and other debt 1,170 1,174
Corporate equities 1,917 3,006
Derivative contracts 6,835 7,322
Physical commodities 299 377
Securities sold under agreements to repurchase 62,322 50,123
Securities loaned 5,983 2,860
Payables:
Customers 10,491 11,588
Brokers, dealers and clearing organizations 1,653 953
Interest and dividends 773 825
Other liabilities and accrued expenses 523 458
Accrued compensation and benefits 966 938
Long-term borrowings 9,111 8,462
--------- ---------
126,688 111,787
--------- ---------
Capital units 696 352
--------- ---------
Commitments and contingences
Stockholders'equity:
Preferred stock 818 819
Common stock, $1.00 par value; authorized
300,000,000 shares; issued 80,961,538
shares in fiscal 1995 and 79,774,278
shares in fiscal 1994 81 80
Paid-in capital 639 706
Retained earnings 3,667 3,338
Cumulative translation adjustments (6) (10)
--------- ---------
Subtotal 5,199 4,933
Less:
Note receivable related to sale of
preferred stock to ESOP 100 100
Common stock held in treasury, at cost
(3,404,258 shares in fiscal 1995 and
4,477,495 shares in fiscal 1994) 219 278
--------- ---------
Total stockholders' equity 4,880 4,555
--------- ---------
Total liabilities and stockholders' equity $ 132,264 $ 116,694
========= =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
Page 4
<PAGE> 5
MORGAN STANLEY GROUP INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(IN MILLIONS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
Seven
Months
Three Months Ended Six Months Ended Ended
August 31, July 31, August 31, July 31, August 31,
1995 1994 1995 1994 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues:
Investment banking $ 355 $ 211 $ 628 $ 471 $ 708
Principal transactions:
Trading 352 300 790 558 904
Investments 69 23 63 33 63
Commissions 130 112 261 231 298
Interest and dividends 1,899 1,525 3,641 3,086 4,229
Asset management and administration 96 89 184 170 215
Other 1 2 2 5 3
----------- ----------- ----------- ----------- -----------
Total revenues 2,902 2,262 5,569 4,554 6,420
Interest expense 1,751 1,349 3,407 2,753 3,965
----------- ----------- ----------- ----------- -----------
Net revenues 1,151 913 2,162 1,801 2,455
----------- ----------- ----------- ----------- -----------
Expenses excluding interest:
Compensation and benefits 575 460 1,050 900 1,188
Occupancy and equipment 84 74 164 142 191
Brokerage, clearing and exchange
fees 64 59 130 117 150
Communications 31 28 65 57 76
Business development 30 41 64 80 78
Professional services 37 39 77 80 91
Other 32 30 63 59 74
----------- ----------- ----------- ----------- -----------
Total expenses excluding
interest 853 731 1,613 1,435 1,848
----------- ----------- ----------- ----------- -----------
Income before income taxes 298 182 549 366 607
Provision for income taxes 89 61 174 128 194
----------- ----------- ----------- ----------- -----------
Net income $ 209 $ 121 $ 375 $ 238 $ 413
=========== =========== =========== =========== ===========
Earnings applicable to common shares (1) $ 192 $ 104 $ 342 $ 205 $ 375
=========== =========== =========== =========== ===========
Average common and common equivalent
shares outstanding (1) 78,618,459 79,605,505 78,402,692 79,741,366 78,077,863
=========== =========== =========== =========== ===========
Primary earnings per share $ 2.45 $ 1.31 $ 4.36 $ 2.58 $ 4.80
=========== =========== =========== =========== ===========
Fully diluted earnings per share $ 2.34 $ 1.26 $ 4.16 $ 2.48 $ 4.57
=========== =========== =========== =========== ===========
</TABLE>
(1) Amounts shown are used to calculate primary earnings per share.
See Notes to Condensed Consolidated Financial Statements.
Page 5
<PAGE> 6
MORGAN STANLEY GROUP INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(IN MILLIONS)
<TABLE>
<CAPTION>
Seven Months
Six Months Ended Ended
August 31, July 31, August 31,
1995 1994 1995
------------ ----------- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 375 $ 238 $ 413
Adjustments to reconcile net income
to net cash provided by operating activities:
Non-cash charges included in net income 58 35 79
Changes in assets and liabilities:
Cash and securities deposited with
clearing organizations or segregated
under federal and other regulations 1,537 (1,466) 1,498
Financial instruments owned, net of
financial instruments sold, not yet
purchased 1,525 3,067 14
Securities borrowed, net of securities
loaned 2,212 468 2,110
Receivables and other assets 2,053 (307) 645
Payables and other liabilities 605 4,291 (356)
------- ------- -------
Net cash provided by operating activities 8,365 6,326 4,403
Cash flows from investing activities:
Net payments for:
Property, equipment and leasehold
improvements (216) (233) (241)
------- ------- -------
Net cash used for investing activities (216) (233) (241)
Cash flows from financing activities:
Net (payments) proceeds related to short-term (4,396) 694 (3,566)
borrowings
Securities sold under agreements to
repurchase, net of securities
purchased under agreements to resell (2,194) (5,136) 263
Proceeds from:
Issuance of common stock 56 12 56
Issuance of long-term borrowings 1,365 1,453 1,750
Issuance of Capital units 212 230 344
Payments for:
Repurchases of common stock (70) (168) (70)
Repayments of long-term borrowings (1,102) (487) (1,129)
Cash dividends (79) (76) (84)
------- ------- -------
Net cash used for financing activities (6,208) (3,478) (2,436)
------- ------- -------
Net increase in cash and interest-bearing equivalents 1,941 2,615 1,726
Cash and interest-bearing equivalents, at
beginning of period 2,295 1,925 2,510
------- ------- -------
Cash and interest-bearing equivalents, at
end of period $ 4,236 $ 4,540 $ 4,236
======= ======= =======
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
Page 6
<PAGE> 7
MORGAN STANLEY GROUP INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. Basis of Presentation
In February 1995, the Board of Directors approved a change in the Company's
fiscal year-end from January 31 to November 30. The change became effective for
the current fiscal year, and this report includes the results for the quarter
and six months ended August 31, 1995 as well as the seven months ended August
31, 1995. The prior year quarter ended July 31, 1994 was reported on the basis
of the January 31 fiscal year-end. For the seven-month period ended August 31,
1994, the Company recorded pre-tax profit and net income of $394 million and
$258 million, respectively, reflecting gross and net revenues of $5,316 million
and $2,050 million, respectively. The Company's Consolidated Statement of Cash
Flows for the seven months ended August 31, 1994 reflects cash used for
operating activities of $4,190 million, cash used for investing activities of
$259 million, and cash provided by financing activities of $5,045 million.
The information furnished in this quarterly report has been prepared pursuant to
the Securities and Exchange Commission's rules and regulations. The Condensed
Consolidated Financial Statements reflect all adjustments (consisting only of
normal recurring adjustments) which are, in the opinion of management, necessary
for the fair statement of the results for the interim period and should be read
in connection with the Annual Report for the fiscal year ended January 31, 1995
on Form 10-K (file no. 1-9085)("Form 10-K"). The nature of the business of
Morgan Stanley Group Inc. and its domestic and foreign subsidiaries
(collectively, the "Company") is such that the results of any interim period may
not be indicative of the results for the full year. Prior period financial
statements have been reclassified, where appropriate, to conform to the fiscal
1995 presentation.
Financial instruments, including derivatives, used in the Company's trading
activities are recorded at fair value, and unrealized gains and losses are
reflected in trading revenues. Interest revenue and expense arising from
financial instruments used in trading activities are reflected in the Condensed
Consolidated Statement of Income as interest income or expense. The fair values
of the trading positions are generally based on listed market prices. If listed
market prices are not available or if liquidating the Company's positions would
reasonably be expected to impact market prices, fair value is determined based
on other relevant factors, including dealer price quotations and price
quotations for similar instruments traded in different markets, including
markets located in different geographic areas. Fair values for certain
derivatives contracts are derived from pricing models which consider current
market and contractual prices for the underlying securities or commodities, as
well as time value and yield curve or volatility factors underlying the
positions. Purchases and sales of financial instruments are recorded in the
accounts on trade date. Unrealized gains and losses arising from the Company's
dealings in over-the-counter ("OTC") financial instruments, including derivative
contracts related to financial instruments and commodities, are presented in the
accompanying Condensed Consolidated Statement of Financial Condition
net-by-counterparty in cases where there is a legal right of set-off and the
Company has obtained an enforceable netting agreement, which is consistent with
Financial Accounting Standards Board ("FASB") Interpretation No. 39, "Offsetting
of Amounts Related to Certain Contracts". Reverse repurchase and repurchase
agreements are presented net-by-counterparty where net presentation is permitted
by FASB Interpretation No. 41, "Offsetting of Amounts Related to Certain
Repurchase and Reverse Repurchase Agreements."
The Company also enters into various financial instrument related derivative
contracts, such as interest rate swaps, currency swaps and forward contracts, as
an end user to manage the interest rate and currency exposure arising from
certain borrowings. Net revenues from derivatives used in the Company's own
asset and liability management are recognized ratably over the term of the
contract as an adjustment to interest expense.
Page 7
<PAGE> 8
Equity securities purchased in connection with merchant banking and other
principal investment activities are initially carried in the Condensed
Consolidated Financial Statements at their original cost; the carrying value of
such investments is adjusted upward only when changes in the underlying fair
values are readily ascertainable, generally as evidenced by substantial
transactions occurring in the marketplace which directly affect their value.
Downward adjustments relating to such equity securities are made in the event
that the Company determines that the eventual realizable value is less than the
carrying value. Loans made in connection with such activities are carried at
unpaid principal balances less any reserves for estimated losses. At August 31,
1995, there were no such loans outstanding.
Included in the Company's Consolidated Statement of Financial Condition at
August 31, 1995 and January 31, 1995 are Capital Units issued by the Company and
Morgan Stanley Finance plc., a U.K. subsidiary ("MS plc"). A Capital Unit
consists of (a) a Subordinated Debenture of MS plc guaranteed by the Company,
and (b) a related Purchase Contract issued by the Company requiring the holder
to purchase one Depository Share representing ownership of a 1/8 interest in the
Company's Cumulative Preferred Stock.
Earnings per share is based on the weighted average number of common shares and
share equivalents outstanding and gives effect to preferred stock dividend
requirements.
2. Long-Term Borrowings
Long-term borrowings at August 31, 1995, scheduled to mature within one year
aggregate $1,573 million.
During the seven month period ended August 31, 1995, the Company issued senior
notes and subordinated debt aggregating $2,074 million, including non-U.S.
dollar currency notes aggregating $575 million, primarily pursuant to its public
debt shelf registration statements. The weighted average coupon interest rate of
these notes at August 31, 1995 was 6.9%; the Company has entered into certain
transactions to obtain floating interest rates based on either short-term LIBOR
or repurchase agreement rates for Treasury securities. Maturities in the
aggregate for the fiscal years ending November 30 are as follows: 1996, $36
million; 1997, $731 million; 1998, $798 million; 2000, $59 million; and
thereafter, $450 million. As of August 31, 1995, the aggregate outstanding
principal amount of the Company's Senior Indebtedness (as defined in the
aforementioned registration statements) was approximately $13.7 billion.
From August 31, 1995 to September 30, 1995, additional senior notes aggregating
$107 million were issued primarily pursuant to the Company's public debt shelf
registration statements. These notes have maturities from 1996 to 2002.
Page 8
<PAGE> 9
3. Commitments and Contingencies
In the normal course of business, the Company enters into a variety of
derivative contracts related to financial instruments and commodities. The
Company uses swap agreements in its trading activities and in managing its
interest rate exposure. The Company also uses forward and option contracts,
futures and swaps in its foreign currency and commodity trading activities;
these financial instruments also are used to hedge the U.S. dollar cost of
certain foreign currency exposures. In addition, financial futures and forward
contracts are actively traded by the Company and are used to hedge proprietary
inventory. The Company also enters into delayed delivery, when-issued, and
warrant and option contracts involving securities. These instruments generally
represent future commitments to swap interest payment streams, exchange
currencies or purchase or sell other financial instruments at specific terms at
specified future dates. Many of these products have maturities that do not
extend beyond one year; swaps and options and warrants on equities typically
have longer maturities. For further discussion of these matters, refer to
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Derivative Financial Instruments", included in the Form 10-K.
These instruments involve varying degrees of off-balance sheet market risk.
Future changes in interest rates, foreign currency exchange rates or the fair
values of the financial instruments, commodities or securities underlying the
instruments ultimately may result in cash settlements which exceed the amounts
recognized in the Condensed Consolidated Statement of Financial Condition,
which, as described in Note 1, are recorded at fair value, representing the cost
of replacing those instruments.
The Company's exposure to credit risk at any point in time is represented by the
fair value of the derivative contracts reported as assets. These amounts are
presented net-by-counterparty in cases where there is a legal right of set-off
and the Company has obtained an enforceable netting agreement, but are not
reported net of collateral, which the Company obtains with respect to certain of
these transactions to reduce its exposure to credit losses.
The credit quality of the Company's trading-related derivatives at August 31,
1995 and January 31, 1995 is summarized in the tables below, showing the fair
value of the related assets by counterparty credit rating. The actual credit
ratings are determined by external rating agencies or by equivalent ratings used
by the Company's Credit Department:
Page 9
<PAGE> 10
August 31, 1995
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Collater-
alized Other
Non- Non-
Invest- Invest-
ment ment
(Dollars in millions) AAA AA A BBB Grade Grade Total
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest rate
and currency
swaps and options
(including caps,
floors and swap
options) $ 491 $1,307 $ 927 $ 259 $ 191 $ 213 $3,388
Foreign exchange
forward contracts
and options 536 884 677 71 -- 37 2,205
Mortgage-backed
securities forward
contracts, swaps
and options 1 5 22 10 -- 5 43
Other fixed income
securities contracts
(including options) 85 19 68 12 1 21 206
Equity securities
contracts
(including equity
swaps, warrants
and options) 471 61 150 85 448 30 1,245
Commodity forwards,
options and swaps 81 117 127 165 -- 135 625
------ ------ ------ ------ ------ ------ ------
Total $1,665 $2,393 $1,971 $ 602 $ 640 $ 441 $7,712
====== ====== ====== ====== ====== ====== ======
Percent of total 22% 31% 25% 8% 8% 6% 100%
====== ====== ====== ====== ====== ====== ======
</TABLE>
Page 10
<PAGE> 11
January 31, 1995
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Collater-
alized Other
Non- Non-
Invest- Invest-
ment ment
(Dollars in millions) AAA AA A BBB Grade Grade Total
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest rate
and currency
swaps and options
(including caps,
floors and swap
options) $ 723 $1,617 $ 965 $ 182 $ 294 $ 78 $3,859
Foreign exchange
forward contracts
and options 409 345 251 76 -- 46 1,127
Mortgage-backed
securities forward
contracts, swaps
and options 14 69 75 28 -- 22 208
Other fixed income
securities contracts
(including options) 302 26 42 26 -- 19 415
Equity securities
contracts
(including equity
swaps, warrants
and options) 379 188 217 188 145 18 1,135
Commodity forwards,
options and swaps 300 216 667 490 -- 206 1,879
------ ------ ------ ------ ------ ------ ------
Total $2,127 $2,461 $2,217 $ 990 $ 439 $ 389 $8,623
====== ====== ====== ====== ====== ====== ======
Percent of total 25% 29% 26% 11% 5% 4% 100%
====== ====== ====== ====== ====== ====== ======
</TABLE>
A substantial portion of the Company's securities and commodities transactions
are collateralized and are executed with and on behalf of commercial banks and
other institutional investors, including other brokers and dealers. Positions
taken and commitments made by the Company, including positions taken and
underwriting and financing commitments made in connection with its merchant
banking activities, often involve substantial amounts and significant exposure
to individual issuers and businesses, including non-investment grade issuers.
The Company seeks to limit concentrations of credit risk created in its
businesses through a variety of separate but complementary financial, position
and credit exposure reporting systems, including the use of trading limits based
in part upon the Company's review of the financial condition and credit ratings
of its counterparties.
See also "Business -- Risk Management" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Risk Management" in the Form
10-K for discussions of the Company's risk management policies and procedures.
The Company had approximately $2,212 million of letters of credit outstanding at
August 31, 1995 to satisfy various collateral requirements.
Page 11
<PAGE> 12
The Company and its subsidiaries have been named as defendants in certain legal
actions and have been involved in certain investigations and proceedings in the
ordinary course of business. It is the opinion of management, based on current
knowledge and after consultation with counsel, that the outcome of such matters
will not have a material adverse effect on the Company's Condensed Consolidated
Financial Statements contained herein.
4. Preferred Stock
Preferred stock is composed of the following issues. Each issue of preferred
stock ranks in parity with all other preferred stock.
<TABLE>
<CAPTION>
Shares Outstanding at Balance at
------------------------------ -----------------------------
August 31, January 31, August 31, January 31,
1995 1995 1995 1995
-------------- -------------- ------------- -------------
(in millions)
<S> <C> <C> <C> <C>
ESOP Convertible
Preferred Stock,
liquidation preference
$35.88 3,768,844 3,795,588 $ 135 $ 136
9.36% Cumulative
Preferred Stock,
stated value $25 5,500,000 5,500,000 138 138
7-3/8% Cumulative
Preferred Stock,
stated value $200 1,000,000 1,000,000 200 200
8.88% Cumulative
Preferred Stock,
stated value $200 975,000 975,000 195 195
8-3/4% Cumulative
Preferred Stock,
stated value $200 750,000 750,000 150 150
---------- ----------
Total $ 818 $ 819
========== ==========
</TABLE>
5. Stockholders' Equity
Morgan Stanley & Co. Incorporated ("MS & Co.") is a registered broker-dealer and
a registered futures commission merchant and, accordingly, is subject to the
minimum net capital requirements of the Securities and Exchange Commission, the
New York Stock Exchange and the Commodities Futures Trading Commission. MS&Co.
has consistently operated in excess of these requirements with aggregate net
capital, as defined, totaling $904 million at August 31, 1995, which exceeded
the amount required by $726 million. Morgan Stanley & Co. International Limited
("MSIL"), a London-based broker-dealer subsidiary, is subject to capital
requirements of the Securities and Futures Authority, and Morgan Stanley Japan
Limited ("MSJL"), another broker-dealer subsidiary, is subject to capital
requirements of the Japanese Ministry of Finance. MSIL and MSJL have
consistently operated in excess of their respective capital requirements.
Certain other U.S. and non-U.S. subsidiaries are subject to various securities,
commodities and banking regulations, and capital adequacy requirements
promulgated by the regulatory and exchange authorities of the countries in which
they operate. These subsidiaries have consistently operated in excess of their
applicable local capital adequacy requirements.
Page 12
<PAGE> 13
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The Company's business, particularly its involvement in primary and secondary
markets for all types of financial products, including derivatives, is subject
to substantial positive and negative fluctuations due to a variety of factors
that cannot be predicted with any certainty, including variations in the fair
value of securities and other financial products, the volatility and liquidity
of trading markets, and the level of market activity. As a result, net income
and revenues in any particular period may not be representative of full-year
results and may vary significantly from year to year and from quarter to
quarter. In addition, results of operations in the past have been and in the
future may continue to be materially affected by many factors of a national and
international nature, including economic and market conditions; the availability
of capital; the level and volatility of interest rates; currency values and
other market indices; and the availability of credit, inflation, and legislative
and regulatory developments, as well as the size, number and timing of
transactions or assignments (including realization of returns from the Company's
merchant banking investments). The Company's results of operations also may be
materially affected by competitive factors, including new entrants into the
Company's traditional business activities, and its ability to attract and retain
highly skilled individuals.
After experiencing an industry-wide setback in 1994, the global securities
industry has encountered improved conditions so far in 1995. Investor concerns
regarding inflation subsided, and a favorable interest rate environment
contributed towards increased activity and trading volumes in the bond and stock
markets. In addition, major currencies in the global foreign exchange markets
experienced periods of higher volatility.
During fiscal 1994, despite particularly weak financial markets, the Company
made significant strategic investments in human and technological resources to
improve its long-term global competitive position. The Company continues to
believe that these strategic investments will enhance its ability to provide
value-added service to suppliers and users of capital in the global marketplace.
In addition, the Company's ongoing progress in cost control, risk management and
other factors that impact profitability will be an important factor in its
ability to achieve acceptable return-on-equity levels and thus will be a
significant measure of the overall success of the Company's strategy.
Accordingly, the Company has implemented certain cost control initiatives which
have reduced discretionary non-compensation costs during 1995. In addition, the
Company continues to expect headcount levels to remain stable throughout fiscal
1995.
For a description of the Company's business, including its trading in cash
instruments and derivative products, its merchant banking activities, and its
high-yield underwriting and trading policies, and their respective risks, and
the Company's risk management policies and procedures, see Part I, Item I, of
the Company's Annual Report on Form 10-K for the fiscal year ended January 31,
1995 ("Form 10-K").
In February 1995, the Board of Directors approved a change in the Company's
fiscal year-end from January 31 to November 30, effective for the current fiscal
year. The discussions that follow compare the results of operations for the
three months ended August 31, 1995 to the second quarter of fiscal 1994 (May 1,
1994 to July 31, 1994), as well as the six months ended August 31, 1995 to the
six months ended July 31, 1994. For the seven-month period ended August 31,
1995, the Company recorded pre-tax profit and net income of $607 million and
$413 million, respectively, reflecting gross and net revenues of $6,420 million
and $2,455 million, respectively. Results for the comparable seven-month period
ended August 31, 1994 were pre-tax profit and net income of $394 million and
$258 million, respectively, reflecting gross and net revenues of $5,316 million
and $2,050 million, respectively.
Page 13
<PAGE> 14
Three Months Ended August 31, 1995 Compared with Second Quarter Ended July 31,
1994
(Amounts for the second quarter of fiscal 1994 are given in parentheses).
Revenues net of interest expense (net revenues) were $1,151 million ($913
million) and net income totaled $209 million ($121 million), an increase of 73%,
primarily reflecting increased principal transaction trading and investment
revenues and investment banking revenues, partially offset by higher
incentive-based compensation.
Investment banking revenues increased to $355 million ($211 million) reflecting
among other things significantly increased revenues from merger, acquisition and
restructuring assignments as compared to second quarter 1994 levels. Equity
underwriting revenues also increased as compared to the second quarter of fiscal
1994, reflecting higher levels of equity financing led by an increase in the
technology sector. Primary revenues generated from fixed income derivative
products also increased, resulting from the overall higher level of underwriting
volume for structured products. These increases were partially offset by a
decline in high-yield underwriting revenues.
Secondary revenues (combined principal trading, commissions and net interest
revenues) increased to $630 million ($588 million). Principal transaction
revenues from trading activities, including derivatives, were $352 million,
substantially higher than the fiscal 1994 second quarter's result ($300
million). Equity trading revenues rose significantly, reflecting higher revenues
from all equity related products, including structured products, options and
futures and equity cash products, as trading activity continued at high levels,
primarily in the United States and Japan. Fixed income trading revenues
generally were positively affected as inflation remained relatively stable
throughout the quarter and global bond markets remained strong as the United
States reduced interest rates, followed by interest rate reductions in Europe
and Japan. The Company's global corporate and emerging market fixed income
activities recorded higher levels of revenue as trading volumes for corporates
increased from moderate levels and conditions in the emerging markets remained
stable. Despite lower industry-wide trading volumes, revenues from foreign
exchange increased primarily due to higher volatility in the major currencies,
especially the Japanese Yen. These increases in principal transaction revenues
were partially offset by a decline in commodities trading revenues, primarily
attributable to energy related products.
Principal transaction investment gains aggregating $69 million ($23 million)
were recognized in the second quarter of fiscal 1995, primarily in connection
with the increase in the carrying value of the Company's merchant banking
investment in Southern Pacific Rail Corporation ("SPR") resulting from SPR's
agreement to be merged into Union Pacific Railroad Corporation.
Commission revenues increased to $130 million ($112 million), principally
reflecting increased customer activity and trading volumes in the global markets
for over-the-counter and listed equity securities, particularly the United
States and Japan.
Page 14
<PAGE> 15
Interest and dividend revenues and expense are a function of the level and mix
of total assets, including financial instruments owned and resale and repurchase
agreements, and the prevailing level, term structure and volatility of interest
rates. Net interest and dividend revenues declined to $148 million ($176
million), primarily resulting from the continued flattening of the U.S. yield
curve. The resulting decline in interest rate spreads adversely affected the
profitability of the Company's spread-sensitive businesses, and the flatter
yield curve substantially reduced the savings from the Company's use of swaps to
effectively convert much of its fixed rate debt to floating rate debt. Interest
and dividend revenues rose to $1,899 million ($1,525 million), and interest and
dividend expense increased to $1,751 million ($1,349 million), principally
reflecting growth in interest-bearing assets and liabilities. Interest and
dividend revenues and expense should be viewed in the broader context of
principal trading and investment banking results. Decisions relating to
principal transactions in securities are based on an overall review of aggregate
revenues and costs associated with each transaction or series of transactions.
This review includes an assessment of the potential gain or loss associated with
a trade, the interest income or expense associated with financing or hedging the
Company's positions, and potential underwriting, commission or other revenues
associated with related primary or secondary market sales.
Asset management and administration revenues, which include fees for asset
management and non-interest revenues earned from correspondent clearing and
custody services, increased to $96 million ($89 million), reflecting continued
growth in both asset management activities and global clearing and custody
services resulting from the Company's continuing strategic emphasis on these
businesses. Customer assets under management increased to $52 billion ($48
billion) primarily resulting from appreciation in the value of customer
portfolios, as well as inflows of new assets. Customer assets under
administration increased to $109 billion ($84 billion), primarily reflecting
additional assets placed under custody with the Company, as well as appreciation
in the value of customer portfolios.
On June 29, 1995, the Company announced that it had signed a definitive
agreement to purchase Miller Anderson & Sherrerd, LLP, an institutional
investment manager with $33 billion in assets under management. The purchase
price is approximately $350 million, payable in a combination of cash, notes and
stock of the Company. The current pro forma combination of Miller Anderson &
Sherrerd with the Company's asset management business will increase the
Company's assets under management to approximately $85 billion. The transaction
is subject to certain customary conditions and is expected to close by the end
of the 1995 fiscal year.
Total expenses excluding interest increased to $853 million ($731 million).
Within that total, compensation and benefits expense increased $115 million to
$575 million ($460 million), principally reflecting increased levels of
incentive compensation based on higher revenues and earnings, as well as
salaries and benefits relating to employees hired in the latter half of fiscal
1994. Non-compensation expenses, excluding brokerage, clearing and exchange
fees, increased $2 million to $214 million. Brokerage, clearing and exchange
fees increased $5 million to $64 million, reflecting increased trading volumes
and the continued international growth of the Company's sales and trading
activities. Business development and professional services expenses decreased
$13 million, primarily reflecting lower travel and entertainment costs,
consulting costs and employment agency fees attributable to the Company's cost
control initiatives. Occupancy and equipment expense increased $10 million,
reflecting incremental space costs related to growth in the number of employees
and global expansion, as well as increased spending for information technology
equipment.
Six Months Ended August 31, 1995 Compared with Six Months Ended July 31, 1994
(Amounts for the first six months of fiscal 1994 are given in parentheses).
Revenues net of interest expense (net revenues) were $2,162 million ($1,801
million), and net income totaled $375 million ($238 million), reflecting
increased trading and investment banking revenues partially offset by higher
incentive-based compensation.
Page 15
<PAGE> 16
Investment banking revenues increased to $628 million ($471 million) reflecting
significantly higher revenues from merger, acquisition and restructuring
assignments. Revenues from fixed income debt underwriting increased (including
primary revenues from fixed income derivative products), partially offset by a
decline in equity and high-yield underwriting revenues.
Secondary revenues (combined principal trading, commissions and net interest
revenues) increased to $1,285 million ($1,122 million). Principal transaction
revenues from trading activities were $790 million ($558 million), reflecting
substantially higher revenues from trading in fixed income and equity products,
including derivative related products. Foreign exchange trading revenues also
increased, partially offset by decreased revenues from commodities trading.
Principal transaction investment revenues aggregating $63 million were
recognized during the six-month 1995 period, primarily reflecting revenues
related to the increase in carrying value of the Company's merchant banking
investment in SPR.
Commission revenues increased to $261 million ($231 million), principally
reflecting increased customer activity in the global markets for equity
securities. Note that customer activity results in principal trading and net
interest revenues as well as commissions.
Net interest and dividend revenues were $234 million ($333 million). Interest
and dividend revenues rose to $3,641 million ($3,086 million) and interest
expense increased to $3,407 million ($2,753 million). As noted in the quarter to
quarter comparison of net interest, interest and dividend revenues and expense
reflect principal trading strategies and should be viewed in the broader context
of principal trading and investment banking results.
Asset management and administration revenues increased to $184 million ($170
million), reflecting increased revenues from both correspondent clearing and
custody services and asset management activities, as well as continued growth in
customer assets under management and administration.
Total non-interest expenses increased to $1,613 million ($1,435 million). Within
that total, employee compensation and benefits expense increased to $1,050
million ($900 million), principally reflecting increased levels of incentive
compensation based on higher revenues and earnings, as well as salaries and
benefits relating to employees hired in the latter half of fiscal 1994. Other
non-interest expenses increased to $563 million ($535 million). Business
development and professional services expenses decreased $19 million, primarily
reflecting lower travel and entertainment and consulting costs attributable to
the Company's cost control initiatives. Occupancy and equipment expense
increased $22 million, reflecting incremental space costs related to growth in
the number of employees and global expansion, as well as significantly greater
spending for information technology equipment. Brokerage, clearing and exchange
fees increased $13 million reflecting increased trading volumes, business mix
changes and the growing international component of the Company's sales and
trading activities.
Page 16
<PAGE> 17
Liquidity and Capital Resources
The Company's total assets increased from $116.7 billion at January 31, 1995 to
$132.3 billion at August 31, 1995, reflecting growth in resale agreements and
financial instruments owned. A substantial portion of the Company's total assets
consists of highly liquid marketable securities and short-term receivables
arising principally from securities transactions. The highly liquid nature of
these assets provides the Company with flexibility in financing and managing its
business. Balance sheet leverage ratios are reviewed by counterparties and
creditors in order to evaluate a securities firm's overall financial risk.
Details of ending assets, average assets and leverage ratios for the seven
months ended August 31, 1995 and for fiscal 1994 are as follows:
<TABLE>
<CAPTION>
Average
Assets for
the Seven Average
Months Assets
Assets at Ended Assets at for
August 31, August 31, January 31, Fiscal
(Dollars in millions) 1995 1995 1995 1994
- ------------------------------- -------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
Cash, deposits and receivables $ 11,620 $ 13,523 $ 12,104 $ 14,299
Financial instruments owned 49,947 50,108 47,109 49,236
Securities purchased under
agreements to resell and
securities borrowed 68,904 65,517 55,955 64,921
Property, equipment and
leasehold improvements
and other assets 1,793 1,665 1,526 1,626
-------- -------- -------- --------
Total assets $132,264 $130,813 $116,694 $130,082
======== ======== ======== ========
Leverage ratios:
Total assets/equity 27.1x 27.9x 25.6x 29.0x
Net assets (1)/equity 17.3x 18.6x 17.7x 19.4x
</TABLE>
(1) Net assets represent total assets less the lower of securities purchased
under agreements to resell or securities sold under agreements to
repurchase.
The Company's Finance and Risk Committee, which includes senior officers from
each of the major capital commitment areas, among other things, establishes the
overall funding, capital and credit policies of the Company, reviews the
Company's performance relative to these policies, allocates capital among
business activities of the Company, monitors the availability of sources of
financing, and oversees the liquidity and interest rate sensitivity of the
Company's asset and liability position.
The Company funds its balance sheet on a global basis. The Company's funding
needs are satisfied from capital, including equity and long-term debt;
medium-term notes; internally generated funds; repurchase agreements; U.S.,
Canadian, French and Euro commercial paper; German Schuldschein loans;
securities lending; buy/sell agreements; municipal re-investments; master notes;
deposits; and committed and uncommitted lines of credit. All repurchase
transactions and a portion of the Company's bank borrowings are made on a
collateralized basis.
Page 17
<PAGE> 18
The Company maintains borrowing relationships with a broad range of banks,
financial institutions, counterparties and others from which it draws funds in a
variety of currencies. The volume of the Company's borrowings generally
fluctuates in response to changes in the amount of resale transactions
outstanding, the level of the Company's securities inventories and overall
market conditions. Availability and cost of financing to the Company can vary
depending upon market conditions, the volume of certain trading activities, the
Company's credit ratings and the overall availability of credit to the
securities industry.
The Company's reliance on external sources to finance a significant portion of
its day-to-day operations makes access to global sources of financing important.
The cost of such financing is dependent on the Company's short-term and
long-term debt ratings. In addition, the Company's debt ratings have a
significant impact on certain trading revenues, particularly in those businesses
where longer term counterparty performance is critical, such as over-the-counter
derivatives transactions. The Company's short-term and long-term senior debt
ratings as of August 31, 1995 are as follows:
<TABLE>
<CAPTION>
Agency Short-Term Rating Long-Term Rating
- ------------------------------------ ------------------------- ----------------------------
<S> <C> <C>
Moody's Investor's Services P1 A1
Standard & Poor's A1+ A+
IBCA A1+ AA-
Thomson BankWatch TBW1 AA
Dominion Bond Rating Service (1) R1 (Middle) n/a
</TABLE>
(1) Dominion Bond Rating Service rates the Company's Canadian commercial paper
program.
On March 28, 1995, Standard & Poor's Corporation ("S&P") affirmed the short-term
and long-term ratings of the Company. However, in light of continuing difficult
conditions in the industry at that time, S&P revised the long-term rating
outlook for six securities firms, including the Company, from stable to
negative. Noting the cyclical nature of the industry, S&P indicated that ratings
may remain unchanged for individual firms that adjust costs downward while
avoiding serious instability in trading results, but may be lowered for
individual firms if profitability worsens or if continued market turbulence
aggravates trading risk. On May 26, 1995, Dominion Bond Rating Service similarly
affirmed the short-term rating of the Company and revised the trend from stable
to negative.
During the seven month period ended August 31, 1995, the Company issued senior
notes and subordinated debt aggregating $2,074 million, including non-U.S.
dollar currency notes aggregating $575 million. As of August 31, 1995, the
aggregate outstanding principal amount of the Company's Senior Indebtedness (as
defined in the Company's public debt shelf registration statements) was
approximately $13.7 billion.
From August 31, 1995 to September 30, 1995, additional senior notes aggregating
$107 million were issued. These notes have maturities from 1996 to 2002.
The Company maintains a senior revolving credit facility with a group of banks.
Under the terms of the credit agreement, the banks are committed to provide up
to $2.5 billion for up to 364 days. Any loans outstanding on the commitment
termination date will mature on the first anniversary of the commitment
termination date.
The Company also maintains a master collateral facility that will enable Morgan
Stanley & Co. Incorporated ("MS&Co."), the Company's U.S. broker-dealer
subsidiary, to pledge certain collateral to secure loan arrangements, letters of
credit and other financial accommodations. As part of this facility, MS&Co. also
has in place a secured committed credit agreement with a group of banks that are
parties to the master collateral facility under which such banks are committed
to provide up to $1 billion for up to 364 days. Any loans outstanding on the
commitment termination date will mature on the first anniversary of the
commitment termination date.
Page 18
<PAGE> 19
The Company also maintains short-term agreements with three non-U.S. banks which
commit the banks to provide on a collateralized basis up to deutsche marks
("DM") 250 million (approximately $170 million), French francs ("FRF") 500
million (approximately $99 million) and $100 million (or its equivalent in DM,
FRF, Swiss francs, or European Currency Units), respectively.
There were no borrowings outstanding under any of the foregoing bank facilities
at August 31, 1995; however, the Company anticipates utilizing these facilities
for short-term funding from time to time.
During the seven month period ended August 31, 1995, the Company repurchased
approximately one million shares of its common stock at an aggregate cost of
approximately $70 million. The unused portion of the Company's stock repurchase
authorization at September 30, 1995 was approximately $246 million.
Certain assets of the Company, such as real property, equipment, leasehold
improvements, certain equity investments made in connection with the Company's
merchant banking and other principal investment activities, high-yield debt
securities, emerging market debt, and certain collateralized mortgage
obligations and mortgage-related loan products, are not highly liquid. In
connection with its merchant banking and other principal investment activities,
the Company has equity investments (directly and indirectly through funds
managed by the Company) in privately or publicly held companies. As of August
31, 1995, the aggregate carrying value of the Company's equity investments in
privately held companies (including direct investments and partnership
interests) was $178 million, and its aggregate investment in publicly held
companies was $276 million.
In its capacity as an underwriter of and a market-maker in mortgage-backed
securities, collateralized mortgage obligations and related instruments, and a
market-maker in commercial, residential and real estate loan products, the
Company carries certain related assets with reduced levels of liquidity. The
carrying value of such assets approximated $756 million at August 31, 1995.
In addition, at August 31, 1995, the aggregate value of high-yield debt
securities and emerging market loans and securitized instruments held in
inventory was $1,163 million (a substantial portion of which was subordinated
debt) with not more than 5%, 16% and 5% of all such securities, loans and
instruments attributable to any one issuer, industry or geographic region,
respectively. Non-investment grade securities generally involve greater risk
than investment grade securities due to the lower credit ratings of the issuers,
which typically have relatively high levels of indebtedness and are, therefore,
more sensitive to adverse economic conditions. In addition, the market for
non-investment grade securities and emerging markets loans and securitized
instruments has been, and may in the future continue to be, characterized by
periods of illiquidity. The Company has in place credit and other risk policies
to control total inventory positions and risk concentrations for non-investment
grade securities and emerging market loans and securitized instruments.
The Company may, from time to time, also provide financing or financing
commitments to companies in connection with its investment banking activities.
As of August 31, 1995, there were no such financing loans outstanding, and the
Company had one commitment to provide financing totaling approximately $310
million in connection with its high-yield underwriting activities. Subsequent to
August 31, 1995, this financing commitment was terminated.
Page 19
<PAGE> 20
At August 31, 1995, financial instruments owned by the Company included
derivative products (generally in the form of futures, forwards, swaps, caps,
collars, floors, swap options and similar instruments which derive their value
from underlying interest rates, foreign exchange rates or commodity or equity
instruments or indices) related to financial instruments and commodities with an
aggregate net replacement cost of $7.7 billion. The net replacement cost of all
derivative products in a gain position represents the Company's maximum exposure
to derivatives related credit risk. Derivative products may have both on- and
off-balance sheet risk implications, depending on the nature of the contract. It
should be noted, however, that in many cases derivatives serve to reduce, rather
than increase, the Company's exposure to losses from market, credit and other
risks. The risks associated with the Company's derivative activities, including
market and credit risks, are managed on an integrated basis with the associated
cash instruments in a manner consistent with the Company's overall risk
management policies and procedures. The Company manages its exposure to
derivative products through various means, which include entering into master
netting agreements when feasible; monitoring the creditworthiness of
counterparties on an ongoing basis and requesting initial and/or additional
collateral when deemed necessary; diversifying and limiting exposure to
individual counterparties; and limiting the duration of exposure.
Page 20
<PAGE> 21
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The following developments have occurred with respect to certain
matters previously reported in the Form 10-K and/or the Company's Quarterly
Report on Form 10-Q for the period ended May 31, 1995.
State of West Virginia v. Morgan Stanley & Co. Incorporated. The
Supreme Court of Appeals of West Virginia denied the petitions for rehearing
that were filed by the State and by Morgan Stanley & Co. Incorporated ("Morgan
Stanley"). On August 21, 1995, Morgan Stanley filed a motion to recuse the
Circuit Court judge who had theretofore presided over the litigation. On
September 6, 1995, the Supreme Court of Appeals, having been advised that the
judge would not voluntarily recuse himself, ordered that the motion be heard by
a designated judge in a different judicial district.
Taxable Municipal Bond Litigation. A fairness hearing on the proposed
settlement was held on July 31, 1995, and the magistrate has filed a report
which recommends approval of the settlement; a final decision by the district
court has not yet been issued. If the settlement is approved, the various
actions in which Morgan Stanley is a defendant will be dismissed, with the
exception of the action filed by the Washington National plaintiffs, who have
opted out of the proposed settlement. The defendants have filed a motion for
summary judgment in the Washington National action.
Katell, et al. v. Morgan Stanley Group, Inc., et al. On August 15,
1995, a notice of appeal was filed on behalf of one of the two plaintiffs. The
parties thereafter reached an agreement in principle, subject to court
approval, to settle this action and a related action captioned Desert Equities,
Inc. v. Morgan Stanley Leveraged Equity Fund II, L.P., et al.
Hedged-Investments Litigation. Following a fairness hearing on April
28, 1995, the court entered a final order and judgment approving a settlement of
both the Higley action and the competing class action. On June 5, 1995, the
court denied a request made by one class member to intervene for purposes of
appealing both a court-approved plan for allocation of the settlement proceeds
and the final order and judgment. On June 12, 1995, the class member filed a
notice of appeal to the Colorado Court of Appeals, appealing the plan of
allocation, the final order and judgment, and the order denying intervention.
NASDAQ Antitrust Litigation. On August 10, 1995, defendants' motion to
dismiss was granted with leave to replead. On August 22, 1995, plaintiffs filed
a Refiled Consolidated Complaint which is identical in substance to the
dismissed pleading except that it lists by name the stocks that plaintiffs
contend were the subject of the alleged conspiracy.
ITEM 2. CHANGES IN SECURITIES.
In August 1995, the Company and Morgan Stanley Finance plc ("MS plc")
issued 7,974,203 8.40% Capital Units in an aggregate amount of $199,355,075 each
consisting of (i) a 8.40% Subordinated Debenture of MS plc due August 30, 2015
in the principal amount of $25.00 guaranteed by the Company and (ii) a related
Purchase Contract issued by the Company requiring the holder, at the Company's
option after August 30, 1996, to purchase one Depositary Share representing
ownership of a 1/8 interest in a share of the Company's 8.40% Cumulative
Preferred Stock, stated value $200.00 per share. Exhibit 4.1 to this Form 10-Q
sets forth the designation, preferences and rights of the 8.40% Cumulative
Preferred Stock and the following summary is qualified in its entirety by
reference thereto.
Page 21
<PAGE> 22
The 8.40% Cumulative Preferred Stock, if issued will rank as to payment
of dividends and amounts payable on liquidation prior to the Company's Common
Stock and on a parity with the Company's ESOP Convertible Preferred Stock, 9.36%
Cumulative Preferred Stock, 8.88% Cumulative Preferred Stock, 8-3/4% Cumulative
Preferred Stock, 7-3/8% Cumulative Preferred Stock, 9.00% Cumulative Preferred
Stock (if issued in connection with the 9.00% Capital Units) 7.82% Cumulative
Preferred Stock (if issued in connection with the 7.82% Capital Units) and 7.80%
Cumulative Preferred Stock (if issued in connection with the 7.80% Capital
Units). The holders of the 8.40% Cumulative Preferred Stock are entitled to
receive, when and as declared out of funds legally available therefor, cash
dividends payable quarterly at the rate of 8.40% per annum, calculated as a
percentage of the stated value.
Unless full cumulative dividends on the 8.40% Cumulative Preferred
Stock have been paid, dividends (other than in Common Stock) may not be paid or
declared or set aside for payment and other distributions may not be made upon
the Common Stock or on any other Preferred Stock of the Company ranking junior
or on a parity with the 8.40% Cumulative Preferred Stock as to dividends, nor
may any Common Stock or such other Preferred Stock of the Company be redeemed,
purchased or otherwise acquired by the Company for any consideration or any
payment be made to or available for a sinking fund for the redemption of any
shares of such stock.
In the event of any liquidation, dissolution or winding up of the
Company, the holders of shares of 8.40% Cumulative Preferred Stock will be
entitled to receive (out of assets of the Company available for distribution to
stockholders) liquidating distributions in the amount of $200.00 per share
(equivalent to $25.00 per Depositary Share), plus accrued and accumulated but
unpaid dividends to the date of final distribution, before any distribution is
made to holders of Common Stock or Preferred Stock ranking junior to the 8.40%
Cumulative Preferred Stock.
Holders of 8.40% Cumulative Preferred Stock will have voting rights
only as required by the laws of the State of Delaware or whenever dividends
payable on the 8.40% Cumulative Preferred Stock or any other class or series of
stock ranking on a parity with the 8.40% Cumulative Preferred Stock with respect
to the payment of dividends are in arrears for any aggregate number of days
equal to six calendar quarters or more, whether or not consecutive. In this
case, each holder of 8.40% Cumulative Preferred Stock will be entitled to one
vote for each share of 8.40% Cumulative Preferred Stock held (voting together as
a class with all other series of the Company's Preferred Stock upon which like
voting rights have been conferred or are exercisable) to elect two directors of
the Company at the next annual meeting of stockholders and at each subsequent
meeting until such arrears have been paid or set apart for payment.
The 8.40% Cumulative Preferred Stock is redeemable in whole or in part
at the Company's option on or after August 30, 2000, at a redemption price equal
to $200.00 per share (equivalent to $25.00 per Depositary Share), plus accrued
and accumulated but unpaid dividends. If full cumulative dividends on the 8.40%
Cumulative Preferred Stock have not been paid, the 8.40% Cumulative Preferred
Stock may not be redeemed in part and the Company may not purchase or acquire
any shares of 8.40% Cumulative Preferred Stock other than pursuant to a purchase
or exchange offer made on the same terms to all holders of the 8.40% Cumulative
Preferred Stock.
Page 22
<PAGE> 23
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of stockholders of the Company was held on June 8,
1995. A Proxy Statement, dated April 26, 1995 (the "Proxy Statement"), was
distributed by management pursuant to Regulation 14 of the Securities Exchange
Act of 1934.
The stockholders voted on proposals to approve the election of
directors and the ratification of the appointment of independent accountants.
All nominees for election to the board were elected to the terms of office set
forth in the Proxy Statement. In addition, the vote of the stockholders also
resulted in the adoption of the proposal to ratify the appointment of the
independent accountants. The number of votes cast for, against or withheld, and
the number of abstentions with respect to each proposal is set forth below.
There were no broker non-votes in connection with the matters voted upon at the
meeting.
<TABLE>
<CAPTION>
% of % of % of
Votes Against/ Votes Votes
For Cast Withheld Cast Abstain Cast
-------------------------------------------------------------------------------
Election of Directors:
Nominee:
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Richard B. Fisher 66,448,053 99.131 582,700 .869 N/A
John J. Mack 66,443,550 99.124 587,203 .876 N/A
Barton M. Biggs 66,448,966 99.132 581,787 .868 N/A
Peter F. Karches 66,424,782 99.096 605,971 .904 N/A
Sir David A. Walker 66,444,669 99.126 586,084 .874 N/A
Daniel B. Burke 66,449,778 99.133 580,975 .867 N/A
Dick Cheney 66,449,055 99.132 581,698 .868 N/A
S. Parker Gilbert 66,262,381 98.854 768,372 1.146 N/A
Allen E. Murray 66,265,932 98.859 764,821 1.141 N/A
Paul F. Oreffice * 66,261,566 98.852 769,187 1.148 N/A
Paul J. Rizzo 66,466,624 99.129 584,129 .871 N/A
Ratification of
Independent
Accountants: 66,959,542 99.894 62,618 .093 8,593 .013
</TABLE>
- --------------------
* Mr. Oreffice resigned from the Board effective July 21, 1995.
Page 23
<PAGE> 24
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
<TABLE>
<S> <C>
(a) Exhibit 4.1 - Restated Certificate of Incorporation, as amended to
date.
Exhibit 4.2 - Subordinated Indenture dated as of November 15, 1993
among MS plc, as Issuer, the Company, as Guarantor,
and Chemical Bank, as Trustee (incorporated by
reference to Exhibit 4.1 to the Company's Current
Report on Form 8-K dated December 1, 1993).
Exhibit 4.3 - Capital Unit Agreement dated as of August 1, 1995
among the Company, MS plc, Chemical Bank, as Agent
and Book-Entry Unit Depositary, and the holders from
time to time of the Capital Units (incorporated by
reference to Exhibit 4 to the Company's Current
Report on Form 8-K dated August 1, 1995).
Exhibit 4.4 - Form of Certificate of 8.40% Cumulative Preferred
Stock (stated value $200.00 per share) related to
8.40% Capital Units (incorporated by reference to
Exhibit 4-c to the Company's Registration Statement
on Form S-3 (No. 33-57833)).
Exhibit 11 - Statement Re: Computation of Earnings per Share.
Exhibit 12 - Statement Re: Computation of Ratio of Earnings to
Fixed Charges and Preferred Stock Dividends.
Exhibit 27 - Financial Data Schedule.
</TABLE>
(b) The Company filed a report on Form 8-K dated June 28, 1995 to
report the issuance by the Company of a press release summarizing the
financial results of the Company for the three months ended May 31,
1995 and April 30, 1994 and the four months ended May 31, 1995 and
announcing the declaration by the Company's Board of Directors of a
quarterly cash dividend of 32 cents per common share.
The Company filed a report on Form 8-K dated August 1, 1995 to
file a Capital Unit Agreement dated as of August 1, 1995 among the
Company, MS plc, Chemical Bank as Agent and Book-Entry Unit Depositary,
and the holders from time to time of the 8.40% Capital Units, each
consisting of (i) a 8.40% Subordinated Debenture of MS plc due August
30, 2015 in the principal amount of $25.00 guaranteed by the Company
and (ii) a related Purchase Contract issued by the Company requiring
the holder, at the Company's option after August 30, 1996, to purchase
one Depositary Share representing ownership of 1/8 interest in a share
of the Company's 8.40% Cumulative Preferred Stock, stated value 200.00
per share.
The Company filed a report on Form 8-K dated August 22, 1995
to file a Nikkei 225 Index Call Warrant Agreement dated as of August
21, 1995 among the Company, Chemical Bank and Morgan Stanley in
connection with Nikkei 225 Index Call Warrants expiring August 15,
1997.
Page 24
<PAGE> 25
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MORGAN STANLEY GROUP INC.
Registrant
Date: October 12, 1995 /s/ Eileen K. Murray
---------------------
Eileen K. Murray
Chief Accounting Officer
and Controller
Date: October 12, 1995 /s/ Jonathan M. Clark
----------------------
Jonathan M. Clark
General Counsel and Secretary
Page 25
<PAGE> 26
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
Exhibit 4.1 - Restated Certificate of Incorporation, as amended to
date.
Exhibit 4.2 - Subordinated Indenture dated as of November 15, 1993
among MS plc, as Issuer, the Company, as Guarantor,
and Chemical Bank, as Trustee (incorporated by
reference to Exhibit 4.1 to the Company's Current
Report on Form 8-K dated December 1, 1993).
Exhibit 4.3 - Capital Unit Agreement dated as of August 1, 1995
among the Company, MS plc, Chemical Bank, as Agent
and Book-Entry Unit Depositary, and the holders from
time to time of the Capital Units (incorporated by
reference to Exhibit 4 to the Company's Current
Report on Form 8-K dated August 1, 1995).
Exhibit 4.4 - Form of Certificate of 8.40% Cumulative Preferred
Stock (stated value $200.00 per share) related to
8.40% Capital Units (incorporated by reference to
Exhibit 4-c to the Company's Registration Statement
on Form S-3 (No. 33-57833)).
Exhibit 11 - Statement Re: Computation of Earnings per Share.
Exhibit 12 - Statement Re: Computation of Ratio of Earnings to
Fixed Charges and Preferred Stock Dividends.
Exhibit 27 - Financial Data Schedule.
</TABLE>
Page 26
<PAGE> 1
EXHIBIT 4.1
RESTATED CERTIFICATE OF INCORPORATION
OF
MORGAN STANLEY GROUP INC.
Pursuant to Section 245 of the
General Corporation Law of the State of Delaware
Morgan Stanley Group Inc., a corporation duly organized and
existing under the General Corporation Law of the State of Delaware (the
"Corporation") and originally incorporated in the State of Delaware on
July 10, 1975 under the name Morgan Stanley Holdings Incorporated, does
hereby certify as follows:
FIRST: That the Certificate of Incorporation of the
Corporation was filed in the office of the Secretary of State of the State of
Delaware, and a certified copy thereof was recorded in the office of the
Recorder of Kent County, Delaware, on the 10th day of July, 1975.
SECOND: That the Restated Certificate of Incorporation was
filed in the office of the Secretary of State of the State of Delaware, and a
certified copy thereof was recorded in the office of the Recorder of Kent
County, Delaware, on the 30th day of October, 1989.
THIRD: That Certificates of Amendment to the Restated
Certificate of Incorporation were filed in the office of the Secretary of State
of the State of Delaware, and certified copies thereof were recorded in the
office of the Recorder of Kent County, Delaware, on the 8th day of May, 1991,
and the 21st day of May, 1992.
FOURTH: That Certificates of Stock Designation were filed in
the office of the Secretary of State of the State of Delaware, and certified
copies thereof were recorded in the office of the Recorder of Kent County,
Delaware, on the 19th day of September, 1990, the 24th day of May, 1991, the
29th day of August, 1991, the 15th day of November, 1991, the 20th day of
March, 1992, and the 6th day of May, 1992.
FIFTH: That a Certificate of Retirement of Stock was filed in
the office of the Secretary of State of the State of Delaware and a certified
copy thereof was recorded in the office of the Recorder of Kent County,
Delaware, on the 20th day of June, 1992.
<PAGE> 2
2
SIXTH: That this Restated Certificate of Incorporation
restates and integrates and does not further amend the provisions of the
Corporation's Restated Certificate of Incorporation as heretofore amended or
supplemented, and that there is no discrepancy between those provisions and the
provisions of this Restated Certificate of Incorporation, and that the Restated
Certificate of Incorporation is hereby restated to read in its entirety as
follows:
ARTICLE I
NAME
The name of the Corporation is:
MORGAN STANLEY GROUP INC.
ARTICLE II
REGISTERED OFFICE AND REGISTERED AGENT
The registered office of the Corporation in the State of
Delaware is located at 32 Loockerman Sq., Ste. L-100, City of Dover, County of
Kent. The name of the registered agent of the Corporation at such address is
United States Corporation Company.
ARTICLE III
CORPORATE PURPOSE
The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may now or hereafter be organized under the
General Corporation Law of Delaware.
ARTICLE IV
CAPITAL STOCK
SECTION 1. Shares and Classes Authorized. The total number
of shares of all classes of capital stock which the Corporation shall have
authority to issue is 330,000,000 shares, which shall include:
(a) 30,000,000 shares of preferred stock of no par value
each (hereinafter referred to as "Preferred Stock"); and
<PAGE> 3
3
(b) 300,000,000 shares of common stock of the par value
of $1.00 each (hereinafter referred to as "Common Stock");
such classes of Preferred Stock and Common Stock being sometimes hereinafter
collectively referred to as "capital stock".
SECTION 2. Preferences, Rights, Limitations and Restrictions
of Capital Stock. The designations and the powers, preferences and rights, and
the qualifications, limitations or restrictions thereof, in respect of the
classes of the capital stock, and the authority with respect thereto expressly
vested in the Board of Directors of the Corporation, are as follows:
PART I -- PREFERRED STOCK (a) The Preferred Stock may be
issued either as a class without series or, if so determined by the Board of
Directors of the Corporation, from time to time in one or more series and with
such designation for such class or each such series as shall be stated and
expressed in the resolution or resolutions providing for the issue of such
class or each such series adopted by the Board of Directors. The Board of
Directors in any such resolution or resolutions is expressly authorized to
state and express for such class or each such series:
(i) Voting rights, if any, including, without limitation, the
authority to confer multiple votes per share, voting rights as to
specified matters or issues or, subject to the provisions of this
Restated Certificate of Incorporation, voting rights to be exercised
either together with holders of Common Stock as a single class, or
independently as a separate class;
(ii) The rate per annum and the times at and conditions upon
which the holders of shares of such class or series shall be entitled
to receive dividends, the conditions and dates upon which such
dividends shall be payable and whether such dividends shall be
cumulative or noncumulative, and, if cumulative, the terms upon which
such dividends shall be cumulative;
(iii) Redemption, repurchase, retirement and sinking fund
rights, preferences and limitations, if any, the amount payable on
shares of such class or series in the event of such redemption,
repurchase or retirement, the terms and conditions of any sinking
fund, the manner of creating such fund or funds and whether any of the
foregoing shall be cumulative or noncumulative;
<PAGE> 4
4
(iv) The rights to which the holders of the shares of such
class or series shall be entitled upon any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation;
(v) The terms, if any, upon which the shares of such class or
series shall be convertible into, or exchangeable for, shares of stock
of any other class or classes or of any other series of the same or
any other class or classes, including the price or prices or the rate
or rates of conversion or exchange and the terms of adjustment, if
any; and
(vi) Any other designations, preferences and relative,
participating, optional or other special rights and qualifications,
limitations or restrictions thereof so far as they are not
inconsistent with the provisions of this Restated Certificate of
Incorporation and to the full extent now or hereafter permitted by the
laws of the State of Delaware.
(b) All shares of the Preferred Stock, if issued as a
class without series, or all shares of the Preferred Stock of any one series,
if issued in series, shall be identical to each other in all respects and shall
entitle the holders thereof to the same rights and privileges, except that
shares of any one series issued at different times may differ as to the dates
from which dividends thereon, if cumulative, shall be cumulative.
<PAGE> 5
5
Subpart A: ESOP Convertible Preferred Stock*
1. Designation and Issuance.
(A) The shares of such series shall be designated ESOP
CONVERTIBLE PREFERRED STOCK (hereinafter referred to as the "ESOP Preferred
Stock") and such series shall consist of 3,902,438 shares. Such number of
shares may be increased or decreased from time to time by resolution of the
Pricing Committee of this Board of Directors (the "Pricing Committee"), but no
such increase shall result in such series consisting of more than 4,000,000
shares, and no decrease shall reduce the number of shares of ESOP Preferred
Stock to a number less than that of shares of ESOP Preferred Stock then
outstanding plus the number of shares issuable upon exercise of any rights,
options or warrants or upon conversion of outstanding securities issued by the
Corporation relating to such shares. Any shares of ESOP Preferred Stock
redeemed or purchased by the Corporation shall remain issued and outstanding
for all purposes (except that as long as such shares are held by the
Corporation or its nominee, no dividends shall be paid on such shares and they
shall neither be entitled to vote nor counted for quorum purposes) and may
thereafter be transferred by the Corporation from time to time to a trustee or
trustees referred to in paragraph (B) of this Section 1 (whereupon the voting
and dividend rights of such shares shall be restored); provided that the
Corporation may provide at the time of or at any time after such redemption or
purchase that any such shares then held by the Corporation or its nominee shall
be retired, and such shares shall then be restored to the status of authorized
but unissued shares of preferred stock of the Corporation.
(B) Shares of ESOP Preferred Stock shall be issued only to a
trustee or trustees acting on behalf of an employee stock ownership trust or
plan or other employee benefit plan (a "Plan") of the Corporation. In the
event of any sale, transfer or other disposition (hereinafter a "transfer") of
shares of ESOP Preferred Stock to any person (including, without limitation,
any participant in the Plan) other than (x) any trustee or trustees of the Plan
or (y) any pledgee of such shares acquiring such shares as security for any
loan or
- --------------------
* Terms defined in this Subpart A are so defined for purposes of this
Subpart alone.
<PAGE> 6
6
loans made to the Plan or to any trustee or trustees acting on behalf of the
Plan, the shares of ESOP Preferred Stock so transferred, upon such transfer and
without any further action by the Corporation or the holder, shall be
automatically converted into shares of Common Stock at the Conversion Price (as
hereinafter defined) and on the terms otherwise provided for the conversion of
shares of ESOP Preferred Stock into shares of Common Stock pursuant to Section
5 hereof and no such transferee shall have any of the voting powers,
preferences and relative, participating, optional or special rights ascribed to
shares of ESOP Preferred Stock hereunder, but, rather, only the powers and
rights pertaining to the Common Stock into which such shares of ESOP Preferred
Stock shall be so converted; provided, however, that in the event of a
foreclosure or other realization upon shares of ESOP Preferred Stock pledged as
security for any loan or loans made to the Plan or to the trustee or the
trustees acting on behalf of the Plan, the pledged shares so foreclosed or
otherwise realized upon shall be converted automatically into shares of Common
Stock at the Conversion Price and on the terms otherwise provided for
conversions of shares of ESOP Preferred Stock into shares of Common Stock
pursuant to Section 5 hereof. In the event of such a conversion, such
transferee shall be treated for all purposes as the record holder of the shares
of Common Stock into which the ESOP Preferred Stock shall have been converted
as of the date of such conversion. Certificates representing shares of ESOP
Preferred Stock shall be legended to reflect such restrictions on transfer.
Notwithstanding the foregoing provisions of this Section 1, shares of ESOP
Preferred Stock (i) may be converted into shares of Common Stock as provided by
Section 5 hereof and the shares of Common Stock issued upon such conversion may
be transferred by the holder thereof as permitted by law and (ii) shall be
redeemable by the Corporation upon the terms and conditions provided by
Sections 6, 7 and 8 hereof.
2. Dividends and Distributions.
(A) (1) Subject to the provisions for adjustment
hereinafter set forth, the holders of shares of ESOP Preferred Stock (other
than the Corporation or its nominee) shall be entitled to receive, when and as
declared by the Board of Directors out of funds legally available therefor,
cash dividends ("Preferred Dividends") payable in accordance with either of the
following elections, as the Board of Directors shall elect from time to time in
its absolute discretion:
<PAGE> 7
7
(i) in an amount per share initially equal to $2.78 per
share per annum, and no more (such amount, as adjusted from time to
time pursuant to the terms hereof, including during any period in
which a Semiannual Payment Election (as defined below) shall be in
effect, the "Annual Dividend Rate"), payable annually in arrears on
December 31 (or such later date not more than four business days
thereafter as the Board of Directors may from time to time elect in
its absolute discretion; such date, the "Annual Payment Date") of each
year (such election, the "Annual Payment Election") beginning on the
Annual Payment Date occurring immediately after the effective date of
such Annual Payment Election; or
(ii) in an amount per share initially equal to $2.78 per share
per annum, and no more (such amount, as adjusted from time to time
pursuant to the terms hereof, including during any period in which an
Annual Payment Election is in effect, the "Semiannual Dividend Rate";
and the Semiannual Dividend Rate and the Annual Dividend Rate, as in
effect at any time, are each hereinafter referred to as the "Preferred
Dividend Rate"), semiannually in arrears, one-half on each June 30 and
December 31 (or, in either case, such later date not more than four
business days after either of such dates as the Board of Directors may
from time to time elect in its absolute discretion; such dates, the
"Semiannual Payment Dates") of each year (such election, the
"Semiannual Payment Election"), beginning on the Semiannual Payment
Date occurring immediately after the effective date of such Semiannual
Payment Election;
provided that any Semiannual Payment Election shall be made effective only
during the period beginning on January 5 and ending on June 29 in each year.
The Board of Directors shall give prompt notice to the holders of the ESOP
Preferred Stock of any Semiannual Payment Election or Annual Payment Election
and any election to alter any Dividend Payment Date pursuant to this Section
2(A)(1). Each Annual Payment Date or Semiannual Payment Date, as applicable,
is hereinafter referred to as a "Dividend Payment Date", and each payment of a
Preferred Dividend shall be made to holders of record at the opening of
business on such Dividend Payment Date.
(2) Preferred Dividends shall begin to accrue on
outstanding shares of ESOP Preferred Stock from the date of issuance of such
shares, except that with respect to any shares of ESOP Preferred Stock redeemed
or purchased by the Corporation and then reissued, Preferred Dividends shall
<PAGE> 8
8
accrue on such shares from their date of reissuance. Preferred Dividends shall
accrue on a daily basis, whether or not the Corporation shall then have
earnings or surplus (computed on the basis of a 360-day year of twelve 30-day
months in case of any period less than one year) based on the Preferred
Dividend Rate in effect on such date; provided that if a Semiannual Payment
Election or an Annual Payment Election becomes effective on or after such date
and before the immediately succeeding Dividend Payment Date, payments in
respect of dividends on the ESOP Preferred Stock made on or after the effective
date of such Semiannual Payment Election or Annual Payment Election and on or
before such Dividend Payment Date shall be computed using the Preferred
Dividend Rate in effect on the date of such payment. Accrued but unpaid
Preferred Dividends shall cumulate as of the Dividend Payment Date on which
they first become payable, but no interest shall accrue on accumulated but
unpaid Preferred Dividends.
(B) So long as any shares of ESOP Preferred Stock shall be
outstanding, no dividend shall be declared or paid or set apart for payment on
any other series of stock ranking on a parity with the ESOP Preferred Stock as
to dividends, unless there shall also be or have been declared and paid or set
apart for payment on the ESOP Preferred Stock, like dividends for all dividend
payment periods of the ESOP Preferred Stock ending on or before the dividend
payment date of such parity stock, ratably in proportion to the respective
amounts of dividends (1) accumulated and unpaid or payable on such parity
stock, on the one hand, and (2) accumulated and unpaid through the dividend
payment period or periods of the ESOP Preferred Stock next preceding such
dividend payment date, on the other hand. If full cumulative dividends on the
ESOP Preferred Stock have not been declared and paid or set apart for payment
when due, the Corporation shall not declare or pay or set apart for payment any
dividends or make any other distributions on, or make any payment on account of
the purchase, redemption or other retirement of, any other class of stock or
series thereof of the Corporation ranking, as to dividends or upon dissolution,
junior to the ESOP Preferred Stock until full cumulative dividends on the ESOP
Preferred Stock shall have been paid or declared and set apart; provided,
however, that the foregoing shall not apply to (i) any dividend or distribution
payable solely in any shares of, or options, warrants or rights to subscribe
for or purchase shares of, any stock ranking, as to dividends and upon
dissolution, junior to the ESOP Preferred Stock or (ii) the acquisition of
shares of any stock ranking, as to dividends and upon dissolution, junior to
the ESOP Preferred Stock in
<PAGE> 9
9
exchange solely for or by conversion solely into shares of any other stock
ranking junior to the ESOP Preferred Stock as to dividends and upon
dissolution.
(C) Any dividend payment made on shares of ESOP Preferred
Stock shall first be credited against the earliest accumulated but unpaid
dividend due with respect to such shares.
3. Liquidation Preference.
(A) In the event of any dissolution or liquidation of the
Corporation, whether voluntary or involuntary, before any payment or
distribution of the assets of the Corporation (whether capital or surplus)
shall be made to or set apart for the holders of any series or class or classes
of stock of the Corporation ranking junior to ESOP Preferred Stock upon
dissolution or liquidation, the holders of ESOP Preferred Stock (other than the
Corporation or its nominee) shall be entitled to receive the Liquidation Price
(as hereinafter defined) per share in effect at the time of dissolution or
liquidation plus an amount equal to all dividends accrued (whether or not
accumulated) and unpaid on the ESOP Preferred Stock to the date of final
distribution to such holders; but such holders shall not be entitled to and
shall not otherwise receive any further payments. The Liquidation Price per
share that holders of ESOP Preferred Stock shall receive upon dissolution or
liquidation shall be $35.875, subject to adjustment as hereinafter provided.
If, upon any dissolution or liquidation of the Corporation, the assets of the
Corporation, or proceeds thereof, distributable among the holders of ESOP
Preferred Stock shall be insufficient to pay in full the preferential amount
aforesaid and liquidating payments on any other shares ranking, as to
dissolution or liquidation, on a parity with ESOP Preferred Stock, then such
assets, or the proceeds thereof, shall be distributed among the holders of ESOP
Preferred Stock and any such other shares ratably in accordance with the
respective amounts that would be payable on such shares of ESOP Preferred Stock
and any such other shares if all amounts payable thereon were paid in full.
For the purposes of this Section 3, neither a consolidation or merger of the
Corporation with or into one or more corporations, nor the sale, transfer,
lease or exchange (for cash, shares of equity stock, securities or other
consideration) of all or substantially all of the assets of the Corporation,
nor the distribution to the stockholders of the Corporation of all or
substantially all of the consideration for such sale, unless such consideration
(apart from assumption of liabilities) or the net proceeds
<PAGE> 10
10
thereof consists substantially entirely of cash, shall be deemed to be a
dissolution or liquidation, voluntary or involuntary.
(B) Subject to the rights of the holders of shares of any
series or class or classes of stock ranking on a parity with or senior to ESOP
Preferred Stock upon dissolution or liquidation, upon any dissolution or
liquidation of the Corporation, after payment shall have been made in full to
the holders of ESOP Preferred Stock as provided in this Section 3, but not
prior thereto, any other series or class or classes of stock ranking junior to
ESOP Preferred Stock upon dissolution or liquidation shall, subject to the
respective terms and provisions (if any) applying thereto, be entitled to
receive any and all assets of the Corporation remaining to be paid or
distributed, and the holders of ESOP Preferred Stock shall not be entitled to
share therein.
4. Ranking and Voting of Shares.
(A) The Corporation's 9.36% Cumulative Preferred Stock, with
a liquidation value of $25.00 per share, the Corporation's 8.88% Cumulative
Preferred Stock, with a liquidation value of $200.00 per share, and the
Corporation's 8-3/4% Cumulative Preferred Stock, with a liquidation value of
$200.00 per share, shall rank on a parity with ESOP Preferred Stock as to
dividends and as to distribution of assets upon dissolution or liquidation.
Unless otherwise provided in the Restated Certificate of
Incorporation of the Corporation, as the same may be amended, or in a
Certificate of Designation of Rights and Preferences relating to any subsequent
series of preferred stock, the ESOP Preferred Stock shall rank on a parity with
all series of the Corporation's preferred stock as to dividends and as to the
distribution of assets upon dissolution or liquidation.
(B) The holders of shares of ESOP Preferred Stock (other
than the Corporation or its nominee) shall have the following voting rights:
(1) The holders of ESOP Preferred Stock shall be entitled
to vote on all matters submitted to a vote of the stockholders of the
Corporation, voting together with the holders of Common Stock as one class.
The holder of each share of ESOP Preferred Stock shall be entitled to a number
of votes equal to 1.35 times the number of shares of Common
<PAGE> 11
11
Stock into which such share of ESOP Preferred Stock could be converted on the
record date for determining the stockholders entitled to vote; it being
understood that whenever the "Conversion Price" (as defined in Section 5
hereof) is adjusted as provided in Section 9 hereof, the number of votes of the
ESOP Preferred Stock shall also be correspondingly adjusted. Notwithstanding
the immediately preceding sentence, if the governing body of the New York Stock
Exchange or any other securities listing service or exchange (each, an
"Exchange") or any relevant governmental or regulatory entity (each such
entity, and each governing body of an Exchange, a "Regulating Entity") shall
have disapproved of such voting power or taken or threatened any action against
the Corporation or in respect of any of its securities in accordance with Rule
19c-4 promulgated under the Securities Exchange Act of 1934 (the "Exchange
Act"), or any other rule or listing standard of any Regulating Entity regarding
the voting power of securities, or if the Board of Directors determines in its
sole judgment that any Regulating Entity may so disapprove or take or threaten
any such action, the holder of each share of ESOP Preferred Stock shall be
entitled to a maximum number of votes permissible (consistent with continued
listing of the Corporation's securities on any such Exchange) in accordance
with the interpretations of any such rule or listing standard by such
Regulating Entity, as determined by the Board of Directors.
(2) Except as otherwise required by law or set forth herein,
holders of ESOP Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for the taking of any
corporate action, including the issuance of any preferred stock now or
hereafter authorized; provided, however, that the vote of at least 66-2/3% of
the outstanding shares of ESOP Preferred Stock, voting separately as a series,
shall be necessary to approve any alteration, amendment or repeal of any
provision of the Restated Certificate of Incorporation or any alteration,
amendment or repeal of any provision of the resolutions relating to the
designation, preferences and rights of ESOP Preferred Stock (including any such
alteration, amendment or repeal effected by any merger or consolidation in
which the Corporation is the surviving or resulting corporation, but not
including any alteration or amendment of rights expressly provided for in
Section (B)(1) above or in Section 2(A)(1)), if such amendment, alteration or
repeal would alter or change the powers, preferences, or special rights of the
ESOP Preferred Stock so as to affect them adversely.
<PAGE> 12
12
5. Conversion into Common Stock.
(A) A holder of shares of ESOP Preferred Stock shall be
entitled, at any time prior to the close of business on the date fixed for
redemption of such shares pursuant to Section 6, 7 or 8 hereof, to cause any or
all of such shares to be converted into shares of Common Stock. The number of
shares of Common Stock into which each share of the ESOP Preferred Stock may be
converted shall be determined by dividing the Liquidation Price in effect at
the time of conversion by the Conversion Price (as hereinafter defined) in
effect at the time of conversion. The initial Conversion Price per share at
which shares of Common Stock shall be issuable upon conversion of any shares of
ESOP Preferred Stock shall be $35.875, subject to adjustment as hereinafter
provided; that is, a conversion rate initially equivalent to one share of
Common Stock for each share of ESOP Preferred Stock, which is subject to
adjustment as hereinafter provided.
(B) Any holder of shares of ESOP Preferred Stock desiring to
convert such shares into shares of Common Stock shall surrender, if
certificated, the certificate or certificates representing the shares of ESOP
Preferred Stock being converted, duly assigned or endorsed for transfer to the
Corporation (or accompanied by duly executed stock powers relating thereto), or
if uncertificated, a duly executed stock power relating thereto, at the
principal executive office of the Corporation or the offices of the transfer
agent for the ESOP Preferred Stock or such office or offices in the continental
United States of an agent for conversion as may from time to time be designated
by notice to the holders of the ESOP Preferred Stock by the Corporation or the
transfer agent for the ESOP Preferred Stock, accompanied by written notice of
conversion. Such notice of conversion shall specify (i) the number of shares
of ESOP Preferred Stock to be converted and the name or names in which such
holder wishes the Common Stock and any shares of ESOP Preferred Stock not to be
so converted to be issued, and (ii) the address to which such holder wishes
delivery to be made of a confirmation of such conversion, if uncertificated, or
any new certificates which may be issued upon such conversion, if certificated.
(C) Upon surrender, if certificated, of a certificate
representing a share or shares of ESOP Preferred Stock for conversion, or if
uncertificated, of a duly executed stock power relating thereto, the
Corporation shall issue and send by hand delivery (with receipt to be
acknowledged) or by first class mail, postage prepaid, to the
<PAGE> 13
13
holder thereof or to such holder's designee, at the address designated by such
holder, if certificated, a certificate or certificates for, or if
uncertificated, confirmation of, the number of shares of Common Stock to which
such holder shall be entitled upon conversion. If there shall have been
surrendered shares of ESOP Preferred Stock only part of which are to be
converted, the Corporation shall issue and deliver to such holder or such
holder's designee, if certificated, a new certificate or certificates
representing the number of shares of ESOP Preferred Stock that shall not have
been converted, or if uncertificated, confirmation of the number of shares of
ESOP Preferred Stock that shall not have been converted.
(D) The issuance by the Corporation of shares of Common
Stock upon a conversion of shares of ESOP Preferred Stock into shares of Common
Stock made at the option of the holder thereof shall be effective as of the
earlier of (i) the delivery to such holder or such holder's designee of the
certificates representing the shares of Common Stock issued upon conversion
thereof, if certificated, or confirmation, if uncertificated, and (ii) the
commencement of business on the second business day after the surrender of the
certificate or certificates, if certificated, or a duly executed stock power,
if uncertificated, for the shares of ESOP Preferred Stock to be converted. On
and after the effective date of conversion, the person or persons entitled to
receive Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such shares of Common Stock, and no
allowance or adjustment shall be made in respect of dividends payable to
holders of Common Stock of record on any date prior to such effective date.
The Corporation shall not be obligated to pay any dividend that may have
accrued or have been declared but that is not payable to holders of shares of
ESOP Preferred Stock if the Dividend Payment Date for such dividend is on or
subsequent to the effective date of conversion of such shares.
(E) The Corporation shall not be obligated to deliver to
holders of ESOP Preferred Stock any fractional share or shares of Common Stock
issuable upon any conversion of such shares of ESOP Preferred Stock, but in
lieu thereof may make a cash payment in respect thereof in any manner permitted
by law.
(F) The Corporation shall at all times reserve and keep
available out of its authorized and unissued Common Stock or treasury Common
Stock, solely for issuance upon the conversion of shares of ESOP Preferred
Stock as herein
<PAGE> 14
14
provided, such number of shares of Common Stock as shall from time to time be
issuable upon the conversion of all the shares of ESOP Preferred Stock then
outstanding.
6. Redemption at the Option of the Corporation.
(A) The ESOP Preferred Stock shall be redeemable, in whole or in
part, at the option of the Corporation at any time after September 19, 2000,
out of funds legally available therefor, at a redemption price per share equal
to 100% of the Liquidation Price plus an amount equal to all accrued (whether
or not accumulated) and unpaid dividends thereon to the date fixed for
redemption. Payment of the redemption price shall be made by the Corporation
in cash or shares of Common Stock, or a combination thereof, as permitted by
paragraph (E) of this Section 6. From and after the date fixed for redemption,
dividends on shares of ESOP Preferred Stock called for redemption will cease to
accrue and all rights of the holder in respect of such shares shall cease,
except the right to receive the redemption price. Upon payment of the
redemption price, such shares shall be deemed to have been transferred to the
Corporation, to be held as treasury shares or to be retired, in either case as
provided in Section 1(A). If less than all of the outstanding shares of ESOP
Preferred Stock are to be redeemed, the Corporation shall either redeem a
portion of the shares of each holder determined pro rata based on the number of
shares held by each holder or shall select the shares to be redeemed by lot, as
may be determined by the Board of Directors of the Corporation.
(B) Notice of redemption will be sent to the holders of ESOP
Preferred Stock at the address shown on the books of the Corporation or any
transfer agent for ESOP Preferred Stock by first class mail, postage prepaid,
mailed not less than twenty (20) days nor more than sixty (60) days prior to
the redemption date or in any other manner provided by law. Each notice shall
state: (i) the redemption date; (ii) the total number of shares of ESOP
Preferred Stock to be redeemed and, if fewer than all the shares held by such
holder are to be redeemed, the number of such shares to be redeemed from such
holder; (iii) the redemption price; (iv) the place or places where
certificates, if certificated, for such shares are to be surrendered for
payment of the redemption price; (v) that dividends on the shares to be
redeemed will cease to accrue on such redemption date; (vi) whether such
redemption price should be paid in cash or in shares of Common Stock; and (vii)
the conversion rights of the shares to be redeemed, the period within which
conversion
<PAGE> 15
15
rights may be exercised and the Conversion Price and number of shares of Common
Stock issuable upon conversion of a share of ESOP Preferred Stock at the time.
Upon surrender of the certificates, if certificated, for any shares so called
for redemption, or upon the date fixed for redemption, if uncertificated, such
shares, if not previously converted, shall be redeemed by the Corporation as of
the close of business on the date fixed for redemption and at the redemption
price set forth in this Section 6.
(C) The Corporation may, in its sole discretion and
notwithstanding anything to the contrary in paragraph (A) of this Section 6, at
any time within one year after either of the following events:
(i) there shall be a change in the federal tax law or
regulations of the United States of America or of an interpretation or
application of such law or regulations or of a determination by a
court of competent jurisdiction that in any case has the effect of
precluding the Corporation from claiming (other than for purposes of
calculating any alternative minimum tax) any of the tax deductions for
dividends paid on the ESOP Preferred Stock when such dividends are
used as provided under Section 404(k)(2) of the Internal Revenue Code
of 1986, as amended (the "Code"), as in effect on the date shares of
ESOP Preferred Stock are initially issued, or
(ii) the Corporation shall certify to the holders of the ESOP
Preferred Stock that the Corporation has determined in good faith that
the Plan either is not qualified as a "stock bonus plan" within the
meaning of Section 401(a) of the Code or is not an "employee stock
ownership plan" within the meaning of Section 4975(e)(7) of the Code,
elect either to (a) redeem, out of funds legally available therefor, any or all
of such ESOP Preferred Stock for cash or, if the Corporation so elects, in
shares of Common Stock, or a combination of such shares of Common Stock and
cash, as permitted by paragraph (E) of this Section 6, at a redemption price
equal to (x) if the relevant event is as provided in clause (i) above, the
Liquidation Price per share on the date fixed for redemption, plus an amount
equal to accrued (whether or not accumulated) and unpaid dividends thereon to
the date fixed for redemption or (y) if the relevant event is as provided in
clause (ii) above, an amount calculated on the basis of the redemption prices
provided in paragraph (D) of this Section 6 on the date fixed for redemption or
(b)
<PAGE> 16
16
exchange any or all of such shares of ESOP Preferred Stock for securities of at
least equal value (as determined by an independent appraiser) that constitute
"qualifying employer securities" with respect to a holder of ESOP Preferred
Stock within the meaning of Section 409(1) of the Code and Section 407(d)(5) of
the Employment Retirement Income Security Act of 1974, as amended ("ERISA"), or
any successor provisions of law. If the Corporation elects to redeem any or
all of the ESOP Preferred Stock pursuant to clause (a) of the preceding
sentence, notice of such redemption shall be given as required in paragraph (B)
of this Section 6, and if the Corporation elects to exchange any or all of the
ESOP Preferred Stock for securities of at least equal value pursuant to clause
(b) of the preceding sentence, it will cause notice of such election to be sent
to the holders of ESOP Preferred Stock at the address shown on the books of the
Corporation or any transfer agent for ESOP Preferred Stock by first class mail,
postage prepaid, mailed not less than twenty (20) days nor more than sixty (60)
days prior to the date of exchange or in any other manner required by law.
Each notice shall state: (i) the exchange date; (ii) the total number of
shares of ESOP Preferred Stock to be exchanged and, if fewer than all the
shares held by such holder are to be exchanged, the number of shares held by
such holder to be exchanged; (iii) the exchange rate; (iv) the place or places
where certificates, if certificated, for such shares are to be surrendered for
exchange; and (v) that dividends on the shares to be exchanged will cease to
accrue on such exchange date.
(D) Notwithstanding anything to the contrary in paragraph (A)
of this Section 6, in the event that the Plan is, or contributions thereto are,
terminated, the Corporation may, in its sole discretion, call for redemption
any or all of the then outstanding ESOP Preferred Stock, upon notice as
required in paragraph (B) of this Section 6, out of funds legally available
therefor, at a redemption price per share equal to the following percentages of
the Liquidation Price in effect on the date fixed for redemption:
<PAGE> 17
17
<TABLE>
<CAPTION>
During the Twelve-
Month Period Percentage of
Beginning September 19, Liquidation Price
----------------------- -----------------
<S> <C>
1991 106.98
1992 106.20
1993 105.43
1994 104.65
1995 103.88
1996 103.10
1997 102.33
1998 101.55
1999 100.78
2000 100.00
</TABLE>
and thereafter at 100%, plus, in each case, an amount equal to all accrued
(whether or not accumulated) and unpaid dividends thereon to the date fixed for
redemption. Payment of the redemption price shall be made by the Corporation
in cash or shares of Common Stock, or a combination thereof, as permitted by
paragraph (E) of this Section 6. From and after the date fixed for redemption,
dividends on shares of ESOP Preferred Stock called for redemption will cease to
accrue and all rights of the holder in respect of such shares shall cease,
except the right to receive the redemption price. Upon payment of the
redemption price, such shares shall be deemed to have been transferred to the
Corporation, to be held as treasury shares or to be retired, in either case as
provided in Section 1(A).
(E) The Corporation, at its option, may make payment of the
redemption price required upon redemption of shares of ESOP Preferred Stock
in cash or in shares of Common Stock, or in a combination of such shares and
cash, any such shares of Common Stock to be valued for such purpose at their
Fair Market Value (as defined in paragraph 9(H)(2)); provided, however, that in
calculating their Fair Market Value the Adjustment Period (as defined in
paragraph 9(H)(2)) shall be deemed to be the five (5) consecutive trading days
preceding the date of redemption.
7. Redemption at the Option of the Holder.
(A) Unless otherwise provided by law, shares of ESOP
Preferred Stock shall be redeemed by the Corporation at the option of the
holder, at any time and from time to time upon notice to the Corporation given
not less than five business days prior to the date fixed by the holder in such
notice, when and to the extent necessary for such holder to
<PAGE> 18
18
provide for distributions required to be made under, or to satisfy an
investment election provided to participants in accordance with, the Plan or
any successor plan or when the holder elects to redeem shares of ESOP Preferred
Stock in connection with any Preferred Dividend (a "Dividend Redemption"), in
shares of Common Stock legally available therefor, at a redemption price equal
to the higher of (x) the Liquidation Price per share on the date fixed for
redemption and (y) the Fair Market Value (as defined in paragraph 9(H)(2)) of
the number of shares of Common Stock into which each share of ESOP Preferred
Stock is convertible at the time the notice of such redemption is given, plus
in either case an amount equal to accrued (whether or not accumulated) and
unpaid dividends thereon to the date fixed for redemption (such higher price on
any date, together with such accrued and unpaid dividends, the "Special
Redemption Price"). At the election of the Corporation, such redemption may
instead be made out of funds legally available therefor in cash or a
combination of Common Stock and cash. Any shares of Common Stock shall be
valued for the purposes of redemption pursuant to this paragraph (A) as
provided by paragraph (E) of Section 6. In the case of any Dividend
Redemption, such holder shall give the notice specified above on the fifth
business day after the related Dividend Payment Date and such redemption shall
be effective as to such number of shares of ESOP Preferred Stock as shall equal
(x) the aggregate amount of such Preferred Dividends paid with respect to
shares of ESOP Preferred Stock allocated or credited to the accounts of
participants in the Plan or any successor plan that are used to repay any loan
associated with such allocated or credited shares divided by (y) the Special
Redemption Price specified above in this paragraph (A).
(B) Unless otherwise provided by law, shares of ESOP
Preferred Stock shall be redeemed by the Corporation at the option of the
holder, at any time and from time to time upon notice to the Corporation given
not less than five business days prior to the date fixed by the holder in such
notice, upon certification by such holder to the Corporation of the following
events: (i) when and to the extent necessary for such holder to make any
payments of principal, interest or premium due and payable (whether voluntary,
scheduled, upon acceleration or otherwise) upon any obligations of the trust
established under the Plan in connection with the acquisition of ESOP Preferred
Stock or any indebtedness, expenses or costs incurred by the holder for the
benefit of the Plan; or (ii) when and if it shall be established to the
satisfaction of the holder that the Plan
<PAGE> 19
19
has not initially been determined by the Internal Revenue Service to be
qualified as a "stock bonus plan" and an "employee stock ownership plan" within
the meaning of Section 401(a) or 4975(e)(7) of the Code, respectively, in
shares of Common Stock legally available therefor, at a redemption price equal
to the Liquidation Price plus an amount equal to accrued and unpaid dividends
thereon to the date fixed for redemption. At the election of the Corporation,
such redemption may instead be made out of funds legally available therefor in
cash or a combination of Common Stock and cash. Any shares of Common Stock
shall be valued for the purposes of redemption pursuant to this paragraph (B)
as provided by paragraph (E) of Section 6.
8. Consolidation, Merger, etc.
(A) If the Corporation shall consummate any consolidation or merger
or similar transaction, however named, pursuant to which the outstanding shares
of Common Stock are by operation of law exchanged solely for or changed,
reclassified or converted solely into securities of any successor or resulting
company (including the Corporation) that constitute "qualifying employer
securities" with respect to a holder of ESOP Preferred Stock within the
meanings of Section 409(1.) of the Code and Section 407(d)(5) of ERISA, or any
successor provision of law, and, if applicable, for a cash payment in lieu of
fractional shares, if any, then, in such event, the terms of such consolidation
or merger or similar transaction shall provide that the shares of ESOP
Preferred Stock of such holder shall be converted into or exchanged for and
shall become preferred securities of such successor or resulting company,
having in respect of such company insofar as possible (taking into account,
without limitation, any requirements relating to the listing of such preferred
securities on any national securities exchange or the qualification of such
preferred securities for trading in any over-the-counter market) the same
powers, preferences and relative, participating, optional or other special
rights (including the redemption rights provided by Sections 6, 7 and 8
hereof), and the qualifications, limitations or restrictions thereon, that the
ESOP Preferred Stock had immediately prior to such transaction; provided,
however, that after such transaction each security into which the ESOP
Preferred Stock is so converted or for which it is exchanged shall be
convertible, pursuant to the terms and conditions provided by Section 5 hereof,
into the number and kind of qualifying employer securities receivable by a
holder equivalent to the number of shares of Common Stock into which such
shares of ESOP
<PAGE> 20
20
Preferred Stock could have been converted pursuant to Section 5 hereof
immediately prior to such transaction and provided further that if by virtue of
the structure of such transaction, a holder of Common Stock is required to make
an election with respect to the nature and kind of consideration to be received
in such transaction, which election cannot practicably be made by the holders
of the ESOP Preferred Stock, then such election shall be deemed to be solely
for "qualifying employer securities" (together, if applicable, with a cash
payment in lieu of fractional shares) with the effect provided above on the
basis of the number and kind of qualifying employer securities receivable by a
holder of the number of shares of Common Stock into which the shares of ESOP
Preferred Stock could have been converted pursuant to Section 5 hereof
immediately prior to such transaction (it being understood that if the kind or
amount of qualifying employer securities receivable in respect of each share of
Common Stock upon such transaction is not the same for each such share, then
the kind and amount of qualifying employer securities deemed to be receivable
in respect of each share of Common Stock for purposes of this proviso shall be
the kind and amount so receivable per share of Common Stock by a plurality of
such shares). The rights of the ESOP Preferred Stock as preferred equity of
such successor or resulting company shall successively be subject to
adjustments pursuant to Section 9 hereof after any such transaction as nearly
equivalent as practicable to the adjustments provided for by such Section prior
to such transaction. The Corporation shall not consummate any such merger,
consolidation or similar transaction unless all the terms of this paragraph (A)
are complied with.
(B) If the Corporation shall consummate any consolidation or
merger or similar transaction, however named, pursuant to which the outstanding
shares of Common Stock are by operation of law exchanged for or changed,
reclassified or converted into other shares or securities or cash or any other
property, or any combination thereof, other than any such consideration which
is constituted solely of qualifying employer securities that are common stock
or common equity (as referred to in paragraph (A) of this Section 8) and cash
payments, if applicable, in lieu of fractional shares or other interests,
outstanding shares of ESOP Preferred Stock shall, without any action on the
part of the Corporation or any holder thereof (but subject to paragraph (C) of
this Section 8), be automatically converted immediately prior to the
consummation of such merger, consolidation or similar transaction into shares
of Common Stock at the Conversion Price then in effect.
<PAGE> 21
21
(C) If the Corporation shall enter into any agreement providing
for any consolidation or merger or similar transaction described in paragraph
(B) of this Section 8, then the Corporation shall as soon as practicable
thereafter (and in any event at least ten (10) business days before
consummation of such transaction) give notice of such agreement and the
material terms thereof to each holder of ESOP Preferred Stock and each such
holder shall have the right to elect, by written notice to the Corporation, to
receive, upon consummation of such transaction (if and when such transaction
is consummated), out of funds legally available therefor, from the Corporation
or the successor of the Corporation, in redemption of such ESOP Preferred
Stock, in lieu of any cash or other securities which such holder would
otherwise be entitled to receive under paragraph (B) of this Section 8, a cash
payment equal to the Liquidation Price per share on the date fixed for such
transaction, plus an amount equal to accrued (whether or not accumulated) and
unpaid dividends thereon to the date fixed for such transaction. No such
notice of redemption shall be effective unless given to the Corporation prior
to the close of business of the fifth business day prior to consummation of
such transaction, unless the Corporation or the successor of the Corporation
shall waive such prior notice, but any notice or redemption so given prior to
such time may be withdrawn by notice of withdrawal given to the Corporation
prior to the close of business on the fifth business day prior to consummation
of such transaction.
9. Anti-dilution Adjustments.
(A) (1) Subject to the provisions of paragraphs (E) and (F)
of this Section 9, in the event the Corporation shall, at any time or from time
to time while any of the shares of the ESOP Preferred Stock are outstanding,
(i) pay a dividend or make a distribution in respect of the Common Stock in
shares of Common Stock or (ii) subdivide the outstanding shares of Common Stock
into a greater number of shares, in each case whether by reclassification of
shares, recapitalization of the Corporation (excluding a recapitalization or
reclassification effected by a merger or consolidation to which Section 8
applies) or otherwise, then, in such event, the Board of Directors shall, to
the extent legally permissible, declare a dividend in respect of the ESOP
Preferred Stock in shares of ESOP Preferred Stock (a "Special Dividend") in
such a manner that a holder of ESOP Preferred Stock will become a holder of
that number of shares of ESOP Preferred Stock equal to the product of the
number of such shares held prior to such event times a fraction (the
<PAGE> 22
22
"Section 9(A) Fraction"), the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock outstanding immediately before
such event. A Special Dividend declared pursuant to this Section 9(A)(1) shall
be effective, upon payment of such dividend or distribution in respect of the
Common Stock, as of the record date for the determination of stockholders
entitled to receive such dividend or distribution (on a retroactive basis), and
in the case of a subdivision shall become effective immediately as of the
effective date thereof. Concurrently with the declaration of the Special
Dividend pursuant to this paragraph 9(A)(1), the Conversion Price, the
Liquidation Price and the Preferred Dividend Rate of all shares of ESOP
Preferred Stock shall be adjusted by dividing the Conversion Price, the
Liquidation Price and the Preferred Dividend Rate, respectively, in effect
immediately before such event by the Section 9(A) Fraction.
(2) Subject to the provisions of paragraphs (E) and (F) of this
Section 9, in the event the Corporation shall, at any time or from time to time
while any of the shares of the ESOP Preferred Stock are outstanding, combine
the outstanding shares of Common Stock into a lesser number of shares, whether
by reclassification of shares, recapitalization of the Corporation (excluding a
recapitalization or reclassification effected by a merger, consolidation or
other transaction to which Section 8 applies) or otherwise, then, in such
event, the Conversion Price shall automatically be adjusted by dividing the
Conversion Price in effect immediately before such event by the Section 9(A)
Fraction and the Liquidation Price and the Preferred Dividend Rate will not be
adjusted. An adjustment to the Conversion Price made pursuant to this
paragraph 9(A)(2) shall be given effect immediately as of the effective date of
such combination.
(B) Subject to the provisions of paragraphs (E) and (F) of this
Section 9, in the event the Corporation shall, at any time or from time to time
while any of the shares of ESOP Preferred Stock are outstanding, issue to
holders of shares of Common Stock as a dividend or distribution, including by
way of a reclassification of shares or a recapitalization of the Corporation,
any right or warrant to purchase shares of Common Stock (but not including as a
right or warrant for this purpose any security convertible into or exchangeable
for shares of Common Stock) for a consideration having a Fair Market Value (as
hereinafter defined) per share less than the Fair Market Value of a share of
Common Stock on the date of issuance of such right or warrant (other than
pursuant to any
<PAGE> 23
23
employee or director incentive, compensation or benefit plan or arrangement of
the Corporation or any subsidiary of the Corporation heretofore or hereafter
adopted), then, in such event, the Board of Directors shall, to the extent
legally permissible, declare a Special Dividend in such a manner that a holder
of ESOP Preferred Stock will become a holder of that number of shares of ESOP
Preferred Stock equal to the product of the number of such shares held prior to
such event times a fraction (the "Section 9(B) Fraction"), the numerator of
which is the number of shares of Common Stock outstanding immediately before
such issuance of rights or warrants plus the maximum number of shares of Common
Stock that could be acquired upon exercise in full of all such rights and
warrants and the denominator of which is the number of shares of Common Stock
outstanding immediately before such issuance of warrants or rights plus the
number of shares of Common Stock that could be purchased at the Fair Market
Value of a share of Common Stock at the time of such issuance for the maximum
aggregate consideration payable upon exercise in full of all such rights and
warrants. A Special Dividend declared pursuant to this Section 9(B) shall be
effective upon such issuance of rights or warrants. Concurrently with the
declaration of the Special Dividend pursuant to this Section 9(B), the
Conversion Price, the Liquidation Price and the Preferred Dividend Rate of all
shares of ESOP Preferred Stock shall be adjusted by dividing the Conversion
Price, the Liquidation Price and the Preferred Dividend Rate, respectively, in
effect immediately before such event by the Section 9(B) Fraction.
(C) (1) Subject to the provisions of paragraphs (E) and (F) of
this Section 9, in the event the Corporation shall, at any time or from time to
time while any of the shares of ESOP Preferred Stock are outstanding, issue,
sell or exchange shares of Common Stock (other than pursuant to (x) any right or
warrant to purchase or acquire shares of Common Stock (including as such a right
or warrant any security convertible into or exchangeable for shares of Common
Stock) or (y) any employee or director incentive, compensation or benefit plan
or arrangement of the Corporation or any subsidiary of the Corporation
heretofore or hereafter adopted) at a purchase price per share less than the
Fair Market Value of a share of Common Stock on the date of such issuance, sale
or exchange, then, in such event, the Board of Directors shall, to the extent
legally permissible, declare a Special Dividend in such a manner that a holder
of ESOP Preferred Stock will become the holder of that number of shares of ESOP
Preferred Stock equal to the product of the number of such shares held prior to
such event times a
<PAGE> 24
24
fraction (the "Section 9(C)(1) Fraction"), the numerator of which is the number
of shares of Common Stock outstanding immediately before such issuance, sale or
exchange plus the number of shares of Common Stock so issued, sold or exchanged
and the denominator of which is the number of shares of Common Stock
outstanding immediately before such issuance, sale or exchange plus the number
of shares of Common Stock that could be purchased at the Fair Market Value of a
share of Common Stock at the time of such issuance, sale or exchange for the
maximum aggregate consideration paid therefor.
(2) Subject to the provisions of paragraphs (E) and (F) of this
Section 9, in the event that the Corporation shall, at any time or from time to
time while any ESOP Preferred Stock is outstanding, issue, sell or exchange any
right or warrant to purchase or acquire shares of Common Stock (including as
such a right or warrant any security convertible into or exchangeable for
shares of Common Stock other than pursuant to (x) any employee or director
incentive, compensation or benefit plan or arrangement of the Corporation or
any subsidiary of the Corporation heretofore or hereafter adopted and (y) any
dividend or distribution on shares of Common Stock contemplated in Section
9(A)(1)) for a consideration having a Fair Market Value, on the date of such
issuance, sale or exchange, less than the Non-Dilutive Amount (as hereinafter
defined), then, in such event, the Board of Directors shall, to the extent
legally permissible, declare a Special Dividend in such a manner that a holder
of ESOP Preferred Stock will become the holder of that number of shares of ESOP
Preferred Stock equal to the product of the number of such shares held prior to
such event times a fraction (the "Section 9(C)(2) Fraction"), the numerator of
which is the number of shares of Common Stock outstanding immediately before
such issuance of rights or warrants plus the maximum number of shares of Common
Stock that could be acquired upon exercise in full of all such rights and
warrants and the denominator of which is the number of shares of Common Stock
outstanding immediately before such issuance of rights or warrants plus the
number of shares of Common Stock that could be purchased at the Fair Market
Value of a share of Common Stock at the time of such issuance for the total of
(x) the maximum aggregate consideration payable at the time of the issuance,
sale or exchange of such right or warrant and (y) the maximum aggregate
consideration payable upon exercise in full of all such rights or warrants.
(3) A Special Dividend declared pursuant to this Section 9(C)
shall be effective upon the effective date of
<PAGE> 25
25
such issuance, sale or exchange. Concurrently with the declaration of the
Special Dividend pursuant to this Section 9(C), the Conversion Price, the
Liquidation Price and the Preferred Dividend Rate of all shares of ESOP
Preferred Stock shall be adjusted by dividing the Conversion Price, the
Liquidation Price and the Preferred Dividend Rate, respectively, in effect
immediately before such event by the Section 9(C)(1) Fraction or Section
9(C)(2) Fraction, as the case may be.
(D) Subject to the provisions of paragraphs (E) and (F) of this
Section 9, in the event the Corporation shall, at any time or from time to time
while any of the shares of ESOP Preferred Stock are outstanding, make an
Extraordinary Distribution (as hereinafter defined) in respect of the Common
Stock, whether by dividend, distribution, reclassification of shares or
recapitalization of the Corporation (including capitalization or
reclassification effected by a merger or consolidation to which Section 8 does
not apply) or effect a Pro Rata Repurchase (as hereinafter defined) of Common
Stock, then, in such event, the Board of Directors shall, to the extent legally
permissible, declare a Special Dividend in such a manner that a holder of ESOP
Preferred Stock will become a holder of that number of shares of ESOP Preferred
Stock equal to the product of the number of such shares held prior to such
event times a fraction (the "Section 9(D) Fraction"), the numerator of which is
the product of (a) the number of shares of Common Stock outstanding immediately
before such Extraordinary Distribution or Pro Rata Repurchase minus, in the
case of Pro Rata Repurchase, the number of shares of Common Stock repurchased
by the Corporation multiplied by (b) the Fair Market Value of a share of Common
Stock on the day before the ex-dividend date with respect to an Extraordinary
Distribution that is paid in cash and on the distribution date with respect to
an Extraordinary Distribution that is paid other than in cash, or on the
applicable expiration date (including all extensions thereof) of any tender
offer that is a Pro Rata Repurchase or on the date of purchase with respect to
any Pro Rata Repurchase that is not a tender offer, as the case may be, and the
denominator of which is (i) the product of (x) the number of shares of Common
Stock outstanding immediately before such Extraordinary Distribution or Pro
Rata Repurchase multiplied by (y) the Fair Market Value of a share of Common
Stock on the day before the ex-dividend date with respect to an Extraordinary
Distribution that is paid in cash and on the distribution date with respect to
an Extraordinary Distribution that is paid other than in cash, or on the
applicable expiration date
<PAGE> 26
26
(including all extensions thereof) of any tender offer that is a Pro Rata
Repurchase, or on the date of purchase with respect to any Pro Rata Repurchase
that is not a tender offer, as the case may be, minus (ii) the Fair Market
Value of the Extraordinary Distribution or the aggregate purchase price of the
Pro Rata Repurchase, as the case may be. The Corporation shall send each
holder of ESOP Preferred Stock (i) notice of its intent to make any
Extraordinary Distribution and (ii) notice of any offer by the Corporation to
make a Pro Rata Repurchase, in each case at the same time as, or as soon as
practicable after, such offer is first communicated to holders of Common Stock
or, in the case of an Extraordinary Distribution, the announcement of a record
date in accordance with the rules of any stock exchange on which the Common
Stock is listed or admitted to trading. Such notice shall indicate the
intended record date and the amount and nature of such dividend or
distribution, or the number of shares subject to such offer for a Pro Rata
Repurchase and the purchase price payable by the Corporation pursuant to such
offer, as well as the Conversion Price and the number of shares of Common Stock
into which a share of ESOP Preferred Stock may be converted at such time.
Concurrently with the Special Dividend paid pursuant to this Section 9(D), the
Conversion Price, the Liquidation Price and the Preferred Dividend Rate of all
shares of ESOP Preferred Stock shall be adjusted by dividing the Conversion
Price, the Liquidation Price and the Preferred Dividend Rate, respectively, in
effect immediately before such Extraordinary Distribution or Pro Rata
Repurchase by the Section 9(D) Fraction.
(E) Notwithstanding any other provision of this Section 9, the
Corporation shall not be required to make (i) any Special Dividend or any
adjustment of the Conversion Price, the Liquidation Price or the Preferred
Dividend Rate unless such Special Dividend or adjustment would require an
increase or decrease of at least one percent (1%) in the number of shares of
ESOP Preferred Stock outstanding, or, (ii) if no additional shares of ESOP
Preferred Stock are issued, any adjustment of the Conversion Price unless such
adjustment would require an increase or decrease of at least one percent (1%)
in the Conversion Price. Any lesser Special Dividend or adjustment shall be
carried forward and shall be made no later than the time of, and together with,
the next subsequent Special Dividend or adjustment which, together with any
Special Dividend or Dividends, adjustment or adjustments so carried forward,
shall amount to an increase or decrease of at least one percent (1%) of the
number of shares of ESOP Preferred Stock outstanding or, if no additional
shares of ESOP Preferred Stock are being issued,
<PAGE> 27
27
an increase or decrease of at least one percent (1%) of the Conversion Price,
whichever the case may be.
(F) The Corporation and the Board of Directors shall each use its
best efforts to take all necessary steps or to take all actions as are
reasonably necessary or appropriate for declaration of any Special Dividend
provided in any of paragraphs (A), (B), (C) and (D) of this Section 9, but
shall not be required to call a special meeting of stockholders in order to
implement the provisions thereof. If for any reason the Board of Directors is
precluded from giving full effect to the Special Dividend provided in any of
such paragraphs, then no such Special Dividend shall be declared, but instead
the Conversion Price shall automatically be adjusted by dividing the Conversion
Price in effect immediately before the relevant event by the Section 9(A),
Section 9(B), Section 9(C) or Section 9(D) Fraction, as applicable, and the
Liquidation Price and the Preferred Dividend Rate will not be adjusted. An
adjustment to the Conversion Price made pursuant to this paragraph (F) shall be
given effect, (i) in the case of a payment of a dividend or distribution under
Section 9(A), upon payment thereof as of the record date for the determination
of holders entitled to receive such dividend or distribution (on a retroactive
basis), and, in the case of a subdivision under Section 9(A), immediately as of
the effective date thereof, (ii) in the case of Section 9(B), upon such
issuance of rights or warrants, (iii) in the case of Section 9(C), upon the
effective date of such issuance, sale or exchange and (iv) in the case of an
Extraordinary Dividend under Section 9(D), as of the record date for the
determination of holders entitled to receive such Extraordinary Dividend (on a
retroactive basis), and, in the case of a Pro Rata Repurchase under Section
9(D), upon the expiration date thereof (if such Pro Rata Repurchase is a tender
offer) or the effective date thereof (if such Pro Rata Repurchase is not a
tender offer). If subsequently the Board of Directors is able to give full
effect to the Special Dividend as provided in paragraph (A), (B), (C) or (D) of
this Section 9, then such Special Dividend will be declared and other
adjustments will be made in accordance with the provisions of such paragraph
and the adjustment in the Conversion Price as provided in this paragraph (F)
will automatically be reversed and nullified prospectively.
(G) If the Corporation shall make any dividend or distribution
on the Common Stock or issue any Common Stock, other capital stock or other
security of the Corporation or any rights or warrants to purchase or acquire
any such
<PAGE> 28
28
security, which transaction does not result in an adjustment to the number of
shares of ESOP Preferred Stock outstanding or the Conversion Price pursuant to
the foregoing provisions of this Section 9, the Board of Directors of the
Corporation may, in its sole discretion, consider whether such action is of
such a nature that some type of equitable adjustment should be made in respect
of such transaction. If in such case the Board of Directors of the Corporation
determines that some type of adjustment should be made, an adjustment shall be
made effective as of such date as determined by the Board of Directors of the
Corporation. The determination of the Board of Directors of the Corporation as
to whether some type of adjustment should be made pursuant to the foregoing
provisions of this Section 9(G), and, if so, as to what adjustment should be
made and when, shall be final and binding on the Corporation and all
stockholders of the Corporation. The Corporation shall be entitled, but not
required, to make such additional adjustments, in addition to those required by
the foregoing provisions of this Section 9, as shall be necessary in order that
any dividend or distribution in shares of capital stock of the Corporation,
subdivision, reclassification or combination of shares of the Corporation or
any reclassification of the Corporation shall not be taxable to holders of the
Common Stock.
(H) For purposes hereof, the following definitions shall apply:
(1) "Extraordinary Distribution" shall mean any dividend or other
distribution to holders of Common Stock (effected while any of the shares of
ESOP Preferred Stock are outstanding) of (i) cash or (ii) any shares of capital
stock of the Corporation (other than shares of Common Stock), other securities
of the Corporation (other than securities of the type referred to in paragraph
(B) of this Section 9), evidences of indebtedness of the Corporation or any
other person or any other property (including shares of any subsidiary of the
Corporation), or any combination of the foregoing, where the aggregate amount
of such cash dividend or other distribution together with the amount of all
cash dividends and other distributions made during the preceding period of
twelve months, when combined with the aggregate amount of all Pro Rata
Repurchases (for this purpose, including only that portion of the aggregate
purchase price of such Pro Rata Repurchase that is in excess of the Fair Market
Value of the Common Stock repurchased as determined on the applicable
expiration date (including all extensions thereof) of any tender offer or
exchange offer that is a Pro Rata Repurchase, or the date of purchase with
respect to any
<PAGE> 29
29
other Pro Rata Repurchase that is not a tender offer or exchange offer) made
during such period, exceeds twelve and one-half percent (12-1/2%) of the
aggregate Fair Market Value of all shares of Common Stock outstanding on the
day before the ex-dividend date with respect to such Extraordinary Distribution
that is paid in cash and on the distribution date with respect to an
Extraordinary Distribution that is paid other than in cash. The Fair Market
Value of an Extraordinary Distribution for purposes of paragraph (D) of this
Section 9 shall be the sum of the Fair Market Value of such Extraordinary
Distribution plus the aggregate amount of any cash dividends or other
distributions that are not Extraordinary Distributions made during such
twelve-month period and not previously included in the calculation of an
adjustment pursuant to paragraph (D) of this Section 9, but shall exclude the
aggregate amount of regular quarterly dividends declared by the Board of
Directors and paid by the Corporation in such twelve-month period.
(2) "Fair Market Value" shall mean, as to shares of Common Stock
or any other class of capital stock or securities of the Corporation or any
other issuer that are publicly traded, the average of the Current Market Prices
(as hereinafter defined) of such shares or securities for each day of the
Adjustment Period (as hereinafter defined). "Current Market Price" of publicly
traded shares of Common Stock or any other class of capital stock or other
security of the Corporation or any other issuer for a day shall mean the last
reported sales price, regular way, or, in case no sale takes place on such day,
the average of the reported closing bid and asked prices, regular way, in
either case as reported on the New York Stock Exchange Composite Tape or, if
such security is not listed or admitted to trading on the New York Stock
Exchange, on the principal national securities exchange on which such security
is listed or admitted to trading or, if not listed or admitted to trading on
any national securities exchange, on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") National Market System or, if
such security is not quoted on such National Market System, the average of the
closing bid and asked prices on such day in the over-the-counter market as
reported by NASDAQ or, if bid and asked prices for such security on such day
shall not have been reported through NASDAQ, the average of the bid and asked
prices for such day as furnished by any New York Stock Exchange member firm
regularly making a market in such security selected for such purpose by the
Board of Directors of the Corporation. "Adjustment Period" shall mean the
period of five consecutive trading days, selected by the Board of Directors of
the
<PAGE> 30
30
Corporation, during the twenty (20) trading days preceding, and including, the
date as of which the Fair Market Value of a security is to be determined. The
"Fair Market Value" of any security that is not publicly traded or of any other
property shall mean the fair value thereof as determined by an independent
investment banking or appraisal firm experienced in the valuation of such
securities or property selected in good faith by the Board of Directors of the
Corporation, or, if no such investment banking or appraisal firm is in the good
faith judgment of the Board of Directors available to make such determination,
as determined in good faith by the Board of Directors of the Corporation.
(3) "Non-Dilutive Amount" in respect of an issuance, sale or
exchange by the Corporation of any right or warrant to purchase or acquire
shares of Common Stock (including any security convertible into or exchangeable
for shares of Common Stock) shall mean the difference between (i) the product
of the Fair Market Value of a share of Common Stock on the day preceding the
first public announcement of such issuance, sale or exchange multiplied by the
maximum number of shares of Common Stock that could be acquired on such date
upon the exercise in full of such rights or warrants (including upon the
conversion or exchange of all such convertible or exchangeable securities),
whether or not exercisable (or convertible or exchangeable) at such date, and
(ii) the aggregate amount payable pursuant to such right or warrant to purchase
or acquire such maximum number of shares of Common Stock; provided, however,
that in no event shall the Non-Dilutive Amount be less than zero. For purposes
of the foregoing sentence, in the case of a security convertible into or
exchangeable for shares of Common Stock, the amount payable pursuant to a right
or warrant to purchase or acquire shares of Common Stock shall be the Fair
Market Value of such security on the date of the issuance, sale or exchange of
such security by the Corporation.
(4) "Pro Rata Repurchase" shall mean any purchase of shares or
Common Stock by the Corporation or any subsidiary thereof, whether for cash,
shares of capital stock of the Corporation, other securities of the Corporation,
evidences of indebtedness of the Corporation or any other person or any other
property (including shares of a subsidiary of the Corporation), or any
combination thereof, effected while any of the shares of ESOP Preferred Stock
are outstanding, pursuant to any tender offer or exchange offer subject to
Section 13(e) of the Exchange Act, or any successor provision of law, or
pursuant to any other offer available to substantially all holders of Common
Stock;
<PAGE> 31
31
provided, however, that no purchase of shares by the Corporation or any
subsidiary thereof made in open market transactions shall be deemed a Pro Rata
Repurchase. For purposes of this Section 9(H), shares shall be deemed to have
been purchased by the Corporation or any subsidiary thereof "in open market
transactions" if they have been purchased substantially in accordance with the
requirements of Rule 10b-18 as in effect under the Exchange Act on the date
shares of ESOP Preferred Stock are initially issued by the Corporation or on
such other terms and conditions as the Board of Directors of the Corporation
shall have determined are reasonably designed to prevent such purchases from
having a material effect on the trading market for the Common Stock.
(I) Whenever an adjustment increasing the number of shares of
ESOP Preferred Stock outstanding is required pursuant hereto, the Board of
Directors shall take action as is necessary so that a sufficient number of
shares of ESOP Preferred Stock are designated with respect to such increase
resulting from such adjustment. Whenever an adjustment to the Conversion
Price, the Liquidation Price or the Preferred Dividend Rate of the ESOP
Preferred Stock is required pursuant hereto, the Corporation shall forthwith
place on file with the transfer agent for the Common Stock and the ESOP
Preferred Stock, if there be one, and with the Treasurer of the Corporation, a
statement signed by the Treasurer or any Assistant Treasurer of the Corporation
stating the adjusted Conversion Price, Liquidation Price and Preferred Dividend
Rate determined as provided herein. Such statement shall set forth in
reasonable detail such facts as shall be necessary to show the reason and the
manner of computing such adjustments, including any determination of Fair
Market Value involved in such computation. Promptly after each adjustment to
the number of shares of ESOP Preferred Stock outstanding, the Conversion Price,
the Liquidation Price or the Preferred Dividend Rate, the Corporation shall
mail a notice thereof and of the then prevailing number of shares of ESOP
Preferred Stock outstanding, the Conversion Price, the Liquidation Price and
the Preferred Dividend Rate to each holder of shares of ESOP Preferred Stock.
10. Miscellaneous.
(A) All notices referred to herein shall be in writing, and
all notices hereunder shall be deemed to have been given upon the earlier of
receipt thereof or three (3) business days after the mailing thereof if sent by
registered mail (unless first-class mail shall be specifically permitted for
such notice under the terms hereof) with postage prepaid,
<PAGE> 32
32
addressed: (i) if to the Corporation, to its office at 1251 Avenue of the
Americas, New York, New York 10020 (Attention: Secretary) or to the transfer
agent for the ESOP Preferred Stock, or other agent of the Corporation
designated as permitted hereof or (ii) if to any holder of the ESOP Preferred
Stock or Common Stock, as the case may be, to such holder at the address of
such holder as listed in the stock record books of the Corporation (which may
include the records of any transfer agent for Common Stock) or (iii) to such
other address as the Corporation or any such holder, as the case may be, shall
have designated by notice similarly given.
(B) The term "Common Stock" as used herein means the Corporation's
Common Stock, par value $1.00 per share, as the same exists at the date of
filing of this Certificate of Designation pursuant to Section 151 of the General
Corporation Law of the State of Delaware, or any other class of stock resulting
from successive changes or reclassifications of such Common Stock consisting
solely of changes in par value, or from par value to without par value, or from
without par value to par value. In the event that, at any time as a result of
an adjustment made pursuant to Section 9 hereof, the holder of any shares of the
ESOP Preferred Stock upon thereafter surrendering such shares for conversion
shall become entitled to receive any shares or other securities of the
Corporation other than shares of Common Stock, the anti-dilution provisions
contained in Section 9 hereof shall apply in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to Common Stock, and
the provisions of Sections 1 through 8 and 10 hereof with respect to the Common
Stock shall apply on like or similar terms to any such other shares or
securities.
(C) The Corporation shall pay any and all stock transfer and
documentary stamp taxes that may be payable in respect of any issuance or
delivery of shares of ESOP Preferred Stock or shares of Common Stock or other
securities issued on account of ESOP Preferred Stock pursuant thereto or
certificates representing such shares or securities. The Corporation shall
not, however, be required to pay any such tax which may be payable in respect
of any transfer involved in the issuance or delivery of shares of ESOP
Preferred Stock or Common Stock or other securities in a name other than that
in which the shares of ESOP Preferred Stock with respect to which such shares
or other securities are issued or delivered were registered, or in respect of
any payment to any person with respect to any shares or securities other than a
payment
<PAGE> 33
33
to the registered holder thereof, and shall not be required to make any such
issuance, delivery or payment unless and until the person otherwise entitled to
such issuance, delivery or payment has paid to the Corporation the amount of
any such tax or has established, to the satisfaction of the Corporation, that
such tax has been paid or is not payable.
(D) In the event that a holder of shares of ESOP Preferred Stock
shall not by written notice designate the name in which shares of Common Stock
to be issued upon conversion or exchange of such shares should be registered or
to whom payment upon redemption of shares of ESOP Preferred Stock should be
made or the address to which the certificate or certificates representing such
shares, or such payment, should be sent, the Corporation shall be entitled to
register such shares, and make such payment, in the name of the holder of such
ESOP Preferred Stock as shown on the records of the Corporation and to send the
certificate or certificates or other documentation representing such shares, or
such payment, to the address of such holder shown on the records of the
Corporation.
(E) The Corporation may appoint, and from time to time discharge
and change, a transfer agent for the ESOP Preferred Stock. Upon any such
appointment or discharge of a transfer agent, the Corporation shall send notice
thereof by first-class mail, postage prepaid, to each holder of record of ESOP
Preferred Stock.
<PAGE> 34
34
Subpart B: 9.36% Cumulative Preferred Stock*
1. Designation and Amount; Fractional Shares. The designation
for such series of the Preferred Stock authorized by this resolution shall be
the 9.36% Cumulative Preferred Stock, without par value but with a stated value
of $25.00 per share (the "Cumulative Preferred Stock"). The maximum number of
shares of Cumulative Preferred Stock shall be 5,500,000. The Cumulative
Preferred Stock is issuable in whole shares only.
2. Dividends. Holders of shares of Cumulative Preferred Stock
will be entitled to receive, when and as declared by the Board out of assets of
the Corporation legally available for payment, cash dividends payable quarterly
at the rate of 9.36% per annum. Dividends on the Cumulative Preferred Stock,
calculated as a percentage of the stated value, will be payable quarterly on
February 28, May 30, August 30 and November 30, commencing August 30, 1991
(each a "dividend payment date"). Dividends on shares of the Cumulative
Preferred Stock will be cumulative from the date of initial issuance of such
shares of Cumulative Preferred Stock. Dividends will be payable, in arrears,
to holders of record as they appear on the stock books of the Corporation on
such record dates, not more than 60 days nor less than 10 days preceding the
payment dates thereof, as shall be fixed by the Board. The amount of dividends
payable for the initial dividend period or any period shorter than a full
dividend period shall be calculated on the basis of a 360-day year of twelve
30-day months. No dividends may be declared or paid or set apart for payment
on any Parity Preferred Stock (as defined in paragraph 9(b) below) with regard
to the payment of dividends unless there shall also be or have been declared
and paid or set apart for payment on the Cumulative Preferred Stock, like
dividends for all dividend payment periods of the Cumulative Preferred Stock
ending on or before the dividend payment date of such Parity Preferred Stock,
ratably in proportion to the respective amounts of dividends (x) accumulated
and unpaid or payable on such Parity Preferred Stock, on the one hand, and (y)
accumulated and unpaid through the dividend payment period or periods of the
Cumulative Preferred Stock next preceding such dividend payment date, on the
other hand.
- --------------------
* Terms defined in this Subpart B are so defined for purposes of this
Subpart alone.
<PAGE> 35
35
Except as set forth in the preceding sentence, unless full
cumulative dividends on the Cumulative Preferred Stock have been paid, no
dividends (other than in Common Stock of the Corporation) may be paid or
declared and set aside for payment or other distribution made upon the Common
Stock or on any other stock of the Corporation ranking junior to or on a parity
with the Cumulative Preferred Stock as to dividends, nor may any Common Stock
or any other stock of the Corporation ranking junior to or on a parity with the
Cumulative Preferred Stock as to dividends be redeemed, purchased or otherwise
acquired for any consideration (or any payment be made to or available for a
sinking fund for the redemption of any shares of such stock; provided, however,
that any moneys theretofore deposited in any sinking fund with respect to any
preferred stock of the Corporation in compliance with the provisions of such
sinking fund may thereafter be applied to the purchase or redemption of such
preferred stock in accordance with the terms of such sinking fund regardless of
whether at the time of such application full cumulative dividends upon shares
of the Cumulative Preferred Stock outstanding to the last dividend payment date
shall have been paid or declared and set apart for payment) by the Corporation
(except by conversion into or exchange for stock of the Corporation ranking
junior to the Cumulative Preferred Stock as to dividends).
3. Liquidation Preference. The shares of Cumulative Preferred
Stock shall rank, as to liquidation, dissolution or winding up of the
Corporation, prior to the shares of Common Stock and any other class of stock
of the Corporation ranking junior to the Cumulative Preferred Stock as to
rights upon liquidation, dissolution or winding up of the Corporation, so that
in the event of any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, the holders of the Cumulative Preferred Stock
shall be entitled to receive out of the assets of the Corporation available for
distribution to its stockholders, whether from capital, surplus or earnings,
before any distribution is made to holders of shares of Common Stock or any
other such junior stock, an amount equal to $25.00 per share (the "Liquidation
Preference" of a share of Cumulative Preferred Stock) plus an amount equal to
all dividends (whether or not earned or declared) accrued and accumulated and
unpaid on the shares of Cumulative Preferred Stock to the date of final
distribution. The holders of the Cumulative Preferred Stock will not be
entitled to receive the Liquidation Preference until the liquidation preference
of any other class of stock of the Corporation ranking senior to the Cumulative
Preferred Stock as to rights upon
<PAGE> 36
36
liquidation, dissolution or winding up shall have been paid (or a sum set aside
therefor sufficient to provide for payment) in full. After payment of the full
amount of the Liquidation Preference and such dividends, the holders of shares
of Cumulative Preferred Stock will not be entitled to any further participation
in any distribution of assets by the Corporation. If, upon any liquidation,
dissolution or winding up of the Corporation, the assets of the Corporation, or
proceeds thereof, distributable among the holders of shares of Parity Preferred
Stock shall be insufficient to pay in full the preferential amount aforesaid,
then such assets, or the proceeds thereof, shall be distributable among such
holders ratably in accordance with the respective amounts which would be
payable on such shares if all amounts payable thereon were paid in full. For
the purposes hereof, neither a consolidation or merger of the Corporation with
or into any other corporation, nor a merger of any other corporation with or
into the Corporation, nor a sale or transfer of all or any part of the
Corporation's assets for cash or securities shall be considered a liquidation,
dissolution or winding up of the Corporation.
4. Conversion. The Cumulative Preferred Stock is not
convertible into shares of any other class or series of stock of the
Corporation.
5. Voting Rights. The holders of shares of Cumulative
Preferred Stock shall have no voting rights whatsoever, except for any voting
rights to which they may be entitled under the laws of the State of Delaware,
and except as follows:
(a) Whenever, at any time or times, dividends payable on the
shares of Cumulative Preferred Stock or on any Parity Preferred Stock
with respect to payment of dividends shall be in arrears for an
aggregate number of days equal to six calendar quarters or more,
whether or not consecutive, the holders of the outstanding shares of
Cumulative Preferred Stock shall have the right, with holders of
shares of any one or more other class or series of stock upon which
like voting rights have been conferred and are exercisable (voting
together as a class), to elect two of the authorized number of members
of the Board of Directors of the Corporation at the Corporation's next
annual meeting of stockholders and at each subsequent annual meeting
of stockholders until such arrearages have been paid or set apart for
payment, at which time such right shall terminate, except as herein or
by law expressly provided, subject to revesting in the
<PAGE> 37
37
event of each and every subsequent default of the character above
mentioned. Upon any termination of the right of the holders of shares
of Cumulative Preferred Stock as a class to vote for directors as
herein provided, the term of office of all directors then in office
elected by the holders of shares of Cumulative Preferred Stock shall
terminate immediately. Any director who shall have been so elected
pursuant to this paragraph may be removed at any time, either with or
without cause. Any vacancy thereby created may be filled, only by the
affirmative vote of the holders of shares of Cumulative Preferred
Stock voting separately as a class (together with the holders of
shares of any other class or series of stock upon which like voting
rights have been conferred and are exercisable). If the office of any
director elected by the holders of shares of Cumulative Preferred
Stock voting as a class becomes vacant for any reason other than
removal from office as aforesaid, the remaining director elected
pursuant to this paragraph may choose a successor who shall hold
office for the unexpired term in respect of which such vacancy
occurred. At elections for such directors, each holder of shares of
Cumulative Preferred Stock shall be entitled to one vote for each
share held (the holders of shares of any other class or series of
preferred stock having like voting rights being entitled to such
number of votes, if any, for each share of such stock held as may be
granted to them).
(b) So long as any shares of Cumulative Preferred Stock
remain outstanding, the consent of the holders of at least two-thirds
of the shares of Cumulative Preferred Stock outstanding at the time
and all other class or series of stock upon which like voting rights
have been conferred and are exercisable (voting together as a class)
given in person or by proxy, either in writing or at any meeting
called for the purpose, shall be necessary to permit, effect or
validate any one or more of the following:
(i) the issuance or increase of the authorized amount of
any class or series of shares ranking prior (as that term is
defined in paragraph 9(a) hereof) to the shares of the
Cumulative Preferred Stock; or
(ii) the amendment, alteration or repeal, whether by
merger, consolidation or otherwise, of any of the provisions
of the Certificate of
<PAGE> 38
38
Incorporation (including this resolution or any provision
hereof) that would materially and adversely affect any power,
preference, or special right of the shares of Cumulative
Preferred Stock or of the holders thereof;
provided, however, that any increase in the amount of authorized
Common Stock or authorized Preferred Stock or any increase or decrease
in the number of shares of any series of Preferred Stock or the
creation and issuance of other series of Common Stock or Preferred
Stock, in each case ranking on a parity with or junior to the shares
of Cumulative Preferred Stock with respect to the payment of dividends
and the distribution of assets upon liquidation, dissolution or
winding up, shall not be deemed to materially and adversely affect
such powers, preferences or special rights.
(c) The foregoing voting provisions shall not apply if, at or
prior to the time when the act with respect to which such vote would
otherwise be required shall be effected, all outstanding shares of
Cumulative Preferred Stock shall have been redeemed or called for
redemption and sufficient funds shall have been deposited in trust to
effect such redemption.
6. Redemption. The shares of the Cumulative Preferred Stock
may be redeemed at the option of the Corporation, as a whole, or from time to
time in part, at any time, upon not less than 30 days' prior notice mailed to
the holders of the shares to be redeemed at their addresses as shown on the
stock books of the Corporation; provided, however, that shares of the
Cumulative Preferred Stock shall not be redeemable prior to May 30, 1996.
Subject to the foregoing, on or after such date, shares of the Cumulative
Preferred Stock are redeemable at $25.00 per share together with an amount
equal to all dividends (whether or not earned or declared) accrued and
accumulated and unpaid to, but excluding, the date fixed for redemption.
If full cumulative dividends on the Cumulative Preferred Stock
have not been paid, the Cumulative Preferred Stock may not be redeemed in part
and the Corporation may not purchase or acquire any shares of the Cumulative
Preferred Stock otherwise than pursuant to a purchase or exchange offer made on
the same terms to all holders of the Cumulative Preferred Stock. If fewer than
all the outstanding shares of Cumulative Preferred Stock are to be redeemed,
the Corporation will select those to be redeemed by lot or a substantially
equivalent method.
<PAGE> 39
39
If a notice of redemption has been given pursuant to this
paragraph 6 and if, on or before the date fixed for redemption, the funds
necessary for such redemption shall have been set aside by the Corporation,
separate and apart from its other funds, in trust for the pro rata benefit of
the holders of the shares of Cumulative Preferred Stock so called for
redemption, then, notwithstanding that any certificates for such shares have
not been surrendered for cancellation, on the redemption date dividends shall
cease to accrue on the shares to be redeemed, and at the close of business on
the redemption date the holders of such shares shall cease to be stockholders
with respect to such shares and shall have no interest in or claims against the
Corporation by virtue thereof and shall have no voting or other rights with
respect to such shares, except the right to receive the moneys payable upon
surrender (and endorsement, if required by the Corporation) of their
certificates, and the shares evidenced thereby shall no longer be outstanding.
Subject to applicable escheat laws, any moneys so set aside by the Corporation
and unclaimed at the end of two years from the redemption date shall revert to
the general funds of the Corporation, after which reversion the holders of such
shares so called for redemption shall look only to the general funds of the
Corporation for the payment of the amounts payable upon such redemption. Any
interest accrued on funds so deposited shall be paid to the Corporation from
time to time.
7. Authorization and Issuance of Other Securities. No
consent of the holders of the Cumulative Preferred Stock shall be required for
(a) the creation of any indebtedness of any kind of the Corporation, (b) the
creation, or increase or decrease in the amount, of any class or series of
stock of the Corporation not ranking prior as to dividends or upon liquidation,
dissolution or winding up to the Cumulative Preferred Stock or (c) any increase
or decrease in the amount of authorized Common Stock or any increase, decrease
or change in the par value thereof or in any other terms thereof.
8. Amendment of Resolution. Subject to the provisions of
paragraph 5, the Board reserves the right by subsequent amendment of this
resolution from time to time to increase or decrease the number of shares which
constitute the Cumulative Preferred Stock (but not below the number of shares
thereof then outstanding) and in other respects to amend this resolution within
the limitations provided by law, this resolution and the Certificate of
Incorporation.
9. Rank. For the purposes of this resolution, any stock of
any class or classes of the Corporation shall be deemed to rank:
<PAGE> 40
40
(a) prior to shares of the Cumulative Preferred Stock, either
as to dividends or upon liquidation, dissolution or winding up, or
both, if the holders of stock of such class or classes shall be
entitled by the terms thereof to the receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding up, as
the case may be, in preference or priority to the holders of shares of
the Cumulative Preferred Stock;
(b) on a parity with shares of the Cumulative Preferred
Stock, either as to dividends or upon liquidation, dissolution or
winding up, or both, whether or not the dividend rates, dividend
payment dates, or redemption or liquidation prices per share thereof
be different from those of the Cumulative Preferred Stock, if the
holders of stock of such class or classes shall be entitled by the
terms thereof to the receipt of dividends or of amounts distributed
upon liquidation, dissolution or winding up, as the case may be, in
proportion to their respective dividend rates or liquidation prices,
without preference or priority of one over the other as between the
holders of such stock and the holders of shares of Cumulative
Preferred Stock (the term "Parity Preferred Stock" being used to refer
to any stock on a parity with the shares of Cumulative Preferred
Stock, either as to dividends or upon liquidation, dissolution or
winding up, or both, as the context may require); and
(c) junior to shares of the Cumulative Preferred Stock,
either as to dividends or upon liquidation, dissolution or winding up,
or both, if such class shall be Common Stock or if the holders of the
Cumulative Preferred Stock shall be entitled to the receipt of
dividends or of amounts distributable upon liquidation, dissolution or
winding up, as the case may be, in preference or priority to the
holders of stock of such class or classes.
The Cumulative Preferred Stock shall rank prior, as to
dividends and upon liquidation, dissolution or winding up, to the Common Stock
and on a parity with the Corporation's ESOP Convertible Preferred Stock, with a
liquidation value of $35.875 per share, the Corporation's 8.88% Cumulative
Preferred Stock, with a liquidation value of $200.00 per share, and the
Corporation's 8-3/4% Cumulative Preferred Stock, with a liquidation value of
$200.00 per share.
<PAGE> 41
41
Subpart C: 8.88% Cumulative Preferred Stock*
1. Designation and Amount; Fractional Shares. The
designation for such series of the Preferred Stock authorized by this
resolution shall be the 8.88% Cumulative Preferred Stock, without par value,
with a stated value of $200.00 per share (the "Cumulative Preferred Stock").
The stated value per share of Cumulative Preferred Stock shall not for any
purpose be considered to be a determination by the Board or the Committee with
respect to the capital and surplus of the Corporation. The maximum number of
shares of Cumulative Preferred Stock shall be 975,000. The Cumulative
Preferred Stock is issuable in whole shares only.
2. Dividends. Holders of shares of Cumulative Preferred
Stock will be entitled to receive, when and as declared by the Board or the
Committee out of assets of the Corporation legally available for payment, cash
dividends payable quarterly at the rate of 8.88% per annum. Dividends on the
Cumulative Preferred Stock, calculated as a percentage of the stated value,
will be payable quarterly on February 28, May 30, August 30 and November 30,
commencing February 28, 1992 (each a "dividend payment date"). Dividends on
shares of the Cumulative Preferred Stock will be cumulative from the date of
initial issuance of such shares of Cumulative Preferred Stock. Dividends will
be payable, in arrears, to holders of record as they appear on the stock books
of the Corporation on such record dates, not more than 60 days nor less than 10
days preceding the payment dates thereof, as shall be fixed by the Board or the
Committee. The amount of dividends payable for the initial dividend period or
any period shorter than a full dividend period shall be calculated on the basis
of a 360-day year of twelve 30-day months. No dividends may be declared or
paid or set apart for payment on any Parity Preferred Stock (as defined in
paragraph 9(b) below) with regard to the payment of dividends unless there
shall also be or have been declared and paid or set apart for payment on the
Cumulative Preferred Stock, like dividends for all dividend payment periods of
the Cumulative Preferred Stock ending on or before the dividend payment date of
such Parity Preferred Stock, ratably in proportion to the respective amounts of
dividends (x) accumulated and unpaid or payable on such Parity Preferred Stock,
on the one hand, and (y) accumulated and unpaid
- ---------------------
* Terms defined in this Subpart C are so defined for purposes of this
Subpart alone.
<PAGE> 42
42
through the dividend payment period or periods of the Cumulative Preferred
Stock next preceding such dividend payment date, on the other hand.
Except as set forth in the preceding sentence, unless full
cumulative dividends on the Cumulative Preferred Stock have been paid, no
dividends (other than in Common Stock of the Corporation) may be paid or
declared and set aside for payment or other distribution made upon the Common
Stock or on any other stock of the Corporation ranking junior to or on a parity
with the Cumulative Preferred Stock as to dividends, nor may any Common Stock
or any other stock of the Corporation ranking junior to or on a parity with the
Cumulative Preferred Stock as to dividends be redeemed, purchased or otherwise
acquired by the Corporation for any consideration or any payment by the
Corporation be made to or available for a sinking fund for the redemption of
any shares of such stock; provided, however, that any moneys theretofore
deposited in any sinking fund with respect to any preferred stock of the
Corporation in compliance with the provisions of such sinking fund may
thereafter be applied to the purchase or redemption of such preferred stock in
accordance with the terms of such sinking fund regardless of whether at the
time of such application full cumulative dividends upon shares of the
Cumulative Preferred Stock outstanding to the last dividend payment date shall
have been paid or declared and set apart for payment; and provided further that
any such junior or parity Preferred Stock or Common Stock may be converted into
or exchanged for stock of the Corporation ranking junior to the Cumulative
Preferred Stock as to dividends.
3. Liquidation Preference. The shares of Cumulative
Preferred Stock shall rank, as to liquidation, dissolution or winding up of the
Corporation, prior to the shares of Common Stock and any other class of stock
of the Corporation ranking junior to the Cumulative Preferred Stock as to
rights upon liquidation, dissolution or winding up of the Corporation, so that
in the event of any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, the holders of the Cumulative Preferred Stock
shall be entitled to receive out of the assets of the Corporation available for
distribution to its stockholders, whether from capital, surplus or earnings,
before any distribution is made to holders of shares of Common Stock or any
other such junior stock, an amount equal to $200.00 per share (the "Liquidation
Preference" of a share of Cumulative Preferred Stock) plus an amount equal to
all dividends (whether or not earned or declared) accrued and
<PAGE> 43
43
accumulated and unpaid on the shares of Cumulative Preferred Stock to the date
of final distribution. The holders of the Cumulative Preferred Stock will not
be entitled to receive the Liquidation Preference until the liquidation
preference of any other class of stock of the Corporation ranking senior to the
Cumulative Preferred Stock as to rights upon liquidation, dissolution or
winding up shall have been paid (or a sum set aside therefor sufficient to
provide for payment) in full. After payment of the full amount of the
Liquidation Preference and an amount equal to such dividends, the holders of
shares of Cumulative Preferred Stock will not be entitled to any further
participation in any distribution of assets by the Corporation. If, upon any
liquidation, dissolution or winding up of the Corporation, the assets of the
Corporation, or proceeds thereof, distributable among the holders of shares of
Parity Preferred Stock shall be insufficient to pay in full the preferential
amount aforesaid, then such assets, or the proceeds thereof, shall be
distributable among such holders ratably in accordance with the respective
amounts which would be payable on such shares if all amounts payable thereon
were paid in full. For the purposes hereof, neither a consolidation or merger
of the Corporation with or into any other corporation, nor a merger of any
other corporation with or into the Corporation, nor a sale or transfer of all
or any part of the Corporation's assets for cash or securities shall be
considered a liquidation, dissolution or winding up of the Corporation.
4. Conversion. The Cumulative Preferred Stock is not
convertible into shares of any other class or series of stock of the
Corporation.
5. Voting Rights. The holders of shares of Cumulative
Preferred Stock shall have no voting rights whatsoever, except for any voting
rights to which they may be entitled under the laws of the State of Delaware,
and except as follows:
(a) Whenever, at any time or times, dividends payable on the
shares of Cumulative Preferred Stock or on any Parity Preferred Stock
with respect to payment of dividends shall be in arrears for an
aggregate number of days equal to six calendar quarters or more,
whether or not consecutive, the holders of the outstanding shares of
Cumulative Preferred Stock shall have the right, with holders of
shares of any one or more other class or series of stock upon which
like voting rights have been conferred and are exercisable (voting
together as a class), to elect two of the authorized number of members
<PAGE> 44
44
of the Board at the Corporation's next annual meeting of stockholders
and at each subsequent annual meeting of stockholders until such
arrearages have been paid or set apart for payment, at which time such
right shall terminate, except as herein or by law expressly provided,
subject to revesting in the event of each and every subsequent default
of the character above mentioned. Upon any termination of the right
of the holders of shares of Cumulative Preferred Stock as a class to
vote for directors as herein provided, the term of office of all
directors then in office elected by the holders of shares of
Cumulative Preferred Stock shall terminate immediately. Any director
who shall have been so elected pursuant to this paragraph may be
removed at any time, either with or without cause. Any vacancy
thereby created may be filled only by the affirmative vote of the
holders of shares of Cumulative Preferred Stock voting separately as a
class (together with the holders of shares of any other class or
series of stock upon which like voting rights have been conferred and
are exercisable). If the office of any director elected by the
holders of shares of Cumulative Preferred Stock voting as a class
becomes vacant for any reason other than removal from office as
aforesaid, the remaining director elected pursuant to this paragraph
may choose a successor who shall hold office for the unexpired term in
respect of which such vacancy occurred. At elections for such
directors, each holder of shares of Cumulative Preferred Stock shall
be entitled to one vote for each share held (the holders of shares of
any other class or series of preferred stock having like voting rights
being entitled to such number of votes, if any, for each share of such
stock held as may be granted to them).
(b) So long as any shares of Cumulative Preferred Stock
remain outstanding, the consent of the holders of at least two-thirds
of the shares of Cumulative Preferred Stock outstanding at the time
and all other classes or series of stock upon which like voting rights
have been conferred and are exercisable (voting together as a class)
given in person or by proxy, either in writing or at any meeting
called for the purpose, shall be necessary to permit, effect or
validate any one or more of the following:
(i) the issuance or increase of the authorized amount of
any class or series of shares ranking prior (as that term is
defined in paragraph 9(a) hereof) to the shares of the
Cumulative Preferred Stock; or
<PAGE> 45
45
(ii) the amendment, alteration or repeal, whether by
merger, consolidation or otherwise, of any of the provisions
of the Certificate of Incorporation (including this resolution
or any provision hereof) that would materially and adversely
affect any power, preference, or special right of the shares
of Cumulative Preferred Stock or of the holders thereof;
provided, however, that any increase in the amount of
authorized Common Stock or authorized Preferred Stock or any
increase or decrease in the number of shares of any series of
Preferred Stock or the creation and issuance of other series
of Common Stock or Preferred Stock, in each case ranking on a
parity with or junior to the shares of Cumulative Preferred
Stock with respect to the payment of dividends and the
distribution of assets upon liquidation, dissolution or
winding up, shall not be deemed to materially and adversely
affect such powers, preferences or special rights.
(c) The foregoing voting provisions shall not apply if, at or
prior to the time when the act with respect to which such vote would
otherwise be required shall be effected, all outstanding shares of
Cumulative Preferred Stock shall have been redeemed or called for
redemption and sufficient funds shall have been deposited in trust to
effect such redemption.
6. Redemption. The shares of the Cumulative Preferred Stock
may be redeemed at the option of the Corporation, as a whole, or from time to
time in part, at any time, upon not less than 30 days' prior notice mailed to
the holders of the shares to be redeemed at their addresses as shown on the
stock books of the Corporation; provided, however, that shares of the
Cumulative Preferred Stock shall not be redeemable prior to November 30, 1996.
Subject to the foregoing, on or after such date, shares of the Cumulative
Preferred Stock are redeemable at $200.00 per share together with an amount
equal to all dividends (whether or not earned or declared) accrued and
accumulated and unpaid to, but excluding, the date fixed for redemption.
If full cumulative dividends on the Cumulative Preferred Stock
have not been paid, the Cumulative Preferred Stock may not be redeemed in part
and the Corporation may not purchase or acquire any shares of the Cumulative
Preferred Stock otherwise than pursuant to a purchase or exchange offer made on
the same terms to all holders of the Cumulative Preferred Stock.
<PAGE> 46
46
If fewer than all the outstanding shares of Cumulative
Preferred Stock are to be redeemed, the Corporation will select those to be
redeemed by lot or a substantially equivalent method.
If a notice of redemption has been given pursuant to this
paragraph 6 and if, on or before the date fixed for redemption, the funds
necessary for such redemption shall have been set aside by the Corporation,
separate and apart from its other funds, in trust for the pro rata benefit of
the holders of the shares of Cumulative Preferred Stock so called for
redemption, then, notwithstanding that any certificates for such shares have
not been surrendered for cancellation, on the redemption date dividends shall
cease to accrue on the shares to be redeemed, and at the close of business on
the redemption date the holders of such shares shall cease to be stockholders
with respect to such shares and shall have no interest in or claims against the
Corporation by virtue thereof and shall have no voting or other rights with
respect to such shares, except the right to receive the moneys payable upon
surrender (and endorsement, if required by the Corporation) of their
certificates, and the shares evidenced thereby shall no longer be outstanding.
Subject to applicable escheat laws, any moneys so set aside by the Corporation
and unclaimed at the end of two years from the redemption date shall revert to
the general funds of the Corporation, after which reversion the holders of such
shares so called for redemption shall look only to the general funds of the
Corporation for the payment of the amounts payable upon such redemption. Any
interest accrued on funds so deposited shall be paid to the Corporation from
time to time.
All shares of Cumulative Preferred Stock redeemed, purchased
or otherwise acquired by the Corporation shall be retired and cancelled and
shall be restored to the status of authorized but unissued shares of Preferred
Stock, without designation as to series, and may thereafter be issued.
7. Authorization and Issuance of Other Securities. No
consent of the holders of the Cumulative Preferred Stock shall be required for
(a) the creation of any indebtedness of any kind of the Corporation, (b) the
creation, or increase or decrease in the amount, of any class or series of
stock of the Corporation not ranking prior as to dividends or upon liquidation,
dissolution or winding up to the Cumulative Preferred Stock or (c) any increase
or decrease in the amount of authorized Common Stock or any increase, decrease
or change in the par value thereof or in any other terms thereof.
<PAGE> 47
47
8. Amendment of Resolution. The Board and the Committee each
reserves the right by subsequent amendment of this resolution from time to time
to increase or decrease the number of shares that constitute the Cumulative
Preferred Stock (but not below the number of shares thereof then outstanding)
and in other respects to amend this resolution within the limitations provided
by law, this resolution and the Certificate of Incorporation.
9. Rank. For the purposes of this resolution, any stock of
any class or classes of the Corporation shall be deemed to rank:
(a) prior to shares of the Cumulative Preferred Stock, either
as to dividends or upon liquidation, dissolution or winding up, or
both, if the holders of stock of such class or classes shall be
entitled by the terms thereof to the receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding up, as
the case may be, in preference or priority to the holders of shares of
the Cumulative Preferred Stock;
(b) on a parity with shares of the Cumulative Preferred
Stock, either as to dividends or upon liquidation, dissolution or
winding up, or both, whether or not the dividend rates, dividend
payment dates, or redemption or liquidation prices per share thereof
be different from those of the Cumulative Preferred Stock, if the
holders of stock of such class or classes shall be entitled by the
terms thereof to the receipt of dividends or of amounts distributed
upon liquidation, dissolution or winding up, as the case may be, in
proportion to their respective dividend rates or liquidation prices,
without preference or priority of one over the other as between the
holders of such stock and the holders of shares of Cumulative
Preferred Stock (the term "Parity Preferred Stock" being used to refer
to any stock on a parity with the shares of Cumulative Preferred
Stock, either as to dividends or upon liquidation, dissolution or
winding up, or both, as the context may require); and
(c) junior to shares of the Cumulative Preferred Stock,
either as to dividends or upon liquidation, dissolution or winding up,
or both, if such class shall be Common Stock or if the holders of the
Cumulative Preferred Stock shall be entitled to the receipt of
dividends or of amounts distributable upon liquidation, dissolution or
winding up, as the case may be, in preference or priority to the
holders of stock of such class or classes.
<PAGE> 48
48
The Cumulative Preferred Stock shall rank prior, as to
dividends and upon liquidation, dissolution or winding up, to the Common Stock
and on a parity with the Corporation's ESOP Convertible Preferred Stock, with a
liquidation value of $35.875 per share, the Corporation's 9.36% Cumulative
Preferred Stock, with a liquidation value of $25.00 per share, and the
Corporation's 8-3/4% Cumulative Preferred Stock, with a liquidation value of
$200.00 per share.
<PAGE> 49
49
Subpart D: 8-3/4% Cumulative Preferred Stock*
1. Designation and Amount; Fractional Shares. The
designation for such series of the Preferred Stock authorized by this
resolution shall be the 8-3/4% Cumulative Preferred Stock, without par value,
with a stated value of $200.00 per share (the "Cumulative Preferred Stock").
The stated value per share of Cumulative Preferred Stock shall not for any
purpose be considered to be a determination by the Board or the Committee with
respect to the capital and surplus of the Corporation. The number of shares of
Cumulative Preferred Stock shall be 750,000. The Cumulative Preferred Stock is
issuable in whole shares only.
2. Dividends. Holders of shares of Cumulative Preferred
Stock will be entitled to receive, when and as declared by the Board or the
Committee out of assets of the Corporation legally available for payment, cash
dividends payable quarterly at the rate of 8-3/4% per annum. Dividends on the
Cumulative Preferred Stock, calculated as a percentage of the stated value,
will be payable quarterly on February 28, May 30, August 30 and November 30,
commencing May 30, 1992 (each a "dividend payment date"). Dividends on shares
of the Cumulative Preferred Stock will be cumulative from the date of initial
issuance of such shares of Cumulative Preferred Stock. Dividends will be
payable, in arrears, to holders of record as they appear on the stock books of
the Corporation on such record dates, not more than 60 days nor less than 10
days preceding the payment dates thereof, as shall be fixed by the Board or the
Committee. The amount of dividends payable for the initial dividend period or
any period shorter than a full dividend period shall be calculated on the basis
of a 360-day year of twelve 30-day months. No dividends may be declared or
paid or set apart for payment on any Parity Preferred Stock (as defined in
paragraph 9(b) below) with regard to the payment of dividends unless there
shall also be or have been declared and paid or set apart for payment on the
Cumulative Preferred Stock, like dividends for all dividend payment periods of
the Cumulative Preferred Stock ending on or before the dividend payment date of
such Parity Preferred Stock, ratably in proportion to the respective amounts of
dividends (x) accumulated and unpaid or payable on such Parity Preferred Stock,
on the one hand, and (y) accumulated and unpaid through the dividend payment
period or periods of the
- --------------------
* Terms defined in this Subpart D are so defined for purposes of this
Subpart alone.
<PAGE> 50
50
Cumulative Preferred Stock next preceding such dividend payment date, on the
other hand.
Except as set forth in the preceding sentence, unless full
cumulative dividends on the Cumulative Preferred Stock have been paid, no
dividends (other than in Common Stock of the Corporation) may be paid or
declared and set aside for payment or other distribution made upon the Common
Stock or on any other stock of the Corporation ranking junior to or on a parity
with the Cumulative Preferred Stock as to dividends, nor may any Common Stock
or any other stock of the Corporation ranking junior to or on a parity with the
Cumulative Preferred Stock as to dividends be redeemed, purchased or otherwise
acquired by the Corporation for any consideration or any payment by the
Corporation be made to or available for a sinking fund for the redemption of
any shares of such stock; provided, however, that any moneys theretofore
deposited in any sinking fund with respect to any preferred stock of the
Corporation in compliance with the provisions of such sinking fund may
thereafter be applied to the purchase or redemption of such preferred stock in
accordance with the terms of such sinking fund regardless of whether at the
time of such application full cumulative dividends upon shares of the
Cumulative Preferred Stock outstanding to the last dividend payment date shall
have been paid or declared and set apart for payment; and provided further that
any such junior or parity Preferred Stock or Common Stock may be converted into
or exchanged for stock of the Corporation ranking junior to the Cumulative
Preferred Stock as to dividends.
3. Liquidation Preference. The shares of Cumulative
Preferred Stock shall rank, as to liquidation, dissolution or winding up of the
Corporation, prior to the shares of Common Stock and any other class of stock
of the Corporation ranking junior to the Cumulative Preferred Stock as to
rights upon liquidation, dissolution or winding up of the Corporation, so that
in the event of any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, the holders of the Cumulative Preferred Stock
shall be entitled to receive out of the assets of the Corporation available for
distribution to its stockholders, whether from capital, surplus or earnings,
before any distribution is made to holders of shares of Common Stock or any
other such junior stock, an amount equal to $200.00 per share (the "Liquidation
Preference" of a share of Cumulative Preferred Stock) plus an amount equal to
all dividends (whether or not earned or declared) accrued and accumulated and
unpaid on the shares of Cumulative Preferred
<PAGE> 51
51
Stock to the date of final distribution. The holders of the Cumulative
Preferred Stock will not be entitled to receive the Liquidation Preference
until the liquidation preference of any other class of stock of the Corporation
ranking senior to the Cumulative Preferred Stock as to rights upon liquidation,
dissolution or winding up shall have been paid (or a sum set aside therefor
sufficient to provide for payment) in full. After payment of the full amount
of the Liquidation Preference and an amount equal to such dividends, the
holders of shares of Cumulative Preferred Stock will not be entitled to any
further participation in any distribution of assets by the Corporation. If,
upon any liquidation, dissolution or winding up of the Corporation, the assets
of the Corporation, or proceeds thereof, distributable among the holders of
shares of Parity Preferred Stock shall be insufficient to pay in full the
preferential amount aforesaid, then such assets, or the proceeds thereof, shall
be distributable among such holders ratably in accordance with the respective
amounts which would be payable on such shares if all amounts payable thereon
were paid in full. For the purposes hereof, neither a consolidation or merger
of the Corporation with or into any other corporation, nor a merger of any
other corporation with or into the Corporation, nor a sale or transfer of all
or any part of the Corporation's assets for cash or securities shall be
considered a liquidation, dissolution or winding up of the Corporation.
4. Conversion. The Cumulative Preferred Stock is not
convertible into shares of any other class or series of stock of the
Corporation.
5. Voting Rights. The holders of shares of Cumulative
Preferred Stock shall have no voting rights whatsoever, except for any voting
rights to which they may be entitled under the laws of the State of Delaware,
and except as follows:
(a) Whenever, at any time or times, dividends payable on the
shares of Cumulative Preferred Stock or on any Parity Preferred Stock
with respect to payment of dividends shall be in arrears for an
aggregate number of days equal to six calendar quarters or more,
whether or not consecutive, the holders of the outstanding shares of
Cumulative Preferred Stock shall have the right, with holders of
shares of any one or more other class or series of stock upon which
like voting rights have been conferred and are exercisable (voting
together as a class), to elect two of the authorized number of members
of the Board at the Corporation's next annual meeting of
<PAGE> 52
52
stockholders and at each subsequent annual meeting of stockholders
until such arrearages have been paid or set apart for payment, at
which time such right shall terminate, except as herein or by law
expressly provided, subject to revesting in the event of each and
every subsequent default of the character above mentioned. Upon any
termination of the right of the holders of shares of Cumulative
Preferred Stock as a class to vote for directors as herein provided,
the term of office of all directors then in office elected by the
holders of shares of Cumulative Preferred Stock shall terminate
immediately. Any director who shall have been so elected pursuant to
this paragraph may be removed at any time, either with or without
cause. Any vacancy thereby created may be filled only by the
affirmative vote of the holders of shares of Cumulative Preferred
Stock voting separately as a class (together with the holders of
shares of any other class or series of stock upon which like voting
rights have been conferred and are exercisable). If the office of any
director elected by the holders of shares of Cumulative Preferred
Stock voting as a class becomes vacant for any reason other than
removal from office as aforesaid, the remaining director elected
pursuant to this paragraph may choose a successor who shall hold
office for the unexpired term in respect of which such vacancy
occurred. At elections for such directors, each holder of shares of
Cumulative Preferred Stock shall be entitled to one vote for each
share held (the holders of shares of any other class or series of
preferred stock having like voting rights being entitled to such
number of votes, if any, for each share of such stock held as may be
granted to them).
(b) So long as any shares of Cumulative Preferred Stock
remain outstanding, the consent of the holders of at least two-thirds
of the shares of Cumulative Preferred Stock outstanding at the time
and all other classes or series of stock upon which like voting rights
have been conferred and are exercisable (voting together as a class)
given in person or by proxy, either in writing or at any meeting
called for the purpose, shall be necessary to permit, effect or
validate any one or more of the following:
(i) the issuance or increase of the authorized amount of
any class or series of shares ranking prior (as that term is
defined in paragraph 9(a) hereof) to the shares of the
Cumulative Preferred Stock; or
<PAGE> 53
53
(ii) the amendment, alteration or repeal, whether by
merger, consolidation or otherwise, of any of the provisions
of the Certificate of Incorporation (including this resolution
or any provision hereof) that would materially and adversely
affect any power, preference, or special right of the shares
of Cumulative Preferred Stock or of the holders thereof;
provided, however, that any increase in the amount of
authorized Common Stock or authorized Preferred Stock or any
increase or decrease in the number of shares of any series of
Preferred Stock or the creation and issuance of other series
of Common Stock or Preferred Stock, in each case ranking on a
parity with or junior to the shares of Cumulative Preferred
Stock with respect to the payment of dividends and the
distribution of assets upon liquidation, dissolution or
winding up, shall not be deemed to materially and adversely
affect such powers, preferences or special rights.
(c) The foregoing voting provisions shall not apply if, at or
prior to the time when the act with respect to which such vote would
otherwise be required shall be effected, all outstanding shares of
Cumulative Preferred Stock shall have been redeemed or called for
redemption and sufficient funds shall have been deposited in trust to
effect such redemption.
6. Redemption. The shares of the Cumulative Preferred Stock
may be redeemed at the option of the Corporation, as a whole, or from time to
time in part, at any time, upon not less than 30 days' prior notice mailed to
the holders of the shares to be redeemed at their addresses as shown on the
stock books of the Corporation; provided, however, that shares of the
Cumulative Preferred Stock shall not be redeemable prior to May 30, 1997.
Subject to the foregoing, on or after such date, shares of the Cumulative
Preferred Stock are redeemable at $200.00 per share together with an amount
equal to all dividends (whether or not earned or declared) accrued and
accumulated and unpaid to, but excluding, the date fixed for redemption.
If full cumulative dividends on the Cumulative Preferred Stock
have not been paid, the Cumulative Preferred Stock may not be redeemed in part
and the Corporation may not purchase or acquire any shares of the Cumulative
Preferred Stock otherwise than pursuant to a purchase or exchange offer made on
the same terms to all holders of the Cumulative Preferred Stock.
<PAGE> 54
54
If fewer than all the outstanding shares of Cumulative
Preferred Stock are to be redeemed, the Corporation will select those to be
redeemed by lot or a substantially equivalent method.
If a notice of redemption has been given pursuant to this
paragraph 6 and if, on or before the date fixed for redemption, the funds
necessary for such redemption shall have been set aside by the Corporation,
separate and apart from its other funds, in trust for the pro rata benefit of
the holders of the shares of Cumulative Preferred Stock so called for
redemption, then, notwithstanding that any certificates for such shares have
not been surrendered for cancellation, on the redemption date dividends shall
cease to accrue on the shares to be redeemed, and at the close of business on
the redemption date the holders of such shares shall cease to be stockholders
with respect to such shares and shall have no interest in or claims against the
Corporation by virtue thereof and shall have no voting or other rights with
respect to such shares, except the right to receive the moneys payable upon
surrender (and endorsement, if required by the Corporation) of their
certificates, and the shares evidenced thereby shall no longer be outstanding.
Subject to applicable escheat laws, any moneys so set aside by the Corporation
and unclaimed at the end of two years from the redemption date shall revert to
the general funds of the Corporation, after which reversion the holders of such
shares so called for redemption shall look only to the general funds of the
Corporation for the payment of the amounts payable upon such redemption. Any
interest accrued on funds so deposited shall be paid to the Corporation from
time to time.
All shares of Cumulative Preferred Stock redeemed, purchased
or otherwise acquired by the Corporation shall be retired and cancelled and
shall be restored to the status of authorized but unissued shares of Preferred
Stock, without designation as to series, and may thereafter be issued.
7. Authorization and Issuance of Other Securities. No
consent of the holders of the Cumulative Preferred Stock shall be required for
(a) the creation of any indebtedness of any kind of the Corporation, (b) the
creation, or increase or decrease in the amount, of any class or series of
stock of the Corporation not ranking prior as to dividends or upon liquidation,
dissolution or winding up to the Cumulative Preferred Stock or (c) any increase
or decrease in the amount of authorized Common Stock or any increase, decrease
or change in the par value thereof or in any other terms thereof.
<PAGE> 55
55
8. Amendment of Resolution. The Board and the Committee each
reserves the right by subsequent amendment of this resolution from time to time
to increase or decrease the number of shares that constitute the Cumulative
Preferred Stock (but not below the number of shares thereof then outstanding)
and in other respects to amend this resolution within the limitations provided
by law, this resolution and the Certificate of Incorporation.
9. Rank. For the purposes of this resolution, any stock of
any class or classes of the Corporation shall be deemed to rank:
(a) prior to shares of the Cumulative Preferred Stock, either
as to dividends or upon liquidation, dissolution or winding up, or
both, if the holders of stock of such class or classes shall be
entitled by the terms thereof to the receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding up, as
the case may be, in preference or priority to the holders of shares of
the Cumulative Preferred Stock;
(b) on a parity with shares of the Cumulative Preferred
Stock, either as to dividends or upon liquidation, dissolution or
winding up, or both, whether or not the dividend rates, dividend
payment dates, or redemption or liquidation prices per share thereof
be different from those of the Cumulative Preferred Stock, if the
holders of stock of such class or classes shall be entitled by the
terms thereof to the receipt of dividends or of amounts distributed
upon liquidation, dissolution or winding up, as the case may be, in
proportion to their respective dividend rates or liquidation prices,
without preference or priority of one over the other as between the
holders of such stock and the holders of shares of Cumulative
Preferred Stock (the term "Parity Preferred Stock" being used to refer
to any stock on a parity with the shares of Cumulative Preferred
Stock, either as to dividends or upon liquidation, dissolution or
winding up, or both, as the context may require); and
(c) junior to shares of the Cumulative Preferred Stock,
either as to dividends or upon liquidation, dissolution or winding up,
or both, if such class shall be Common Stock or if the holders of the
Cumulative Preferred Stock shall be entitled to the receipt of
dividends or of amounts distributable upon liquidation, dissolution or
winding up, as the case may be, in preference or priority to the
holders of stock of such class or classes.
<PAGE> 56
56
The Cumulative Preferred Stock shall rank prior, as to
dividends and upon liquidation, dissolution or winding up, to the Common Stock
and on a parity with the Corporation's ESOP Convertible Preferred Stock, with a
liquidation value of $35.875 per share, the Corporation's 9.36% Cumulative
Preferred Stock, with a liquidation value of $25.00 per share, and the
Corporation's 8.88% Cumulative Preferred Stock, with a liquidation value of
$200.00 per share.
<PAGE> 57
57
PART II -- COMMON STOCK (a) Dividends. Subject to the
preferential dividend rights applicable to shares of any class or series of
stock having preference over the Common Stock as to dividends, the holders of
shares of Common Stock shall be entitled to receive such dividends when and as
declared by the Board of Directors and shall share equally, share for share
alike, in such dividends.
(b) Liquidation, Dissolution or Winding Up. In the event of
any voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, after distribution in full of the preferential amounts to be
distributed to the holders of shares of any class or series of stock having
preference over the Common Stock upon voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of Common
Stock shall be entitled to receive all of the remaining assets of the
Corporation available for distribution, ratably in proportion to the number of
shares of the Common Stock held.
(c) Voting. Each share of Common Stock shall entitle the
holder thereof to one vote on all matters submitted to a vote of the
stockholders of the Corporation. The holders of the shares of Common Stock
shall at all times, except as otherwise provided in this Restated Certificate
of Incorporation or required by law, vote as one class, together with the
holders of any other class or series of stock of the Corporation accorded such
general class voting right.
SECTION 3. Definitions. For the purposes of this Restated
Certificate of Incorporation:
(a) the term "outstanding", when used in reference to shares
of stock, shall mean issued shares, excluding shares held by the
Corporation or a Subsidiary; and
(b) the term "Subsidiary" or "Subsidiaries" shall mean a
corporation(s) of which the Corporation, directly or indirectly, has
the power, whether through the ownership of voting securities,
contract or otherwise, to elect at least a majority of the members of
such corporation's board of directors; provided, however, that for
purposes of Article VI of the Restated Certificate of Incorporation,
the term "Subsidiary" or "Subsidiaries" shall mean a corporation(s),
all of the capital stock of which is owned by the Corporation, other
than directors' qualifying shares.
<PAGE> 58
58
ARTICLE V
BOARD OF DIRECTORS
SECTION 1. Number, Election and Terms of Directors.
The business and affairs of the Corporation shall be managed by or under the
direction of a Board of Directors consisting of not fewer than four nor more
than fifteen persons; provided, however, that, pursuant to the provisions of
Section 141(a) of the General Corporation Law of the State of Delaware, the
powers and authority of the Board of Directors with respect to any stock
option, performance unit or other compensation or employee benefit plan of the
Corporation, to the extent not otherwise assigned or reserved to the Board of
Directors by the provisions of any such plan, are hereby conferred upon and
shall be exercised by a committee or committees designated by resolution passed
by the Board of Directors to consist of one or more persons who may or may not
be directors of the Corporation, unless the Board of Directors, by resolution
passed by the Board of Directors, shall determine that any or all such powers
and authority shall instead be conferred upon and exercised by the Board of
Directors. The exact number of directors within the minimum and maximum
limitations specified in the preceding sentence may be established from time to
time by the Board of Directors pursuant to a resolution adopted by a majority
of the entire Board of Directors. Subject to the rights of the holders of any
class or series of stock having preference over the Common Stock as to
dividends or upon liquidation, dissolution or winding up of the Corporation to
elect directors under specified circumstances, if any, directors shall be
elected each year at the annual meeting of stockholders and shall hold office
until their successors shall have been duly elected and qualified, or until
their earlier resignation or removal.
SECTION 2. Calling Special Meetings of Stockholders.
A special meeting of the stockholders may be called at any time and for any
purpose or purposes by the President or the Chairman of the Board or by order
of the Board of Directors, and shall be called by the Secretary upon the
written request of the holders of record of at least 80% of the voting power of
the then outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors (the "Voting Stock").
SECTION 3. Newly Created Directorships and Vacancies on the
Board of Directors. Subject to the rights of any class or series of stock
having preference over the
<PAGE> 59
59
Common Stock as to dividends or upon liquidation, dissolution or winding up of
the Corporation to elect directors under specified circumstances, if any,
newly-created directorships resulting from any increase in the authorized
number of directors or any vacancies on the Board of Directors resulting from
death, resignation, retirement, disqualification, removal from office or other
cause shall be filled by a majority vote of the directors then in office,
although less than a quorum; and any director so chosen shall hold office for
the remaining term of his predecessor or, if there shall have been no
predecessor, until the next annual election of directors or until his successor
shall have been duly elected and qualified. No decrease in the number of
directors constituting the Board of Directors shall shorten the term of any
incumbent director.
SECTION 4. Removal of Directors. Subject to the rights of
the holders of any class or series of stock having preference over the Common
Stock as to dividends or upon liquidation, dissolution or winding up of the
Corporation to elect directors under specified circumstances, if any, any
director, or the entire Board of Directors, may be removed from office at any
time, with or without cause, only by the affirmative vote of the holders of at
least 80% of the voting power of the Voting Stock, voting together as a single
class.
SECTION 5. Amendment of By-Laws. In furtherance of and not
in limitation of the powers conferred by statute, the Board of Directors of the
Corporation from time to time, may amend, repeal or adopt By-Laws of the
Corporation; provided, that any By-Laws made, amended or repealed by the Board
of Directors or the stockholders may be amended or repealed, and that any
By-Laws may be made, by the stockholders of the Corporation. Notwithstanding
any other provisions of this Restated Certificate of Incorporation or the
By-Laws of the Corporation (and notwithstanding the fact that a lesser
percentage may be specified by law, this Restated Certificate of Incorporation
or the By-Laws of the Corporation), the affirmative vote of the holders of at
least 80% of the voting power of the Voting Stock, voting together as a single
class, shall be required for the stockholders of the Corporation to amend,
repeal or adopt any By-Laws of the Corporation or to adopt any amendment to
this Restated Certificate of Incorporation inconsistent with the By-Laws of the
Corporation.
SECTION 6. Amendment of Certificate of Incorporation.
Notwithstanding any other provisions of this Restated Certificate of
Incorporation or the By-Laws of the
<PAGE> 60
60
Corporation (and notwithstanding the fact that a lesser percentage may be
specified by law, this Restated Certificate of Incorporation or the By-Laws of
the Corporation), the affirmative vote of the holders of at least 80% of the
voting power of the Voting Stock, voting together as a single class, shall be
required to amend or repeal, or to adopt any provision inconsistent with, this
Article V hereof.
SECTION 7. Other Powers. The By-Laws of the Corporation may
confer upon the Board of Directors powers in addition to the foregoing and in
addition to the powers and authorities expressly conferred upon them by law,
but only to the extent permitted by law and not prohibited by the provisions of
this Restated Certificate of Incorporation.
ARTICLE VI
INDEMNIFICATION
The Corporation shall indemnify, to the fullest extent
permitted by applicable law, any person who was or is a party or is threatened
to be made a party to, or is involved in any manner in, any threatened, pending
or completed action, suit or proceeding (whether civil, criminal,
administrative or investigative) by reason of the fact that such person (1) is
or was a director or officer of the Corporation or a Subsidiary or (2) is or
was serving at the request of the Corporation or a Subsidiary as a director,
officer, partner, member, employee or agent of another corporation,
partnership, joint venture, trust, committee or other enterprise.
To the extent deemed advisable by the Board of Directors, the
Corporation may indemnify, to the fullest extent permitted by applicable law,
any person who was or is a party or is threatened to be made a party to, or is
involved in any manner in, any threatened, pending or completed action, suit or
proceeding (whether civil, criminal, administrative or investigative) by reason
of the fact that the person is or was an employee or agent (other than a
director or officer) of the Corporation or a Subsidiary.
The Corporation shall have the power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the Corporation or a Subsidiary, or is or was serving at the
request of the Corporation or a Subsidiary as a director, officer, partner,
<PAGE> 61
61
member, employee or agent of another corporation, partnership, joint venture,
trust, committee or other enterprise, against any expense, liability or loss
asserted against him and incurred by him in any such capacity, or arising out
of his status as such, whether or not the Corporation or a Subsidiary would
have the power to indemnify him against such expense, liability or loss under
the provisions of applicable law.
No repeal, modification or amendment of, or adoption of any
provision inconsistent with, this Article VI nor, to the fullest extent
permitted by applicable law, any modification of law shall adversely affect any
right or protection of any person granted pursuant hereto existing at, or with
respect to events that occurred prior to, the time of such repeal, amendment,
adoption or modification.
For purposes of this Article VI, the term "Subsidiary" or
"Subsidiaries" shall mean a corporation(s), all of the capital stock of which
is owned directly or indirectly by the Corporation, other than directors'
qualifying shares.
The right to indemnification conferred in this Article VI also
includes, to the fullest extent permitted by applicable law, the right to be
paid the expenses (including attorneys' fees) incurred in connection with any
such proceeding in advance of its final disposition. The payment of any
amounts to any director, officer, partner, member, employee or agent pursuant
to this Article VI shall subrogate the Corporation to any right such director,
officer, partner, member, employee or agent may have against any other person
or entity. The rights conferred in this Article VI shall be contract rights.
ARTICLE VII
LIABILITY OF DIRECTORS
A director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for any breach of
fiduciary duty as a director, except for liability (i) for any breach by the
director of his duty of loyalty to the Corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the General
Corporation Law of the State of Delaware or (iv) for any transaction from which
the director derived an improper personal benefit.
<PAGE> 62
62
No repeal, modification or amendment of, or adoption of any
provision inconsistent with, this Article VII nor, to the fullest extent
permitted by law, any modification of law shall adversely affect any right or
protection of a director of the Corporation existing at the time of such
repeal, amendment, adoption or modification or affect the liability of any
director of the Corporation for any action taken or any omission that occurred
prior to the time of such repeal, amendment, adoption or modification.
If the General Corporation Law of the State of Delaware shall
be amended, after this Restated Certificate of Incorporation is amended to
include this Article VII, to authorize corporate action further eliminating or
limiting the liability of directors, then a director of the Corporation, in
addition to the circumstances in which he is not liable immediately prior to
such amendment, shall be free of liability to the fullest extent permitted by
the General Corporation Law of the State of Delaware, as so amended.
SEVENTH: That this restatement has been duly adopted by
resolution of the Board of Directors of the Corporation in accordance with
Section 245 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, Morgan Stanley Group Inc. has caused this
Certificate to be executed by its President and attested by its Assistant
Secretary and its corporate seal to be affixed hereto this 14th day of
September, 1992.
/s/ Robert F. Greenhill
(Seal) ----------------------------
Robert F. Greenhill
President
Attest:
/s/ Patricia A. Kurtz
----------------------------
Patricia A. Kurtz
Assistant Secretary
<PAGE> 63
CERTIFICATE OF AMENDMENT
TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF
MORGAN STANLEY GROUP INC.
(Pursuant to Section 242 of the
Delaware General Corporation Law)
MORGAN STANLEY GROUP INC., a Delaware corporation, HEREBY
CERTIFIES AS FOLLOWS;
1. The name of the Corporation is Morgan Stanley Group Inc.
The date of filing of its original Certificate of Incorporation with the
Secretary of State of the State of Delaware was July 10, 1975. The date of
filing of the most recent Restated Certificate of Incorporation with the
Secretary of State of the State of Delaware was September 15, 1992.
2. This Certificate of Amendment sets forth amendments to the
Restated Certificate of Incorporation of the Corporation that were duly adopted
in accordance with the provisions of Section 242 of the General Corporation Law
of the State of Delaware.
3. Article IV, Section 2, Part I, Subpart A, Section 1(A) of
the Restated Certificate of Incorporation is hereby amended in full to be and
read as follows:
(A) The shares of such series shall be designated ESOP
CONVERTIBLE PREFERRED STOCK (hereinafter referred to as the "ESOP
Preferred Stock") and such series shall consist of 3,902,438 shares.
Such number of shares may be increased or decreased from time to time
by resolution of the Pricing Committee of this Board of Directors (the
"Pricing Committee"), but no such increase shall result in such series
consisting of more than 4,000,000 shares, and no decrease shall reduce
the number of shares of ESOP Preferred Stock to a number less than
that of shares of ESOP Preferred Stock then outstanding plus the
number of shares issuable upon exercise of any rights, options or
warrants or upon conversion of outstanding securities issued by the
Corporation relating to such shares. Notwithstanding the preceding
sentence, the Board of Directors may increase the number of shares of
ESOP
<PAGE> 64
2
Preferred Stock to a number greater than 4,000,000 shares, or may
decrease the number of such shares, subject only to any limitations
imposed by applicable law or this Restated Certificate of
Incorporation. Any shares of ESOP Preferred Stock redeemed or
purchased by the Corporation shall remain issued and outstanding for
all purposes (except that as long as such shares are held by the
Corporation or its nominee, no dividends shall be paid on such shares
and they shall neither be entitled to vote nor counted for quorum
purposes) and may thereafter be transferred by the Corporation from
time to time to a trustee or trustees referred to in paragraph (B) of
this Section 1 (whereupon the voting and dividend rights of such
shares shall be restored); provided that the Corporation may provide
at the time of or at any time after such redemption or purchase that
any such shares then held by the Corporation or its nominee shall be
retired, and such shares shall then be restored to the status of
authorized but unissued shares of preferred stock of the Corporation.
4. Article IV, Section 2, Part I, Subpart A, Section 9,
Paragraphs (A), (B), (C), (D), (E), (F), (G) and (I) of the Restated
Certificate of Incorporation are hereby amended in full to be and read as
follows:
(A)(1) In the event the Corporation shall, at any time or
from time to time while any of the shares of the ESOP Preferred Stock
are outstanding, (i) pay a dividend or make a distribution in respect
of the Common Stock in shares of Common Stock or (ii) subdivide the
outstanding shares of Common Stock into a greater number of shares, in
each case whether by reclassification of shares, recapitalization of
the Corporation (excluding a recapitalization or reclassification
effected by a merger or consolidation to which Section 8 applies) or
otherwise, then, in such event, the Conversion Price shall, subject to
the provisions of paragraphs (E) and (F) of this Section 9,
automatically be adjusted by dividing such Conversion Price by a
fraction (the "Section 9(A) Fraction"), the numerator of which is the
number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common
Stock outstanding immediately before such event. Such adjustment to
the Conversion Price shall be effective, upon payment of such dividend
or distribution in respect of the Common Stock, as of the record date
for the determination of stockholders entitled to receive such
dividend or distribution (on a
<PAGE> 65
3
retroactive basis), and in the case of a subdivision shall become
effective immediately as of the effective date thereof. An adjustment
to the Conversion Price pursuant to this Section 9(A)(1) shall have no
effect on the Liquidation Price or the Preferred Dividend Rate of the
ESOP Preferred Stock.
(2) In the event the Corporation shall, at any time or from
time to time while any of the shares of the ESOP Preferred Stock are
outstanding, combine the outstanding shares of Common Stock into a
lesser number of shares, whether by reclassification of shares,
recapitalization of the Corporation (excluding a recapitalization or
reclassification effected by a merger, consolidation or other
transaction to which Section 8 applies) or otherwise, then, in such
event, the Conversion Price shall, subject to the provisions of
paragraph (F) of this Section 9, automatically be adjusted by dividing
the Conversion Price in effect immediately before such event by the
Section 9(A) Fraction. An adjustment to the Conversion Price made
pursuant to this paragraph 9(A)(2) shall be given effect immediately
as of the effective date of such combination and shall have no effect
on the Liquidation Price or the Preferred Dividend Rate of the ESOP
Preferred Stock.
(B) In the event the Corporation shall, at any time or from
time to time while any of the shares of ESOP Preferred Stock are
outstanding, issue to holders of shares of Common Stock as a dividend
or distribution, including by way of a reclassification of shares or a
recapitalization of the Corporation, any right or warrant to purchase
shares of Common Stock (but not including as a right or warrant for
this purpose any security convertible into or exchangeable for shares
of Common Stock) for a consideration having a Fair Market Value (as
hereinafter defined) per share less than the Fair Market Value of a
share of Common Stock on the date of issuance of such right or warrant
(other than pursuant to any employee or director incentive,
compensation or benefit plan or arrangement of the Corporation or any
subsidiary of the Corporation heretofore or hereafter adopted), then,
in such event, the Conversion Price shall, subject to the provisions
of paragraphs (E) and (F) of this Section 9, automatically be adjusted
by dividing such Conversion Price by a fraction (the "Section 9(B)
Fraction"), the numerator of which is the number of shares of Common
Stock outstanding immediately before such issuance of rights or
warrants plus the maximum
<PAGE> 66
4
number of shares of Common Stock that could be acquired upon exercise
in full of all such rights and warrants and the denominator of which
is the number of shares of Common Stock outstanding immediately before
such issuance of warrants or rights plus the number of shares of
Common Stock that could be purchased at the Fair Market Value of a
share of Common Stock at the time of such issuance for the maximum
aggregate consideration payable upon exercise in full of all such
rights and warrants. Such adjustment to the Conversion Price shall be
effective upon such issuance of rights or warrants. An adjustment to
the Conversion Price pursuant to this Section 9(B) shall have no
effect on the Liquidation Price or the Preferred Dividend Rate of the
ESOP Preferred Stock.
(C)(1) In the event the Corporation shall, at any time or
from time to time while any of the shares of ESOP Preferred Stock are
outstanding, issue, sell or exchange shares of Common Stock (other
than pursuant to (x) any right or warrant to purchase or acquire
shares of Common Stock (including as such a right or warrant for this
purpose any security convertible into or exchangeable for shares of
Common Stock) or (y) any employee or director incentive, compensation
or benefit plan or arrangement of the Corporation or any subsidiary of
the Corporation heretofore or hereafter adopted) at a purchase price
per share less than the Fair Market Value of a share of Common Stock
on the date of such issuance, sale or exchange, then, in such event,
the Conversion Price shall, subject to the provisions of paragraphs
(E) and (F) of this Section 9, automatically be adjusted by dividing
such Conversion Price by a fraction (the "Section 9(C)(1) Fraction"),
the numerator of which is the number of shares of Common Stock
outstanding immediately before such issuance, sale or exchange plus
the number of shares of Common Stock so issued, sold or exchanged and
the denominator of which is the number of shares of Common Stock
outstanding immediately before such issuance, sale or exchange plus
the number of shares of Common Stock that could be purchased at the
Fair Market Value of a share of Common Stock at the time of such
issuance, sale or exchange for the maximum aggregate consideration
paid therefor.
(2) In the event that the Corporation shall, at any time or
from time to time while any ESOP Preferred Stock is outstanding,
issue, sell or exchange any right or warrant to purchase or acquire
shares of Common Stock (including as such a right or warrant for this
purpose
<PAGE> 67
5
any security convertible into or exchangeable for shares of Common
Stock other than pursuant to any employee or director incentive,
compensation or benefit plan or arrangement of the Corporation or any
subsidiary of the Corporation heretofore or hereafter adopted) for a
consideration having a Fair Market Value, on the date of such
issuance, sale or exchange, less than the Non-Dilutive Amount (as
hereinafter defined), then, in such event, the Conversion Price shall,
subject to the provisions of paragraphs (E) and (F) of this Section 9,
automatically be adjusted by dividing such Conversion Price by a
fraction (the "Section 9(C)(2) Fraction"), the numerator of which is
the number of shares of Common Stock outstanding immediately before
such issuance of rights or warrants plus the maximum number of shares
of Common Stock that could be acquired upon exercise in full of all
such rights and warrants and the denominator of which is the number of
shares of Common Stock outstanding immediately before such issuance of
rights or warrants plus the number of shares of Common Stock that
could be purchased at the Fair Market Value of a share of Common Stock
at the time of such issuance for the total of (x) the maximum
aggregate consideration payable at the time of the issuance, sale or
exchange of such right or warrant and (y) the maximum aggregate
consideration payable upon exercise in full of all such rights or
warrants.
(3) An adjustment to the Conversion Price pursuant to this
Section 9(C) shall be effective upon the effective date of any
issuance, sale or exchange described in paragraph (1) or (2) above.
Any such adjustment shall have no effect on the Liquidation Price or
the Preferred Dividend Rate of the ESOP Preferred Stock.
(D) In the event the Corporation shall, at any time or from
time to time while any of the shares of ESOP Preferred Stock are
outstanding, make an Extraordinary Distribution (as hereinafter
defined) in respect of the Common Stock, whether by dividend,
distribution, reclassification of shares or recapitalization of the
Corporation (including capitalization or reclassification effected by
a merger or consolidation to which Section 8 does not apply) or effect
a Pro Rata Repurchase (as hereinafter defined) of Common Stock, then,
in such event, the Conversion Price shall, subject to the provisions
of paragraphs (E) and (F) of this Section 9, automatically be adjusted
by dividing such Conversion
<PAGE> 68
6
Price by a fraction (the "Section 9(D) Fraction"), the numerator of
which is the product of (a) the number of shares of Common Stock
outstanding immediately before such Extraordinary Distribution or Pro
Rata Repurchase minus, in the case of a Pro Rata Repurchase, the
number of shares of Common Stock repurchased by the Corporation
multiplied by (b) the Fair Market Value of a share of Common Stock on
the day before the ex-dividend date with respect to an Extraordinary
Distribution that is paid in cash and on the distribution date with
respect to an Extraordinary Distribution that is paid other than in
cash, or on the applicable expiration date (including all extensions
thereof) of any tender offer that is a Pro Rata Repurchase or on the
date of purchase with respect to any Pro Rata Repurchase that is not a
tender offer, as the case may be, and the denominator of which is (i)
the product of (x) the number of shares of Common Stock outstanding
immediately before such Extraordinary Distribution or Pro Rata
Repurchase multiplied by (y) the Fair Market Value of a share of
Common Stock on the day before the ex-dividend date with respect to an
Extraordinary Distribution that is paid in cash and on the
distribution date with respect to an Extraordinary Distribution that
is paid other than in cash, or on the applicable expiration date
(including all extensions thereof) of any tender offer that is a Pro
Rata Repurchase, or on the date of purchase with respect to any Pro
Rata Repurchase that is not a tender offer, as the case may be, minus
(ii) the Fair Market Value of the Extraordinary Distribution or the
aggregate purchase price of the Pro Rata Repurchase, as the case may
be. The Corporation shall send each holder of ESOP Preferred Stock
(i) notice of its intent to make any Extraordinary Distribution and
(ii) notice of any offer by the Corporation to make a Pro Rata
Repurchase, in each case at the same time as, or as soon as
practicable after, such offer is first communicated to holders of
Common Stock or, in the case of an Extraordinary Distribution, the
announcement of a record date in accordance with the rules of any
stock exchange on which the Common Stock is listed or admitted to
trading. Such notice shall indicate the intended record date and the
amount and nature of such dividend or distribution, or the number of
shares subject to such offer for a Pro Rata Repurchase and the
purchase price payable by the Corporation pursuant to such offer, as
well as the Conversion Price and the number of shares of Common Stock
into which a share of ESOP Preferred Stock may be converted at such
time. An adjustment to the Conversion Price pursuant to
<PAGE> 69
7
this Section 9(D) shall be effective (i) in the case of an
Extraordinary Dividend as of the record date for the determination of
holders entitled to receive such Extraordinary Dividend (on a
retroactive basis) and (ii) in the case of a Pro Rata Repurchase upon
the expiration date thereof (if such Pro Rata Repurchase is a tender
offer) or the effective date thereof (if such Pro Rata Repurchase is
not a tender offer). Any such adjustment shall have no effect on the
Liquidation Price or the Preferred Dividend Rate of the ESOP Preferred
Stock.
(E) The Board of Directors shall have the authority to
determine that any adjustment to the Conversion Price provided for in
paragraph (A)(1), (B), (C) or (D) of this Section 9 shall not be made
(or if already made, to determine that such adjustment shall be
cancelled prospectively), and in lieu thereof to declare a dividend in
respect of the ESOP Preferred Stock in shares of ESOP Preferred Stock
(a "Special Dividend") in such a manner that a holder of ESOP
Preferred Stock will become a holder of that number of shares of ESOP
Preferred Stock equal to the product of the number of such shares held
prior to such event times the Section 9(A), Section 9(B), Section
9(C)(1), Section 9(C)(2) or Section 9(D) Fraction, as applicable. The
declaration of such a Special Dividend shall be authorized, if at all,
by the Board of Directors no later than 30 calendar days following the
authorization by the Board of Directors (or by a committee duly
authorized by the Board of Directors) of the transaction or other
event described in any of the foregoing paragraphs (A)(1), (B), (C) or
(D) that would otherwise result in an adjustment to the Conversion
Price being made pursuant to any such paragraphs, and if the Board of
Directors does not authorize the declaration of a Special Dividend by
the end of such 30-day period, then no such Special Dividend shall be
declared and the adjustment to the Conversion Price provided for in
paragraph (A)(1), (B), (C) or (D) of this Section 9 shall become final
and binding on the Corporation and all stockholders of the
Corporation. Concurrently with the declaration of any Special
Dividend pursuant to this paragraph (E), the Conversion Price, the
Liquidation Price and the Preferred Dividend Rate of all shares of
ESOP Preferred Stock shall be adjusted by dividing the Conversion
Price, the Liquidation Price and the Preferred Dividend Rate,
respectively, in effect immediately before such event by the Section
9(A), Section 9(B), Section 9(C)(1), Section 9(C)(2) or Section 9(D)
Fraction, as applicable.
<PAGE> 70
8
(F) Unless the Board of Directors determines otherwise, and
notwithstanding any other provision of this Section 9, any adjustment
to the Conversion Price provided for in any of paragraphs (A), (B),
(C) or (D) of this Section 9 shall not be made unless such adjustment
would require an increase or decrease of at least one percent (1%) in
the Conversion Price and, similarly, the Board of Directors shall not
declare any Special Dividend pursuant to paragraph (E) of this Section
9 unless such Special Dividend or adjustment would require an
increase or decrease of at least one percent (1%) in the number of
shares of ESOP Preferred Stock outstanding. Any lesser adjustment to
the Conversion Price or Special Dividend shall be carried forward and
shall be made no later than the time of, and together with, the next
subsequent adjustment to the Conversion Price or Special Dividend
which, together with any adjustment or adjustments or Special Dividend
or Dividends so carried forward, shall amount to an increase or
decrease of at least one percent (1%) of the Conversion Price or an
increase or decrease of at least one percent (1%) in the number of
shares of ESOP Preferred Stock outstanding, whichever the case may be.
(G) If the Corporation shall make any dividend or
distribution on the Common Stock or issue any Common Stock, other
capital stock or other security of the Corporation or any rights or
warrants to purchase or acquire any such security, which transaction
does not result in an adjustment to the Conversion Price or to the
number of shares of ESOP Preferred Stock outstanding pursuant to the
foregoing provisions of this Section 9, the Board of Directors of the
Corporation may, in its sole discretion, consider whether such action
is of such a nature that some type of equitable adjustment should be
made in respect of such transaction. If in such case the Board of
Directors of the Corporation determines that some type of adjustment
should be made, an adjustment shall be made effective as of such date
as determined by the Board of Directors of the Corporation. The
determination of the Board of Directors of the Corporation as to
whether some type of adjustment should be made pursuant to the
foregoing provisions of this Section 9(G), and, if so, as to what
adjustment should be made and when, shall be final and binding on the
Corporation and all stockholders of the Corporation. The Corporation
shall be entitled, but not required, to make such additional
adjustments, in addition to those required by the foregoing provisions
of this Section 9, as shall be necessary in order that any dividend or
<PAGE> 71
9
distribution in shares of capital stock of the Corporation,
subdivision, reclassification or combination of shares of the
Corporation or any reclassification of the Corporation shall not be
taxable to holders of the Common Stock.
* * *
(I) Whenever an adjustment to the Conversion Price of the
ESOP Preferred Stock is required pursuant to this Section 9, the
Corporation shall forthwith place on file with the transfer agent for
the Common Stock and the ESOP Preferred Stock, if there be one, and
with the Treasurer of the Corporation, a statement signed by the
Treasurer or any Assistant Treasurer of the Corporation stating the
adjusted Conversion Price determined as provided herein. In addition,
whenever a Special Dividend is declared pursuant to paragraph (E) of
this Section 9, (i) the maximum number of shares of ESOP Preferred
Stock shall be adjusted by multiplying 4,000,000 (or such other number
as shall be the maximum number of shares of ESOP Preferred Stock in
effect prior to the authorization of such Special Dividend) by the
Section 9(A), Section 9(B), Section 9(C)(1), Section 9(C)(2) or
Section 9(D) Fraction, as the case may be, (ii) the Board of Directors
shall take action as is necessary so that a sufficient number of
shares of ESOP Preferred Stock are designated with respect to any
increase in the number of shares of ESOP Preferred Stock to be
outstanding as a result of such Special Dividend and (iii) the
Corporation shall forthwith place on file with the transfer agent for
the Common Stock and the ESOP Preferred Stock, if there be one, and
with the Treasurer of the Corporation, a statement signed by the
Treasurer or any Assistant Treasurer of the Corporation stating the
adjusted maximum number of shares of ESOP Preferred Stock, Conversion
Price, Liquidation Price and Preferred Dividend Rate determined as
provided herein. The statement required by either of the two
preceding sentences shall set forth in reasonable detail such facts as
shall be necessary to show the reason and the manner of computing such
adjustments, including any determination of Fair Market Value involved
in such computation. Promptly after each adjustment to the maximum
number of shares of ESOP Preferred Stock, Conversion Price, the
Liquidation Price, the Preferred Dividend Rate, or the number of
shares of ESOP Preferred Stock outstanding, the Corporation shall mail
a notice thereof and of the then prevailing maximum number of shares
of ESOP Preferred Stock, Conversion Price, Liquidation Price,
Preferred Dividend Rate and
<PAGE> 72
10
number of shares of ESOP Preferred Stock outstanding to each holder of
shares of ESOP Preferred Stock.
IN WITNESS WHEREOF, MORGAN STANLEY GROUP INC. has caused this
Certificate to be signed by John J. Mack, its President, and attested by
Jonathan M. Clark, its General Counsel and Secretary, this 30th day of June,
1993.
MORGAN STANLEY GROUP INC.
By: /s/ John J. Mack
-------------------
Name: John J. Mack
Title: President
ATTEST:
/s/ Jonathan M. Clark
- --------------------------
Name: Jonathan M. Clark
Title: General Counsel and
Secretary
<PAGE> 73
CERTIFICATE OF DESIGNATION OF PREFERENCES AND RIGHTS
OF THE
7-3/8% CUMULATIVE PREFERRED STOCK
($200.00 Stated Value)
OF
MORGAN STANLEY GROUP INC.
______________________________
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
______________________________
The undersigned DOES HEREBY CERTIFY that the following
resolution was duly adopted by the Board of Directors (the "Board") of Morgan
Stanley Group Inc., a Delaware corporation (hereinafter called the
"Corporation"), by unanimous written consent in lieu of a meeting dated as of
July 27, 1993, with certain of the designations, preferences and rights having
been fixed by the Pricing Committee of the Board (the "Committee") at a meeting
on August 18, 1993, pursuant to authority delegated to it by the Board pursuant
to the provisions of Section 141(c) of the General Corporation Law of the State
of Delaware:
RESOLVED that, pursuant to authority expressly granted to and
vested in the Committee by the Board and in the Board by provisions of
the Restated Certificate of Incorporation of the Corporation, as
amended (the "Certificate of Incorporation"), the issuance of a series
of Preferred Stock, without par value (the "Preferred Stock"), which
shall consist of 1,000,000 of the 30,000,000 shares of Preferred Stock
which the Corporation now has authority to issue, is authorized, and
the Board and, pursuant to the authority expressly granted to the
Committee by the Board pursuant to the provisions of Section 141(c) of
the General Corporation Law of the State of Delaware and the
Certificate of Incorporation, the Committee, fix the powers,
<PAGE> 74
2
designations, preferences and relative, participating, optional or
other special rights, and the qualifications, limitations or
restrictions thereof, of the shares of such series (in addition to the
powers, designations, preferences and relative, participating,
optional or other special rights, and the qualifications, limitations
or restrictions thereof, set forth in the Certificate of Incorporation
which may be applicable to the Preferred Stock) as follows:
1. Designation and Amount; Fractional Shares. The
designation for such series of the Preferred Stock authorized
by this resolution shall be the 7-3/8% Cumulative Preferred
Stock, without par value, with a stated value of $200.00 per
share (the "Cumulative Preferred Stock"). The stated value
per share of Cumulative Preferred Stock shall not for any
purpose be considered to be a determination by the Board or
the Committee with respect to the capital and surplus of the
Corporation. The number of shares of Cumulative Preferred
Stock shall be 1,000,000. The Cumulative Preferred Stock is
issuable in whole shares only.
2. Dividends. Holders of shares of Cumulative
Preferred Stock will be entitled to receive, when, as and if
declared by the Board or the Committee out of assets of the
Corporation legally available for payment, cash dividends
payable quarterly at the rate of 7-3/8% per annum. Dividends
on the Cumulative Preferred Stock, calculated as a percentage
of the stated value, will be payable quarterly on February 28,
May 30, August 30 and November 30 commencing November 30, 1993
(each a "dividend payment date"). Dividends on shares of the
Cumulative Preferred Stock will be cumulative from the date of
initial issuance of such shares of Cumulative Preferred Stock.
Dividends will be payable, in arrears, to holders of record as
they appear on the stock books of the Corporation on such
record dates, not more than 60 days nor less than 10 days
preceding the payment dates thereof, as shall be fixed by the
Board or the Committee. The amount of dividends payable for
the initial dividend period or any period shorter than a full
dividend period shall be calculated on the basis of a 360-day
year of twelve 30-day months. No dividends may be declared or
paid or set apart for payment on any Parity Preferred Stock
(as defined in paragraph 9(b) below) with regard to the
payment of dividends
<PAGE> 75
3
unless there shall also be or have been declared and paid or
set apart for payment on the Cumulative Preferred Stock, like
dividends for all dividend payment periods of the Cumulative
Preferred Stock ending on or before the dividend payment date
of such Parity Preferred Stock, ratably in proportion to the
respective amounts of dividends (x) accumulated and unpaid or
payable on such Parity Preferred Stock, on the one hand, and
(y) accumulated and unpaid through the dividend payment
period or periods of the Cumulative Preferred Stock next
preceding such dividend payment date, on the other hand.
Except as set forth in the preceding sentence, unless
full cumulative dividends on the Cumulative Preferred Stock
have been paid, no dividends (other than in Common Stock of
the Corporation) may be paid or declared and set aside for
payment or other distribution made upon the Common Stock or on
any other stock of the Corporation ranking junior to or on a
parity with the Cumulative Preferred Stock as to dividends,
nor may any Common Stock or any other stock of the Corporation
ranking junior to or on a parity with the Cumulative Preferred
Stock as to dividends be redeemed, purchased or otherwise
acquired for any consideration (or any payment be made to or
available for a sinking fund for the redemption of any shares
of such stock; provided, however, that any moneys theretofore
deposited in any sinking fund with respect to any preferred
stock of the Corporation in compliance with the provisions of
such sinking fund may thereafter be applied to the purchase or
redemption of such preferred stock in accordance with the
terms of such sinking fund, regardless of whether at the time
of such application full cumulative dividends upon shares of
the Cumulative Preferred Stock outstanding to the last
dividend payment date shall have been paid or declared and set
apart for payment) by the Corporation; provided that any such
junior or parity Preferred Stock or Common Stock may be
converted into or exchanged for stock of the Corporation
ranking junior to the Cumulative Preferred Stock as to
dividends.
3. Liquidation Preference. The shares of Cumulative
Preferred Stock shall rank, as to liquidation, dissolution or
winding up of the Corporation, prior to the shares of Common
Stock and any other class of stock of the Corporation ranking
<PAGE> 76
4
junior to the Cumulative Preferred Stock as to rights upon
liquidation, dissolution or winding up of the Corporation, so
that in the event of any liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary, the
holders of the Cumulative Preferred Stock shall be entitled to
receive out of the assets of the Corporation available for
distribution to its stockholders, whether from capital,
surplus or earnings, before any distribution is made to
holders of shares of Common Stock or any other such junior
stock, an amount equal to $200.00 per share (the "Liquidation
Preference" of a share of Cumulative Preferred Stock) plus an
amount equal to all dividends (whether or not earned or
declared) accrued and accumulated and unpaid on the shares of
Cumulative Preferred Stock to the date of final distribution.
The holders of the Cumulative Preferred Stock will not be
entitled to receive the Liquidation Preference until the
liquidation preference of any other class of stock of the
Corporation ranking senior to the Cumulative Preferred Stock
as to rights upon liquidation, dissolution or winding up shall
have been paid (or a sum set aside therefor sufficient to
provide for payment) in full. After payment of the full
amount of the Liquidation Preference and such dividends, the
holders of shares of Cumulative Preferred Stock will not be
entitled to any further participation in any distribution of
assets by the Corporation. If, upon any liquidation,
dissolution or winding up of the Corporation, the assets of
the Corporation, or proceeds thereof, distributable among the
holders of shares of Parity Preferred Stock shall be
insufficient to pay in full the preferential amount aforesaid,
then such assets, or the proceeds thereof, shall be
distributable among such holders ratably in accordance with
the respective amounts which would be payable on such shares
if all amounts payable thereon were paid in full. For the
purposes hereof, neither a consolidation or merger of the
Corporation with or into any other corporation, nor a merger
of any other corporation with or into the Corporation, nor a
sale or transfer of all or any part of the Corporation's
assets for cash or securities shall be considered a
liquidation, dissolution or winding up of the Corporation.
4. Conversion. The Cumulative Preferred Stock is
not convertible into shares of any other class or series of
stock of the Corporation.
<PAGE> 77
5
5. Voting Rights. The holders of shares of
Cumulative Preferred Stock shall have no voting rights
whatsoever, except for any voting rights to which they may be
entitled under the laws of the State of Delaware, and except
as follows:
(a) Whenever, at any time or times,
dividends payable on the shares of Cumulative
Preferred Stock or on any Parity Preferred Stock with
respect to payment of dividends, shall be in arrears
for an aggregate number of days equal to six calendar
quarters or more, whether or not consecutive, the
holders of the outstanding shares of Cumulative
Preferred Stock shall have the right, with holders of
shares of any one or more other class or series of
stock upon which like voting rights have been
conferred and are exercisable (voting together as a
class), to elect two of the authorized number of
members of the Board at the Corporation's next annual
meeting of stockholders and at each subsequent annual
meeting of stockholders until such arrearages have
been paid or set apart for payment, at which time
such right shall terminate, except as herein or by
law expressly provided, subject to revesting in the
event of each and every subsequent default of the
character above mentioned. Upon any termination of
the right of the holders of shares of Cumulative
Preferred Stock as a class to vote for directors as
herein provided, the term of office of all directors
then in office elected by the holders of shares of
Cumulative Preferred Stock shall terminate
immediately.
Any director who shall have been so elected pursuant
to this paragraph may be removed at any time, either
with or without cause. Any vacancy thereby created
may be filled only by the affirmative vote of the
holders of shares of Cumulative Preferred Stock
voting separately as a class (together with the
holders of shares of any other class or series of
stock upon which like voting rights have been
conferred and are exercisable). If the office of any
director elected by the holders of shares of
Cumulative Preferred Stock voting as a class becomes
vacant for any reason other than removal from office
as aforesaid, the remaining
<PAGE> 78
6
director elected pursuant to this paragraph may
choose a successor who shall hold office for the
unexpired term in respect of which such vacancy
occurred. At elections for such directors, each
holder of shares of Cumulative Preferred Stock shall
be entitled to one vote for each share held (the
holders of shares of any other class or series of
preferred stock having like voting rights being
entitled to such number of votes, if any, for each
share of such stock held as may be granted to them).
(b) So long as any shares of Cumulative
Preferred Stock remain outstanding, the consent of
the holders of at least two-thirds of the shares of
Cumulative Preferred Stock outstanding at the time
and all other classes or series of stock upon which
like voting rights have been conferred and are
exercisable (voting together as a class) given in
person or by proxy, either in writing or at any
meeting called for the purpose, shall be necessary to
permit, effect or validate any one or more of the
following:
(i) the issuance or increase of the
authorized amount of any class or series of
shares ranking prior (as that term is defined
in paragraph 9(a) hereof) to the shares of
the Cumulative Preferred Stock; or
(ii) the amendment, alteration or
repeal, whether by merger, consolidation or
otherwise, of any of the provisions of the
Certificate of Incorporation, (including this
resolution or any provision hereof) that
would materially and adversely affect any
power, preference, or special right of the
shares of Cumulative Preferred Stock or of
the holders thereof;
provided, however, that any increase in the amount of
authorized Common Stock or authorized Preferred Stock
or any increase or decrease in the number of shares
of any series of Preferred Stock or the creation and
issuance of other series of Common Stock or Preferred
Stock, in each case ranking on a parity with or
junior to the shares of Cumulative Preferred Stock
with
<PAGE> 79
7
respect to the payment of dividends and the
distribution of assets upon liquidation, dissolution
or winding up, shall not be deemed to materially and
adversely affect such powers, preferences or special
rights.
(c) The foregoing voting provisions shall
not apply if, at or prior to the time when the act
with respect to which such vote would otherwise be
required shall be effected, all outstanding shares of
Cumulative Preferred Stock shall have been redeemed
or called for redemption and sufficient funds shall
have been deposited in trust to effect such
redemption.
6. Redemption. The shares of the Cumulative
Preferred Stock may be redeemed at the option of the
Corporation, as a whole, or from time to time in part, at any
time, upon not less than 30 days' prior notice mailed to the
holders of the shares to be redeemed at their addresses as
shown on the stock books of the Corporation; provided,
however, that shares of the Cumulative Preferred Stock shall
not be redeemable prior to August 30, 1998. Subject to the
foregoing, on or after such date, shares of the Cumulative
Preferred Stock are redeemable at $200.00 per share together
with an amount equal to all dividends (whether or not earned
or declared) accrued and accumulated and unpaid to, but
excluding, the date fixed for redemption.
If full cumulative dividends on the Cumulative
Preferred Stock have not been paid, the Cumulative Preferred
Stock may not be redeemed in part and the Corporation may not
purchase or acquire any shares of the Cumulative Preferred
Stock otherwise than pursuant to a purchase or exchange offer
made on the same terms to all holders of the Cumulative
Preferred Stock. If fewer than all the outstanding shares of
Cumulative Preferred Stock are to be redeemed, the Corporation
will select those to be redeemed by lot or a substantially
equivalent method.
If a notice of redemption has been given pursuant to
this paragraph 6 and if, on or before the date fixed for
redemption, the funds necessary for such redemption shall have
been set aside by the Corporation, separate and apart from its
other funds, in trust for the pro rata benefit of the holders
of the shares of Cumulative Preferred Stock
<PAGE> 80
8
so called for redemption, then, notwithstanding that any
certificates for such shares have not been surrendered for
cancellation, on the redemption date dividends shall cease to
accrue on the shares to be redeemed, and at the close of
business on the redemption date the holders of such shares
shall cease to be stockholders with respect to such shares and
shall have no interest in or claims against the Corporation by
virtue thereof and shall have no voting or other rights with
respect to such shares, except the right to receive the moneys
payable upon surrender (and endorsement, if required by the
Corporation) of their certificates, and the shares evidenced
thereby shall no longer be outstanding. Subject to applicable
escheat laws, any moneys so set aside by the Corporation and
unclaimed at the end of two years from the redemption date
shall revert to the general funds of the Corporation, after
which reversion the holders of such shares so called for
redemption shall look only to the general funds of the
Corporation for the payment of the amounts payable upon such
redemption. Any interest accrued on funds so deposited shall
be paid to the Corporation from time to time.
7. Authorization and Issuance of Other Securities.
No consent of the holders of the Cumulative Preferred Stock
shall be required for (a) the creation of any indebtedness of
any kind of the Corporation, (b) the creation, or increase or
decrease in the amount, of any class or series of stock of the
Corporation not ranking prior as to dividends or upon
liquidation, dissolution or winding up to the Cumulative
Preferred Stock or (c) any increase or decrease in the amount
of authorized Common Stock or any increase, decrease or change
in the par value thereof or in any other terms thereof.
8. Amendment of Resolution. The Board and the
Committee each reserves the right by subsequent amendment of
this resolution from time to time to increase or decrease the
number of shares that constitute the Cumulative Preferred
Stock (but not below the number of shares thereof then
outstanding) and in other respects to amend this resolution
within the limitations provided by law, this resolution and
the Certificate of Incorporation.
9. Rank. For the purposes of this resolution, any
stock of any class or classes of the Corporation shall be
deemed to rank:
<PAGE> 81
9
(a) prior to shares of the Cumulative
Preferred Stock, either as to dividends or upon
liquidation, dissolution or winding up, or both, if
the holders of stock of such class or classes shall
be entitled by the terms thereof to the receipt of
dividends or of amounts distributable upon
liquidation, dissolution or winding up, as the case
may be, in preference or priority to the holders of
shares of the Cumulative Preferred Stock;
(b) on a parity with shares of the
Cumulative Preferred Stock, either as to dividends or
upon liquidation, dissolution or winding up, or both,
whether or not the dividend rates, dividend payment
dates, or redemption or liquidation prices per share
thereof be different from those of the Cumulative
Preferred Stock, if the holders of stock of such
class or classes shall be entitled by the terms
thereof to the receipt of dividends or of amounts
distributed upon liquidation, dissolution or winding
up, as the case may be, in proportion to their
respective dividend rates or liquidation prices,
without preference or priority of one over the other
as between the holders of such stock and the holders
of shares of Cumulative Preferred Stock (the term
"Parity Preferred Stock" being used to refer to any
stock on a parity with the shares of Cumulative
Preferred Stock, either as to dividends or upon
liquidation, dissolution or winding up, or both, as
the context may require); and
(c) junior to shares of the Cumulative
Preferred Stock, either as to dividends or upon
liquidation, dissolution or winding up, or both, if
such class shall be Common Stock or if the holders of
the Cumulative Preferred Stock shall be entitled to
the receipt of dividends or of amounts distributable
upon liquidation, dissolution or winding up, as the
case may be, in preference or priority to the holders
of stock of such class or classes.
The Cumulative Preferred Stock shall rank prior, as
to dividends and upon liquidation, dissolution or winding up,
to the Common Stock and on a parity with the Corporation's
ESOP Convertible
<PAGE> 82
10
Preferred Stock, with a liquidation value of $35.88 per share,
the Corporation's 9.36% Cumulative Preferred Stock, with a
liquidation value of $25.00 per share, the Corporation's 8.88%
Cumulative Preferred Stock, with a liquidation value of
$200.00 per share and the Corporation's 8-3/4% Cumulative
Preferred Stock, with a liquidation value of $200.00 per
share.
IN WITNESS WHEREOF, Morgan Stanley Group Inc. has
caused this Certificate to be made under the seal of the Corporation
and signed by Barton M. Biggs, its Managing Director, and attested by
Ralph L. Pellecchio, its Assistant Secretary, this 24th day of August,
1993.
MORGAN STANLEY GROUP INC.
By: /s/ Barton M. Biggs
---------------------
Name: Barton M. Biggs
Title: Managing Director,
who is duly authorized to
exercise the duties of a
Vice President.
[SEAL]
Attest:
/s/ Ralph L. Pellecchio
- -------------------------
Assistant Secretary
<PAGE> 83
CERTIFICATE OF CORRECTION FILED
TO CORRECT A CERTAIN ERROR IN THE
CERTIFICATE OF DESIGNATION OF PREFERENCES AND RIGHTS
OF THE 7-3/8% CUMULATIVE PREFERRED STOCK
($200.00 STATED VALUE)
OF
MORGAN STANLEY GROUP INC,
FILED IN THE OFFICE OF THE SECRETARY OF STATE OF
THE STATE OF DELAWARE ON AUGUST 24, 1993, AND
FORWARDED TO THE OFFICE OF THE RECORDER OF DEEDS
IN AND FOR KENT COUNTY, DELAWARE ON AUGUST 25, 1993
Pursuant to Section 103(f) of the
General Corporation Law of the State of Delaware
Morgan Stanley Group Inc., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
1. The name of the corporation is Morgan Stanley Group
Inc. (the "Corporation").
2. A Certificate of Designation of Preferences and Rights
of the 7-3/8% Cumulative Preferred Stock ($200.00 Stated Value) of the
Corporation was filed on August 24, 1993 and forwarded to the Office of the
Recorder of Deeds in and for Kent County, Delaware on August 25, 1993 (the
"Certificate").
3. The Certificate requires correction as permitted by
subsection (f) of the Section 103 of the General Corporation Law of the State
of Delaware.
<PAGE> 84
4. The inaccuracy or defect of the Certificate to be
corrected is that the concluding clause is corrected to read as follows:
"IN WITNESS WHEREOF, Morgan Stanley Group Inc. has
caused this Certificate to be made under the seal of the
Corporation and signed by Barton M. Biggs, its Managing
Director, and attested by Ralph Pallecchio, its Assistant
Secretary, this 24th day of August, 1993."
IN WITNESS WHEREOF, Morgan Stanley Group Inc. has caused this
Certificate of Correction to be made under the seal of the Corporation and
signed by Anson M. Beard, Jr., its Managing Director, and attested by Patricia
A. Kurtz, its Assistant Secretary, this 27th day of August, 1993.
MORGAN STANLEY GROUP INC.
By: /s/ Anson M. Beard, Jr.
----------------------------
Name: Anson M. Beard, Jr.
Title: Managing Director,
who is duly authorized
to exercise the duties
of a Vice President
[SEAL]
Attest:
/s/ Patricia A. Kurtz
- -------------------------
Assistant Secretary
<PAGE> 85
CERTIFICATE OF DESIGNATION OF PREFERENCES AND RIGHTS
OF THE
7.82% CUMULATIVE PREFERRED STOCK
($200.00 Stated Value)
OF
MORGAN STANLEY GROUP INC.
______________________________
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
______________________________
The undersigned DOES HEREBY CERTIFY that the following
resolution was duly adopted by the Board of Directors (the "Board") of Morgan
Stanley Group Inc., a Delaware corporation (hereinafter called the
"Corporation"), by unanimous written consent in lieu of a meeting dated as of
October 29, 1993, with certain of the designations, preferences and rights
having been fixed by the Pricing Committee of the Board (the "Committee") at a
meeting on November 19, 1993, pursuant to authority delegated to it by the
Board pursuant to the provisions of Section 141(c) of the General Corporation
Law of the State of Delaware:
RESOLVED that, pursuant to authority expressly granted to and
vested in the Committee by the Board and in the Board by provisions of
the Restated Certificate of Incorporation of the Corporation, as
amended (the "Certificate of Incorporation"), the issuance of a series
of Preferred Stock, without par value (the "Preferred Stock"), which
shall consist of 682,813 of the 30,000,000 shares of Preferred Stock
which the Corporation now has authority to issue, is authorized, and
the Board and, pursuant to the authority expressly granted to the
Committee by the Board pursuant to the provisions of Section 141(c) of
the General Corporation Law of the State of Delaware and the
Certificate of Incorporation, the Committee, fix the powers,
designations, preferences
<PAGE> 86
2
and relative, participating, optional or other special rights, and
the qualifications, limitations or restrictions thereof, of the
shares of such series (in addition to the powers, designations,
preferences and relative, participating, optional or other special
rights, and the qualifications, limitations or restrictions thereof,
set forth in the Certificate of Incorporation which may be applicable
to the Preferred Stock) as follows:
1. Designation and Amount; Fractional Shares. The
designation for such series of the Preferred Stock authorized by
this resolution shall be the 7.82% Cumulative Preferred Stock,
without par value, with a stated value of $200.00 per share (the
"Cumulative Preferred Stock"). The stated value per share of
Cumulative Preferred Stock shall not for any purpose be
considered to be a determination by the Board or the Committee
with respect to the capital and surplus of the Corporation. The
maximum number of shares of Cumulative Preferred Stock shall be
682,813. The Cumulative Preferred Stock is issuable in whole
shares only.
2. Dividends. Holders of shares of Cumulative Preferred
Stock will be entitled to receive, when, as and if declared by
the Board or the Committee out of assets of the Corporation
legally available for payment, cash dividends payable quarterly
at the rate of 7.82% per annum. Dividends on the Cumulative
Preferred Stock will be payable quarterly on February 28, May 30,
August 30 and November 30 (each a "dividend payment date").
Dividends on shares of the Cumulative Preferred Stock will be
cumulative from the date of initial issuance of such shares of
Cumulative Preferred Stock. Dividends will be payable, in
arrears, to holders of record as they appear on the stock books
of the Corporation on such record dates, not more than 60 days
nor less than 10 days preceding the payment dates thereof, as
shall be fixed by the Board or the Committee. The amount of
dividends payable for the initial dividend period or any period
shorter than a full dividend period shall be calculated on the
basis of a 360-day year of twelve 30-day months. No dividends
may be declared or paid or set apart for payment on any Parity
Preferred Stock (as defined in paragraph 9(b) below) with regard
to the payment of dividends unless there shall also be or have
been declared and paid or set apart for payment on the Cumulative
<PAGE> 87
3
Preferred Stock, like dividends for all dividend payment periods
of the Cumulative Preferred Stock ending on or before the
dividend payment date of such Parity Preferred Stock, ratably in
proportion to the respective amounts of dividends (x) accumulated
and unpaid or payable on such Parity Preferred Stock, on the one
hand, and (y) accumulated and unpaid through the dividend payment
period or periods of the Cumulative Preferred Stock next
preceding such dividend payment date, on the other hand.
Except as set forth in the preceding sentence, unless full
cumulative dividends on the Cumulative Preferred Stock have been
paid, no dividends (other than in Common Stock of the
Corporation) may be paid or declared and set aside for payment
or other distribution made upon the Common Stock or on any other
stock of the Corporation ranking junior to or on a parity with
the Cumulative Preferred Stock as to dividends, nor may any
Common Stock or any other stock of the Corporation ranking junior
to or on a parity with the Cumulative Preferred Stock as to
dividends be redeemed, purchased or otherwise acquired for any
consideration (or any payment be made to or available for a
sinking fund for the redemption of any shares of such stock;
provided, however, that any moneys theretofore deposited in any
sinking fund with respect to any preferred stock of the
Corporation in compliance with the provisions of such sinking
fund may thereafter be applied to the purchase or redemption of
such preferred stock in accordance with the terms of such sinking
fund, regardless of whether at the time of such application full
cumulative dividends upon shares of the Cumulative Preferred
Stock outstanding to the last dividend payment date shall have
been paid or declared and set apart for payment) by the
Corporation; provided that any such junior or parity Preferred
Stock or Common Stock may be converted into or exchanged for
stock of the Corporation ranking junior to the Cumulative
Preferred Stock as to dividends.
3. Liquidation Preference. The shares of Cumulative
Preferred Stock shall rank, as to liquidation, dissolution or
winding up of the Corporation, prior to the shares of Common
Stock and any other class of stock of the Corporation ranking
junior to the Cumulative Preferred Stock as to
<PAGE> 88
4
rights upon liquidation, dissolution or winding up of the
Corporation, so that in the event of any liquidation, dissolution
or winding up of the Corporation, whether voluntary or
involuntary, the holders of the Cumulative Preferred Stock shall
be entitled to receive out of the assets of the Corporation
available for distribution to its stockholders, whether from
capital, surplus or earnings, before any distribution is made to
holders of shares of Common Stock or any other such junior stock,
an amount equal to $200.00 per share (the "Liquidation
Preference" of a share of Cumulative Preferred Stock) plus an
amount equal to all dividends (whether or not earned or declared)
accrued and accumulated and unpaid on the shares of Cumulative
Preferred Stock to the date of final distribution. The holders
of the Cumulative Preferred Stock will not be entitled to receive
the Liquidation Preference until the liquidation preference of
any other class of stock of the Corporation ranking senior to the
Cumulative Preferred Stock as to rights upon liquidation,
dissolution or winding up shall have been paid (or a sum set
aside therefor sufficient to provide for payment) in full. After
payment of the full amount of the Liquidation Preference and such
dividends, the holders of shares of Cumulative Preferred Stock
will not be entitled to any further participation in any
distribution of assets by the Corporation. If, upon any
liquidation, dissolution or winding up of the Corporation, the
assets of the Corporation, or proceeds thereof, distributable
among the holders of shares of Parity Preferred Stock shall be
insufficient to pay in full the preferential amount aforesaid,
then such assets, or the proceeds thereof, shall be distributable
among such holders ratably in accordance with the respective
amounts which would be payable on such shares if all amounts
payable thereon were paid in full. For the purposes hereof,
neither a consolidation or merger of the Corporation with or into
any other corporation, nor a merger of any other corporation with
or into the Corporation, nor a sale or transfer of all or any
part of the Corporation's assets for cash or securities shall be
considered a liquidation, dissolution or winding up of the
Corporation.
4. Conversion. The Cumulative Preferred Stock is not
convertible into shares of any other class or series of stock of
the Corporation.
<PAGE> 89
5
5. Voting Rights. The holders of shares of Cumulative
Preferred Stock shall have no voting rights whatsoever, except
for any voting rights to which they may be entitled under the
laws of the State of Delaware, and except as follows:
(a) Whenever, at any time or times, dividends
payable on the shares of Cumulative Preferred Stock or on
any Parity Preferred Stock with respect to payment of
dividends, shall be in arrears for an aggregate number of
days equal to six calendar quarters or more, whether or not
consecutive, the holders of the outstanding shares of
Cumulative Preferred Stock shall have the right, with
holders of shares of any one or more other class or series
of stock upon which like voting rights have been conferred
and are exercisable (voting together as a class), to elect
two of the authorized number of members of the Board at the
Corporation's next annual meeting of stockholders and at
each subsequent annual meeting of stockholders until such
arrearages have been paid or set apart for payment, at which
time such right shall terminate, except as herein or by law
expressly provided, subject to revesting in the event of
each and every subsequent default of the character above
mentioned. Upon any termination of the right of the holders
of shares of Cumulative Preferred Stock as a class to vote
for directors as herein provided, the term of office of all
directors then in office elected by the holders of shares of
Cumulative Preferred Stock shall terminate immediately.
Any director who shall have been so elected pursuant to this
paragraph may be removed at any time, either with or without
cause. Any vacancy thereby created may be filled only by
the affirmative vote of the holders of shares of Cumulative
Preferred Stock voting separately as a class (together with
the holders of shares of any other class or series of stock
upon which like voting rights have been conferred and are
exercisable). If the office of any director elected by the
holders of shares of Cumulative Preferred Stock voting as a
class becomes vacant for any reason other than removal from
office as aforesaid, the remaining
<PAGE> 90
6
director elected pursuant to this paragraph may choose
a successor who shall hold office for the unexpired term in
respect of which such vacancy occurred. At elections for
such directors, each holder of shares of Cumulative
Preferred Stock shall be entitled to one vote for each share
held (the holders of shares of any other class or series of
preferred stock having like voting rights being entitled to
such number of votes, if any, for each share of such stock
held as may be granted to them).
(b) So long as any shares of Cumulative Preferred
Stock remain outstanding, the consent of the holders of at
least two-thirds of the shares of Cumulative Preferred Stock
outstanding at the time and all other classes or series of
stock upon which like voting rights have been conferred and
are exercisable (voting together as a class) given in person
or by proxy, either in writing or at any meeting called for
the purpose, shall be necessary to permit, effect or
validate any one or more of the following:
(i) the issuance or increase of the authorized
amount of any class or series of shares ranking prior
(as that term is defined in paragraph 9(a) hereof) to
the shares of the Cumulative Preferred Stock; or
(ii) the amendment, alteration or repeal,
whether by merger, consolidation or otherwise, of any
of the provisions of the Certificate of
Incorporation, (including this resolution or any
provision hereof) that would materially and adversely
affect any power, preference, or special right of the
shares of Cumulative Preferred Stock or of the
holders thereof;
provided, however, that any increase in the amount of
authorized Common Stock or authorized Preferred Stock
or any increase or decrease in the number of shares
of any series of Preferred Stock or the creation and
issuance of other series of Common Stock or Preferred
Stock, in each case ranking on a parity with or
junior to the shares of Cumulative Preferred Stock
with
<PAGE> 91
7
respect to the payment of dividends and the
distribution of assets upon liquidation, dissolution
or winding up, shall not be deemed to materially and
adversely affect such powers, preferences or special
rights.
(c) The foregoing voting provisions shall not apply
if, at or prior to the time when the act with respect to
which such vote would otherwise be required shall be
effected, all outstanding shares of Cumulative Preferred
Stock shall have been redeemed or called for redemption and
sufficient funds shall have been deposited in trust to
effect such redemption.
6. Redemption Shares. The shares of the Cumulative
Preferred Stock may be redeemed at the option of the Corporation,
as a whole, or from time to time in part, at any time, upon not
less than 30 days' prior notice mailed to the holders of the
shares to be redeemed at their addresses as shown on the stock
books of the Corporation; provided, however, that shares of the
Cumulative Preferred Stock shall not be redeemable prior to
November 30, 1998. Subject to the foregoing, on or after such
date, shares of the Cumulative Preferred Stock are redeemable at
$200.00 per share together with an amount equal to all dividends
(whether or not earned or declared) accrued and accumulated and
unpaid to, but excluding, the date fixed for redemption.
If full cumulative dividends on the Cumulative Preferred
Stock have not been paid, the Cumulative Preferred Stock may not
be redeemed in part and the Corporation may not purchase or
acquire any shares of the Cumulative Preferred Stock otherwise
than pursuant to a purchase or exchange offer made on the same
terms to all holders of the Cumulative Preferred Stock. If fewer
than all the outstanding shares of Cumulative Preferred Stock are
to be redeemed, the Corporation will select those to be redeemed
by lot or a substantially equivalent method.
If a notice of redemption has been given pursuant to this
paragraph 6 and if, on or before the date fixed for redemption,
the funds necessary for such redemption shall have been set aside
by the Corporation, separate and apart from its other funds, in
trust for the pro rata benefit of the holders of the shares of
Cumulative Preferred Stock
<PAGE> 92
8
so called for redemption, then, notwithstanding that any
certificates for such shares have not been surrendered for
cancellation, on the redemption date dividends shall cease to
accrue on the shares to be redeemed, and at the close of business
on the redemption date the holders of such shares shall cease to
be stockholders with respect to such shares and shall have no
interest in or claims against the Corporation by virtue thereof
and shall have no voting or other rights with respect to such
shares, except the right to receive the moneys payable upon
surrender (and endorsement, if required by the Corporation) of
their certificates, and the shares evidenced thereby shall no
longer be outstanding. Subject to applicable escheat laws, any
moneys so set aside by the Corporation and unclaimed at the end
of two years from the redemption date shall revert to the general
funds of the Corporation, after which reversion the holders of
such shares so called for redemption shall look only to the
general funds of the Corporation for the payment of the amounts
payable upon such redemption. Any interest accrued on funds so
deposited shall be paid to the Corporation from time to time.
7. Authorization and Issuance of Other Securities. No
consent of the holders of the Cumulative Preferred Stock shall be
required for (a) the creation of any indebtedness of any kind of
the Corporation, (b) the creation, or increase or decrease in the
amount, of any class or series of stock of the Corporation not
ranking prior as to dividends or upon liquidation, dissolution or
winding up to the Cumulative Preferred Stock or (c) any increase
or decrease in the amount of authorized Common Stock or any
increase, decrease or change in the par value thereof or in any
other terms thereof.
8. Amendment of Resolution. The Board and the Committee
each reserves the right by subsequent amendment of this
resolution from time to time to increase or decrease the number
of shares that constitute the Cumulative Preferred Stock (but not
below the number of shares thereof then outstanding) and in other
respects to amend this resolution within the limitations provided
by law, this resolution and the Certificate of Incorporation.
9. Rank. For the purposes of this resolution, any stock
of any class or classes of the Corporation shall be deemed to
rank:
<PAGE> 93
9
(a) prior to shares of the Cumulative Preferred
Stock, either as to dividends or upon liquidation,
dissolution or winding up, or both, if the holders of stock
of such class or classes shall be entitled by the terms
thereof to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up,
as the case may be, in preference or priority to the holders
of shares of the Cumulative Preferred Stock;
(b) on a parity with shares of the Cumulative
Preferred Stock, either as to dividends or upon liquidation,
dissolution or winding up, or both, whether or not the
dividend rates, dividend payment dates, or redemption or
liquidation prices per share thereof be different from those
of the Cumulative Preferred Stock, if the holders of stock
of such class or classes shall be entitled by the terms
thereof to the receipt of dividends or of amounts
distributed upon liquidation, dissolution or winding up, as
the case may be, in proportion to their respective dividend
rates or liquidation prices, without preference or priority
of one over the other as between the holders of such stock
and the holders of shares of Cumulative Preferred Stock (the
term "Parity Preferred Stock" being used to refer to any
stock on a parity with the shares of Cumulative Preferred
Stock, either as to dividends or upon liquidation,
dissolution or winding up, or both, as the context may
require); and
(c) junior to shares of the Cumulative Preferred
Stock, either as to dividends or upon liquidation,
dissolution or winding up, or both, if such class shall be
Common Stock or if the holders of the Cumulative Preferred
Stock shall be entitled to the receipt of dividends or of
amounts distributable upon liquidation, dissolution or
winding up, as the case may be, in preference or priority to
the holders of stock of such class or classes.
The Cumulative Preferred Stock shall rank prior, as to
dividends and upon liquidation, dissolution or winding up, to the
Common Stock and on a parity with the Corporation's ESOP
Convertible
<PAGE> 94
10
Preferred Stock, with a liquidation value of $35.88 per share,
the Corporation's 9.36% Cumulative Preferred Stock, with a
liquidation value of $25.00 per share, the Corporation's 8.88%
Cumulative Preferred Stock, with a liquidation value of $200.00
per share, the Corporation's 8-3/4% Cumulative Preferred Stock,
with a liquidation value of $200.00 per share and the
Corporation's 7-3/8% Cumulative Preferred Stock, with a
liquidation value of $200.00 per share.
IN WITNESS WHEREOF, Morgan Stanley Group Inc. has caused
this Certificate to be made under the seal of the Corporation and signed by
Richard B. Fisher, its Chairman, and attested by Patricia A. Kurtz, its
Assistant Secretary, this 23rd day of November, 1993.
MORGAN STANLEY GROUP INC.
/s/ Richard B. Fisher
By: ------------------------
Name: Richard B. Fisher
Title: Chairman
[SEAL]
Attest:
/s/ Patricia A. Kurtz
- ---------------------
Assistant Secretary
<PAGE> 95
CERTIFICATE OF DESIGNATION OF PREFERENCES AND RIGHTS
OF THE
7.80% CUMULATIVE PREFERRED STOCK
($200.00 Stated Value)
OF
MORGAN STANLEY GROUP INC.
-------------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
-------------------------------
The undersigned DOES HEREBY CERTIFY that the following
resolution was duly adopted by the Board of Directors (the "Board") of Morgan
Stanley Group Inc., a Delaware corporation (hereinafter called the
"Corporation"), by unanimous written consent in lieu of a meeting dated as of
October 29, 1993, with certain of the designations, preferences and rights
having been fixed by the Pricing Committee of the Board (the "Committee") at a
meeting on February 1, 1994, pursuant to authority delegated to it by the Board
pursuant to the provisions of Section 141(c) of the General Corporation Law of
the State of Delaware:
RESOLVED that, pursuant to authority expressly granted to and
vested in the Committee by the Board and in the Board by provisions of
the Restated Certificate of Incorporation of the Corporation, as
amended (the "Certificate of Incorporation"), the issuance of a series
of Preferred Stock, without par value (the "Preferred Stock"), which
shall consist of 1,150,000 of the 30,000,000 shares of Preferred
Stock which the Corporation now has authority to issue, is authorized,
and the Board and, pursuant to the authority expressly granted to the
Committee by the Board pursuant to the provisions of Section 141(c) of
the General Corporation Law of the State of Delaware and the
Certificate of Incorporation, the Committee, fix the powers,
<PAGE> 96
2
designations, preferences and relative, participating, optional or
other special rights, and the qualifications, limitations or
restrictions thereof, of the shares of such series (in addition to the
powers, designations, preferences and relative, participating,
optional or other special rights, and the qualifications, limitations
or restrictions thereof, set forth in the Certificate of Incorporation
which may be applicable to the Preferred Stock) as follows:
1. Designation and Amount; Fractional Shares.
The designation for such series of the Preferred Stock
authorized by this resolution shall be the 7.80% Cumulative
Preferred Stock, without par value, with a stated value of
$200.00 per share (the "Cumulative Preferred Stock"). The
stated value per share of Cumulative Preferred Stock shall not
for any purpose be considered to be a determination by the
Board or the Committee with respect to the capital and surplus
of the Corporation. The maximum number of shares of
Cumulative Preferred Stock shall be 1,150,000. The Cumulative
Preferred Stock is issuable in whole shares only.
2. Dividends. Holders of shares of Cumulative
Preferred Stock will be entitled to receive, when, as and if
declared by the Board or the Committee out of assets of the
Corporation legally available for payment, cash dividends
payable quarterly at the rate of 7.80% per annum. Dividends
on the Cumulative Preferred Stock will be payable quarterly on
February 28, May 30, August 30 and November 30 (each a
"dividend payment date"). Dividends on shares of the
Cumulative Preferred Stock will be cumulative from the date of
initial issuance of such shares of Cumulative Preferred Stock.
Dividends will be payable, in arrears, to holders of record as
they appear on the stock books of the Corporation on such
record dates, not more than 60 days nor less than 10 days
preceding the payment dates thereof, as shall be fixed by the
Board or the Committee. The amount of dividends payable for
the initial dividend period or any period shorter than a full
dividend period shall be calculated on the basis of a 360-day
year of twelve 30-day months. No dividends may be declared or
paid or set apart for payment on any Parity Preferred Stock
(as defined in paragraph 9(b) below) with regard to the
payment of dividends unless there shall also be or have been
declared and paid or set apart for payment on the Cumulative
<PAGE> 97
3
Preferred Stock, like dividends for all dividend payment
periods of the Cumulative Preferred Stock ending on or before
the dividend payment date of such Parity Preferred Stock,
ratably in proportion to the respective amounts of dividends
(x) accumulated and unpaid or payable on such Parity Preferred
Stock, on the one hand, and (y) accumulated and unpaid through
the dividend payment period or periods of the Cumulative
Preferred Stock next preceding such dividend payment date, on
the other hand.
Except as set forth in the preceding sentence, unless
full cumulative dividends on the Cumulative Preferred Stock
have been paid, no dividends (other than in Common Stock of
the Corporation) may be paid or declared and set aside for
payment or other distribution made upon the Common Stock or on
any other stock of the Corporation ranking junior to or on a
parity with the Cumulative Preferred Stock as to dividends,
nor may any Common Stock or any other stock of the Corporation
ranking junior to or on a parity with the Cumulative Preferred
Stock as to dividends be redeemed, purchased or otherwise
acquired for any consideration (or any payment be made to or
available for a sinking fund for the redemption of any shares
of such stock; provided, however, that any moneys theretofore
deposited in any sinking fund with respect to any preferred
stock of the Corporation in compliance with the provisions of
such sinking fund may thereafter be applied to the purchase or
redemption of such preferred stock in accordance with the
terms of such sinking fund, regardless of whether at the time
of such application full cumulative dividends upon shares of
the Cumulative Preferred Stock outstanding to the last
dividend payment date shall have been paid or declared and set
apart for payment) by the Corporation; provided that any such
junior or parity Preferred Stock or Common Stock may be
converted into or exchanged for stock of the Corporation
ranking junior to the Cumulative Preferred Stock as to
dividends.
3. Liquidation Preference. The shares of
Cumulative Preferred Stock shall rank, as to liquidation,
dissolution or winding up of the Corporation, prior to the
shares of Common Stock and any other class of stock of the
Corporation ranking junior to the Cumulative Preferred Stock
as to
<PAGE> 98
4
rights upon liquidation, dissolution or winding up of the
Corporation, so that in the event of any liquidation,
dissolution or winding up of the Corporation, whether
voluntary or involuntary, the holders of the Cumulative
Preferred Stock shall be entitled to receive out of the assets
of the Corporation available for distribution to its
stockholders, whether from capital, surplus or earnings,
before any distribution is made to holders of shares of Common
Stock or any other such junior stock, an amount equal to
$200.00 per share (the "Liquidation Preference" of a share of
Cumulative Preferred Stock) plus an amount equal to all
dividends (whether or not earned or declared) accrued and
accumulated and unpaid on the shares of Cumulative Preferred
Stock to the date of final distribution. The holders of the
Cumulative Preferred Stock will not be entitled to receive the
Liquidation Preference until the liquidation preference of any
other class of stock of the Corporation ranking senior to the
Cumulative Preferred Stock as to rights upon liquidation,
dissolution or winding up shall have been paid (or a sum set
aside therefor sufficient to provide for payment) in full.
After payment of the full amount of the Liquidation Preference
and such dividends, the holders of shares of Cumulative
Preferred Stock will not be entitled to any further
participation in any distribution of assets by the
Corporation. If, upon any liquidation, dissolution or winding
up of the Corporation, the assets of the Corporation, or
proceeds thereof, distributable among the holders of shares of
Parity Preferred Stock shall be insufficient to pay in full
the preferential amount aforesaid, then such assets, or the
proceeds thereof, shall be distributable among such holders
ratably in accordance with the respective amounts which would
be payable on such shares if all amounts payable thereon were
paid in full. For the purposes hereof, neither a
consolidation or merger of the Corporation with or into any
other corporation, nor a merger of any other corporation with
or into the Corporation, nor a sale or transfer of all or any
part of the Corporation's assets for cash or securities shall
be considered a liquidation, dissolution or winding up of the
Corporation.
4. Conversion. The Cumulative Preferred Stock
is not convertible into shares of any other class or series of
stock of the Corporation.
<PAGE> 99
5
5. Voting Rights. The holders of shares of
Cumulative Preferred Stock shall have no voting rights
whatsoever, except for any voting rights to which they may be
entitled under the laws of the State of Delaware, and except
as follows:
(a) Whenever, at any time or times,
dividends payable on the shares of Cumulative
Preferred Stock or on any Parity Preferred Stock with
respect to payment of dividends, shall be in arrears
for an aggregate number of days equal to six calendar
quarters or more, whether or not consecutive, the
holders of the outstanding shares of Cumulative
Preferred Stock shall have the right, with holders of
shares of any one or more other class or series of
stock upon which like voting rights have been
conferred and are exercisable (voting together as a
class), to elect two of the authorized number of
members of the Board at the Corporation's next annual
meeting of stockholders and at each subsequent annual
meeting of stockholders until such arrearages have
been paid or set apart for payment, at which time
such right shall terminate, except as herein or by
law expressly provided, subject to revesting in the
event of each and every subsequent default of the
character above mentioned. Upon any termination of
the right of the holders of shares of Cumulative
Preferred Stock as a class to vote for directors as
herein provided, the term of office of all directors
then in office elected by the holders of shares of
Cumulative Preferred Stock shall terminate
immediately.
Any director who shall have been so elected pursuant
to this paragraph may be removed at any time, either
with or without cause. Any vacancy thereby created
may be filled only by the affirmative vote of the
holders of shares of Cumulative Preferred Stock
voting separately as a class (together with the
holders of shares of any other class or series of
stock upon which like voting rights have been
conferred and are exercisable). If the office of any
director elected by the holders of shares of
Cumulative Preferred Stock voting as a class becomes
vacant for any reason other than removal from office
as aforesaid, the remaining
<PAGE> 100
6
director elected pursuant to this paragraph may choose a successor who
shall hold office for the unexpired term in respect of which such
vacancy occurred. At elections for such directors, each holder of
shares of Cumulative Preferred Stock shall be entitled to one vote for
each share held (the holders of shares of any other class or series of
preferred stock having like voting rights being entitled to such number
of votes, if any, for each share of such stock held as may be granted to
them).
(b) So long as any shares of Cumulative Preferred Stock
remain outstanding, the consent of the holders of at least two-thirds of
the shares of the Cumulative Preferred Stock outstanding at the time and
all other classes or series of stock upon which like voting rights have
been conferred and are exercisable (voting together as a class) given in
person or by proxy, either in writing or at any meeting called for the
purpose, shall be necessary to permit, effect or validate any one or
more of the following:
(i) the issuance or increase of the authorized amount of
any class or series of shares ranking prior (as that term is
defined in paragraph 9(a) hereof) to the shares of the
Cumulative Preferred Stock; or
(ii) the amendment, alteration or repeal, whether by
merger, consolidation or otherwise, of any of the provisions of
the Certificate of Incorporation, (including this resolution or
any provision hereof) that would materially and adversely
affect any power, preference, or special right of the shares of
Cumulative Preferred Stock or of the holders thereof;
provided, however, that any increase in the amount of authorized
Common Stock or authorized Preferred Stock or any increase or
decrease in the number of shares of any series of Preferred
Stock or the creation and issuance of other series of Common
Stock or Preferred Stock, in each case ranking on a parity with
or junior to the shares of Cumulative Preferred Stock with
<PAGE> 101
7
respect to the payment of dividends and the distribution
of assets upon liquidation, dissolution or winding up, shall
not be deemed to materially and adversely affect such
powers, preferences or special rights.
(c) The foregoing voting provisions shall not
apply if, at or prior to the time when the act with respect to
which such vote would otherwise be required shall be effected,
all outstanding shares of Cumulative Preferred Stock shall have
been redeemed or called for redemption and sufficient funds
shall have been deposited in trust to effect such redemption.
6. Redemption Shares. The shares of the Cumulative
Preferred Stock may be redeemed at the option of the Corporation, as a
whole, or from time to time in part, at any time, upon not less than 30
days' prior notice mailed to the holders of the shares to be redeemed at
their addresses as shown on the stocks books of the Corporation;
provided, however, that shares of the Cumulative Preferred Stock shall
not be redeemable prior to February 28, 1999. Subject to the foregoing,
on or after such date, shares of the Cumulative Preferred Stock are
redeemable at $200.00 per share together with an amount equal to all
dividends (whether or not earned or declared) accrued and accumulated
and unpaid to, but excluding, the date fixed for redemption.
If full cumulative dividends on the Cumulative Preferred Stock
have not been paid, the Cumulative Preferred Stock may not be redeemed
in part and the Corporation may not purchase or acquire any shares of
the Cumulative Preferred Stock otherwise than pursuant to a purchase or
exchange offer made on the same terms to all holders of the Cumulative
Preferred Stock. If fewer than all the outstanding shares of Cumulative
Preferred Stock are to be redeemed, the Corporation will select those to
be redeemed by lot or a substantially equivalent method.
If a notice of redemption has been given pursuant to this
paragraph 6 and if, on or before the date fixed for redemption, the
funds necessary for such redemption shall have been set aside by the
Corporation, separate and apart from its other funds, in trust for the
pro rata benefit of the holders of the shares of Cumulative Preferred
Stock
<PAGE> 102
8
so called for redemption, then, notwithstanding that any certificates
for such shares have not been surrendered for cancellation, on the
redemption date dividends shall cease to accrue on the shares to
be redeemed, and at the close of business on the redemption date the
holders of such shares shall cease to be stockholders with respect to
such shares and shall have no interest in or claims against the
Corporation by virtue thereof and shall have no voting or other rights
with respect to such shares, except the right to receive the moneys
payable upon surrender (and endorsement, if required by the Corporation)
of their certificates, and the shares evidenced thereby shall no longer
be outstanding. Subject to applicable escheat laws, any moneys so set
aside by the Corporation and unclaimed at the end of two years from the
redemption date shall revert to the general funds of the Corporation,
after which reversion the holders of such shares so called for
redemption shall look only to the general funds of the Corporation for
the payment of the amounts payable upon such redemption. Any interest
accrued on funds so deposited shall be paid to the Corporation from time
to time.
7. Authorization and Issuance of Other Securities. No
consent of the holders of the Cumulative Preferred Stock shall be
required for (a) the creation of any indebtedness of any kind of the
Corporation, (b) the creation, or increase or decrease in the amount, of
any class or series of stock of the Corporation not ranking prior as to
dividends or upon liquidation, dissolution or winding up to the
Cumulative Preferred Stock or (c) any increase or decrease in the amount
of authorized Common Stock or any increase, decrease or change in the
par value thereof or in any other terms thereof.
8. Amendment of Resolution. The Board and the Committee
each reserves the right by subsequent amendment of this resolution from
time to time to increase or decrease the number of shares that
constitute the Cumulative Preferred Stock (but not below the number of
shares thereof then outstanding) and in other respects to amend this
resolution within the limitations provided by law, this resolution and
the Certificate of Incorporation.
9. Rank. For the purposes of this resolution, any stock
of any class or classes of the Corporation shall be deemed to rank:
<PAGE> 103
9
(a) prior to shares of the Cumulative Preferred
Stock, either as to dividends or upon liquidation, dissolution
or winding up, or both, if the holders of stock of such class
or classes shall be entitled by the terms thereof to the
receipt of dividends or of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in
preference or priority to the holders of shares of the
Cumulative Preferred Stock;
(b) on a parity with shares of the Cumulative
Preferred Stock, either as to dividends or upon liquidation,
dissolution or winding up, or both, whether or not the dividend
rates, dividend payment dates, or redemption or liquidation
prices per share thereof be different from those of the
Cumulative Preferred Stock, if the holders of stock of such
class or classes shall be entitled by the terms thereof to the
receipt of dividends or of amounts distributed upon
liquidation, dissolution or winding up, as the case may be, in
proportion to their respective dividend rates or liquidation
prices, without preference or priority of one over the other as
between the holders of such stock and the holders of shares of
Cumulative Preferred Stock (the term "Parity Preferred Stock"
being used to refer to any stock on a parity with the shares of
Cumulative Preferred Stock, either as to dividends or upon
liquidation, dissolution or winding up, or both, as the context
may require); and
(c) junior to shares of the Cumulative Preferred
Stock, either as to dividends or upon liquidation, dissolution
or winding up, or both, if such class shall be Common Stock or
if the holders of the Cumulative Preferred Stock shall be
entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as
the case may be, in preference or priority to the holders of
stock in such class or classes.
The Cumulative Preferred Stock shall rank prior, as to
dividends and upon liquidation, dissolution or winding up, to the Common
Stock and on a parity with the Corporation's ESOP Convertible
<PAGE> 104
10
Preferred Stock, with a liquidation value of $35.88
per share, the Corporation's 9.36% Cumulative
Preferred Stock, with a liquidation value of $25.00
per share, the Corporation's 8.88% Cumulative
Preferred Stock, with a liquidation value of $200.00
per share, the Corporation's 8-3/4% Cumulative
Preferred Stock, with a liquidation value of $200.00
per share, the Corporation's 7-3/8% Cumulative
Preferred Stock, with a liquidation value of $200.00
per share and, if issued, the Corporation's 7.82%
Cumulative Preferred Stock with a liquidation value
of $200.00 per share.
IN WITNESS WHEREOF, Morgan Stanley Group Inc. has caused
this Certificate to be made under the seal of the Corporation and signed
by Richard B. Fisher, its Chairman, and attested by Patricia A. Kurtz,
its Assistant Secretary, this 4 day of February, 1994.
MORGAN STANLEY GROUP INC.
By: /s/ Richard B. Fisher
----------------------------
Name: Richard B. Fisher
Title: Chairman of the Board
[SEAL]
Attest:
/s/ Patricia A. Kurtz
- ----------------------
Patricia A. Kurtz
Assistant Secretary
<PAGE> 105
CERTIFICATE OF DECREASE
OF
AUTHORIZED NUMBER OF SHARES
OF
7.82% CUMULATIVE PREFERRED STOCK
Morgan Stanley Group Inc., a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "Corporation"),
DOES HEREBY CERTIFY:
That the Restated Certificate of Incorporation of the Corporation was
filed in the Office of the Secretary of State of Delaware on September 15, 1992
and forwarded for recording in the Office of the Recorder of Deeds for Kent
County, Delaware on September 15, 1992 and a Certificate of Designation of
Preferences and Rights ("Certificate of Designation") of the 7.82% Cumulative
Preferred Stock, was filed in said Office of the Secretary of State on November
24, 1993 and forwarded for recording in the office of the Recorder of Deeds on
even date therewith.
That pursuant to authority expressly granted to and vested in the
Pricing Committee of the Board of Directors of the Corporation (the "Pricing
Committee"), by resolutions duly adopted by said Board of Directors on October
29, 1993 (the "Resolutions"), the Pricing Committee fixed certain designations,
preferences and rights of the aforesaid 7.82% Cumulative Preferred Stock as set
forth in the Certificate of Designation.
That pursuant to authority expressly granted to and vested in the
Pricing Committee by the Resolutions, the Pricing Committee by a written
unanimous consent in lieu of a meeting dated as of April 12, 1994 duly adopted
a resolution authorizing and directing a decrease in the authorized number of
shares of the 7.82% Cumulative Preferred Stock of the Corporation, from 682,813
shares to 611,238 shares and providing that the 71,575 shares of the 7.82%
Cumulative Preferred Stock designated by the Pricing Committee but not issued
and outstanding resume the status of authorized and unissued Preferred Stock,
all in accordance with the provisions of Section 151 of The General Corporation
Law of the State of Delaware and the aforesaid Restated Certificate of
Incorporation of the Corporation.
<PAGE> 106
IN WITNESS WHEREOF, said Morgan Stanley Group Inc., has caused this
certificate to be signed by Richard B. Fisher, its Chairman, and attested by
Patricia A. Kurtz, its Assistant Secretary, this 12 day of April, 1994.
By /s/ Richard B. Fisher
--------------------------
Name: Richard B. Fisher
Title: Chairman
ATTEST:
By /s/ Patricia A. Kurtz
------------------------------
Name: Patricia A. Kurtz
Title: Assistant Secretary
<PAGE> 107
CERTIFICATE OF DESIGNATION OF PREFERENCES AND RIGHTS
OF THE
9.00% CUMULATIVE PREFERRED STOCK
($200.00 Stated Value)
OF
MORGAN STANLEY GROUP INC.
------------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
------------------------------
The undersigned DOES HEREBY CERTIFY that the following resolution was
duly adopted by the Board of Directors (the "Board") of Morgan Stanley Group
Inc., a Delaware corporation (hereinafter called the "Corporation"), by
unanimous written consent in lieu of a meeting dated as of October 29, 1993 with
certain of the designations, preferences and rights having been fixed by the
Pricing Committee of the Board (the "Committee") at a meeting on February 10,
1995, pursuant to authority delegated to it by the Board pursuant to the
provisions of Section 141(c) of the General Corporation Law of the State of
Delaware:
RESOLVED that, pursuant to authority expressly granted to and vested
in the Committee by the Board and in the Board by provisions of the
Restated Certificate of Incorporation of the Corporation, as amended (the
"Certificate of Incorporation"), the issuance of a series of Preferred
Stock, without par value (the "Preferred Stock"), which shall consist of
738,763 of the 30,000,000 shares of Preferred Stock which the Corporation
now has authority to issue, is authorized, and the Board and, pursuant to
the authority expressly granted to the Committee by the Board pursuant to
the provisions of Section 141(c) of the General Corporation Law of the
State of Delaware and the Certificate of Incorporation, the Committee fix
the powers, designations, preferences and relative, participating, optional
or other special rights, and the qualifications, limitations or
restrictions thereof, of the shares of such series (in addition to the
powers, designations, preferences and relative, participating, optional or
other special rights, and the qualifications, limitations or restrictions
thereof, set
<PAGE> 108
2
forth in the Certificate of Incorporation which may be applicable to the
Preferred Stock) as follows:
1. Designation and Amount; Fractional Shares. The designation
for such series of the Preferred Stock authorized by this resolution
shall be the 9.00% Cumulative Preferred Stock, without par value, with
a stated value of $200.00 per share (the "Cumulative Preferred
Stock"). The stated value per share of Cumulative Preferred Stock
shall not for any purpose be considered to be a determination by the
Board or the Committee with respect to the capital and surplus of the
Corporation. The maximum number of shares of Cumulative Preferred
Stock shall be 738,763. The Cumulative Preferred Stock is issuable
in whole shares only.
2. Dividends. Holders of shares of Cumulative Preferred Stock
will be entitled to receive, when, as and if declared by the Board or
the Committee out of assets of the Corporation legally available for
payment, cash dividends payable quarterly at the rate of 9.00% per
annum. Dividends on the Cumulative Preferred Stock will be payable
quarterly on February 28, May 30, August 30 and November 30 (each a
"dividend payment date"). Dividends on shares of the Cumulative
Preferred Stock will be cumulative from the date of initial issuance
of such shares of Cumulative Preferred Stock. Dividends will be
payable, in arrears, to holders of record as they appear on the stock
books of the Corporation on such record dates, not more than 60 days
nor less than 10 days preceding the payment dates thereof, as shall be
fixed by the Board or the Committee. The amount of dividends payable
for the initial dividend period or any period shorter than a full
dividend period shall be calculated on the basis of a 360-day year of
twelve 30-day months. No dividends may be declared or paid or set
apart for payment on any Parity Preferred Stock (as defined in
paragraph 9(b) below) with regard to the payment of dividends unless
there shall also be or have been declared and paid or set apart for
payment on the Cumulative Preferred Stock, like dividends for all
dividend payment periods of the Cumulative Preferred Stock ending on
or before the dividend payment date of such Parity Preferred Stock,
ratably in proportion to the respective amounts of dividends (x)
accumulated and unpaid or payable on such Parity Preferred Stock, on
the one hand, and (y) accumulated and unpaid through the dividend
payment period or periods of the Cumulative Preferred Stock next
preceding such dividend payment date, on the other hand.
Except as set forth in the preceding sentence, unless full
cumulative dividends on the Cumulative Preferred Stock have been paid,
no dividends (other than in Common Stock of the Corporation) may be
paid or declared and set aside for payment or other distribution made
upon the Common Stock or on any other stock of the Corporation ranking
junior to or on a parity with the
<PAGE> 109
3
Cumulative Preferred Stock as to dividends, nor may any Common Stock
or any other stock of the Corporation ranking junior to or on a parity
with the Cumulative Preferred Stock as to dividends be redeemed,
purchased or otherwise acquired for any consideration (or any payment
be made to or available for a sinking fund for the redemption of any
shares of such stock; provided, however, that any moneys theretofore
deposited in any sinking fund with respect to any preferred stock of
the Corporation in compliance with the provisions of such sinking fund
may thereafter be applied to the purchase or redemption of such
preferred stock in accordance with the terms of such sinking fund,
regardless of whether at the time of such application full cumulative
dividends upon shares of the Cumulative Preferred Stock outstanding to
the last dividend payment date shall have been paid or declared and
set apart for payment) by the Corporation; provided that any such
junior or parity Preferred Stock or Common Stock may be converted into
or exchanged for stock of the Corporation ranking junior to the
Cumulative Preferred Stock as to dividends.
3. Liquidation Preference. The shares of Cumulative Preferred
Stock shall rank, as to liquidation, dissolution or winding up of the
Corporation, prior to the shares of Common Stock and any other class
of stock of the Corporation ranking junior to the Cumulative Preferred
Stock as to rights upon liquidation, dissolution or winding up of the
Corporation, so that in the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the
holders of the Cumulative Preferred Stock shall be entitled to receive
out of the assets of the Corporation available for distribution to its
stockholders, whether from capital, surplus or earnings, before any
distribution is made to holders of shares of Common Stock or any other
such junior stock, an amount equal to $200.00 per share (the
"Liquidation Preference" of a share of Cumulative Preferred Stock)
plus an amount equal to all dividends (whether or not earned or
declared) accrued and accumulated and unpaid on the shares of
Cumulative Preferred Stock to the date of final distribution. The
holders of the Cumulative Preferred Stock will not be entitled to
receive the Liquidation Preference until the liquidation preference of
any other class of stock of the Corporation ranking senior to the
Cumulative Preferred Stock as to rights upon liquidation, dissolution
or winding up shall have been paid (or a sum set aside therefor
sufficient to provide for payment) in full. After payment of the full
amount of the Liquidation Preference and such dividends, the holders
of shares of Cumulative Preferred Stock will not be entitled to any
further participation in any distribution of assets by the
Corporation. If, upon any liquidation, dissolution or winding up of
the Corporation, the assets of the Corporation, or proceeds thereof,
distributable among the holders of shares of Parity Preferred Stock
shall be insufficient to pay in full the preferential amount
aforesaid, then such assets, or the proceeds thereof, shall be
distributable among such holders
<PAGE> 110
4
ratably in accordance with the respective amounts which would be
payable on such shares if all amounts payable thereon were paid in
full. For the purposes hereof, neither a consolidation or merger of
the Corporation with or into any other corporation, nor a merger of
any other corporation with or into the Corporation, nor a sale or
transfer of all or any part of the Corporation's assets for cash or
securities shall be considered a liquidation, dissolution or winding
up of the Corporation.
4. Conversion. The Cumulative Preferred Stock is not
convertible into shares of any other class or series of stock of the
Corporation.
5. Voting Rights. The holders of shares of Cumulative Preferred
Stock shall have no voting rights whatsoever, except for any voting
rights to which they may be entitled under the laws of the State of
Delaware, and except as follows:
(a) Whenever, at any time or times, dividends payable on the
shares of Cumulative Preferred Stock or on any Parity Preferred
Stock with respect to payment of dividends, shall be in arrears
for an aggregate number of days equal to six calendar quarters or
more, whether or not consecutive, the holders of the outstanding
shares of Cumulative Preferred Stock shall have the right, with
holders of shares of any one or more other class or series of
stock upon which like voting rights have been conferred and are
exercisable (voting together as a class), to elect two of the
authorized number of members of the Board at the Corporation's
next annual meeting of stockholders and at each subsequent annual
meeting of stockholders until such arrearages have been paid or
set apart for payment, at which time such right shall terminate,
except as herein or by law expressly provided, subject to
revesting in the event of each and every subsequent default of
the character above mentioned. Upon any termination of the right
of the holders of shares of Cumulative Preferred Stock as a class
to vote for directors as herein provided, the term of office of
all directors then in office elected by the holders of shares of
Cumulative Preferred Stock shall terminate immediately.
Any director who shall have been so elected pursuant to this
paragraph may be removed at any time, either with or without
cause. Any vacancy thereby created may be filled only by the
affirmative vote of the holders of shares of Cumulative Preferred
Stock voting separately as a class (together with the holders of
shares of any other class or series of stock upon which like
voting rights have been conferred and are exercisable). If the
office of any director elected by the holders of shares of
Cumulative Preferred Stock voting as a class becomes vacant
<PAGE> 111
5
for any reason other than removal from office as aforesaid, the
remaining director elected pursuant to this paragraph may choose
a successor who shall hold office for the unexpired term in
respect of which such vacancy occurred. At elections for such
directors, each holder of shares of Cumulative Preferred Stock
shall be entitled to one vote for each share held (the holders of
shares of any other class or series of preferred stock having
like voting rights being entitled to such number of votes, if
any, for each share of such stock held as may be granted to
them).
(b) So long as any shares of Cumulative Preferred Stock
remain outstanding, the consent of the holders of at least two-
thirds of the shares of Cumulative Preferred Stock outstanding at
the time and all other classes or series of stock upon which like
voting rights have been conferred and are exercisable (voting
together as a class) given in person or by proxy, either in
writing or at any meeting called for the purpose, shall be
necessary to permit, effect or validate any one or more of the
following:
(i) the issuance or increase of the authorized amount
of any class or series of shares ranking prior (as that term
is defined in paragraph 9(a) hereof) to the shares of the
Cumulative Preferred Stock; or
(ii) the amendment, alteration or repeal, whether by
merger, consolidation or otherwise, of any of the provisions
of the Certificate of Incorporation, (including this
resolution or any provision hereof) that would materially
and adversely affect any power, preference, or special right
of the shares of Cumulative Preferred Stock or of the
holders thereof;
provided, however, that any increase in the amount of
authorized Common Stock or authorized Preferred Stock or any
increase or decrease in the number of shares of any series
of Preferred Stock or the creation and issuance of other
series of Common Stock or Preferred Stock, in each case
ranking on a parity with or junior to the shares of
Cumulative Preferred Stock with respect to the payment of
dividends and the distribution of assets upon liquidation,
dissolution or winding up, shall not be deemed to materially
and adversely affect such powers, preferences or special
rights.
(c) The foregoing voting provisions shall not apply if, at
or prior to the time when the act with respect to which
such vote would
<PAGE> 112
6
otherwise be required shall be effected, all outstanding shares
of Cumulative Preferred Stock shall have been redeemed or called
for redemption and sufficient funds shall have been deposited in
trust to effect such redemption.
6. Redemption Shares. The shares of the Cumulative Preferred
Stock may be redeemed at the option of the Corporation, as a whole, or
from time to time in part, at any time, upon not less than 30 days'
prior notice mailed to the holders of the shares to be redeemed at
their addresses as shown on the stock books of the Corporation;
provided, however, that shares of the Cumulative Preferred Stock shall
not be redeemable prior to February 28, 2000. Subject to the
foregoing, on or after such date, shares of the Cumulative Preferred
Stock are redeemable at $200.00 per share together with an amount
equal to all dividends (whether or not earned or declared) accrued and
accumulated and unpaid to, but excluding, the date fixed for
redemption.
If full cumulative dividends on the Cumulative Preferred Stock
have not been paid, the Cumulative Preferred Stock may not be redeemed
in part and the Corporation may not purchase or acquire any shares of
the Cumulative Preferred Stock otherwise than pursuant to a purchase
or exchange offer made on the same terms to all holders of the
Cumulative Preferred Stock. If fewer than all the outstanding shares
of Cumulative Preferred Stock are to be redeemed, the Corporation will
select those to be redeemed by lot or a substantially equivalent
method.
If a notice of redemption has been given pursuant to this
paragraph 6 and if, on or before the date fixed for redemption, the
funds necessary for such redemption shall have been set aside by the
Corporation, separate and apart from its other funds, in trust for the
pro rata benefit of the holders of the shares of Cumulative Preferred
Stock so called for redemption, then, notwithstanding that any
certificates for such shares have not been surrendered for
cancellation, on the redemption date dividends shall cease to accrue
on the shares to be redeemed, and at the close of business on the
redemption date the holders of such shares shall cease to be
stockholders with respect to such shares and shall have no interest in
or claims against the Corporation by virtue thereof and shall have no
voting or other rights with respect to such shares, except the right
to receive the moneys payable upon surrender (and endorsement, if
required by the Corporation) of their certificates, and the shares
evidenced thereby shall no longer be outstanding. Subject to
applicable escheat laws, any moneys so set aside by the Corporation
and unclaimed at the end of two years from the redemption date shall
revert to the general funds of the Corporation, after which reversion
the holders of such shares so called for redemption shall look only to
the general funds of the Corporation for the
<PAGE> 113
7
payment of the amounts payable upon such redemption. Any interest
accrued on funds so deposited shall be paid to the Corporation from
time to time.
7. Authorization and Issuance of Other Securities. No consent
of the holders of the Cumulative Preferred Stock shall be required for
(a) the creation of any indebtedness of any kind of the Corporation,
(b) the creation, or increase or decrease in the amount, of any class
or series of stock of the Corporation not ranking prior as to
dividends or upon liquidation, dissolution or winding up to the
Cumulative Preferred Stock or (c) any increase or decrease in the
amount of authorized Common Stock or any increase, decrease or change
in the par value thereof or in any other terms thereof.
8. Amendment of Resolution. The Board and the Committee each
reserves the right by subsequent amendment of this resolution from
time to time to increase or decrease the number of shares that
constitute the Cumulative Preferred Stock (but not below the number of
shares thereof then outstanding) and in other respects to amend this
resolution within the limitations provided by law, this resolution and
the Certificate of Incorporation.
9. Rank. For the purposes of this resolution, any stock of
any class or classes of the Corporation shall be deemed to rank:
(a) prior to shares of the Cumulative Preferred Stock,
either as to dividends or upon liquidation, dissolution or
winding up, or both, if the holders of stock of such class or
classes shall be entitled by the terms thereof to the receipt of
dividends or of amounts distributable upon liquidation,
dissolution or winding up, as the case may be, in preference or
priority to the holders of shares of the Cumulative Preferred
Stock;
(b) on a parity with shares of the Cumulative Preferred
Stock, either as to dividends or upon liquidation, dissolution or
winding up, or both, whether or not the dividend rates, dividend
payment dates, or redemption or liquidation prices per share
thereof be different from those of the Cumulative Preferred
Stock, if the holders of stock of such class or classes shall be
entitled by the terms thereof to the receipt of dividends or of
amounts distributed upon liquidation, dissolution or winding up,
as the case may be, in proportion to their respective dividend
rates or liquidation prices, without preference or priority of
one over the other as between the holders of such stock and the
holders of shares of Cumulative Preferred Stock (the term "Parity
Preferred Stock" being used to refer to any stock on a parity
with the shares of
<PAGE> 114
8
Cumulative Preferred Stock, either as to dividends or upon
liquidation, dissolution or winding up, or both, as the context
may require); and
(c) junior to shares of the Cumulative Preferred Stock,
either as to dividends or upon liquidation, dissolution or
winding up, or both, if such class shall be Common Stock or if
the holders of the Cumulative Preferred Stock shall be entitled
to the receipt of dividends or of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in
preference or priority to the holders of stock of such class or
classes.
The Cumulative Preferred Stock shall rank prior, as to dividends
and upon liquidation, dissolution or winding up, to the Common Stock and on
a parity with (i) the Corporation's ESOP Convertible Preferred Stock, with
a liquidation value of $35.88 per share, (ii) the Corporation's 9.36%
Cumulative Preferred Stock, with a liquidation value of $25.00 per share,
(iii) the Corporation's 8.88% Cumulative Preferred Stock, with a
liquidation value of $200.00 per share, (iv) the Corporation's 8-3/4%
Cumulative Preferred Stock, with a liquidation value of $200.00 per share,
(v) the Corporation's 7-3/8% Cumulative Preferred Stock, with a liquidation
value of $200.00 per share, (vi) if issued, the Corporation's 7.82%
Cumulative Preferred Stock, with a liquidation value of $200.00 per share
and (vii) if issued, the Corporation's 7.80% Cumulative Preferred Stock,
with a liquidation value of $200.00 per share.
<PAGE> 115
9
IN WITNESS WHEREOF, Morgan Stanley Group Inc. has caused this
Certificate to be made under the seal of the Corporation and signed by
Richard B. Fisher, its Chairman, and attested by Patricia A. Kurtz, its
Assistant Secretary, this 14th day of February, 1995.
MORGAN STANLEY GROUP INC.
By: /s/ Richard B. Fisher
----------------------------------
Name: Richard B. Fisher
Title: Chairman of the Board
[SEAL]
ATTEST:
/s/ Patricia A. Kurtz
----------------------------------
Name: Patricia A. Kurtz
Title: Assistant Secretary
<PAGE> 116
CERTIFICATE OF DECREASE
OF
AUTHORIZED NUMBER OF SHARES
OF
9.00% CUMULATIVE PREFERRED STOCK
Morgan Stanley Group Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Corporation"),
DOES HEREBY CERTIFY:
That the Restated Certificate of Incorporation of the
Corporation was filed in the Office of the Secretary of State of Delaware on
September 15, 1992 and forwarded for recording in the Office of the Recorder of
Deeds for Kent County, Delaware on September 15, 1992 and a Certificate of
Designation of Preferences and Rights ("Certificate of Designation") of the
9.00% Cumulative Preferred Stock, was filed in said Office of the Secretary of
State on February 17, 1995 and forwarded for recording in the office of the
Recorder of Deeds on even date therewith.
That pursuant to authority expressly granted to and vested in
the Pricing Committee of the Board of Directors of the Corporation (the "Pricing
Committee"), by resolutions duly adopted by said Board of Directors on October
29, 1993 (the "Resolutions"), the Pricing Committee fixed certain designations,
preferences and rights of the aforesaid 9.00% Cumulative Preferred Stock as set
forth in the Certificate of Designation.
That pursuant to authority expressly granted to and vested in
the Pricing Committee by the Resolutions, the Pricing Committee by a written
unanimous consent in lieu of a meeting dated as of March 9, 1995 duly adopted a
resolution authorizing and directing a decrease in the authorized number of
shares of the 9.00% Cumulative Preferred Stock of the Corporation, from 738,763
shares to 720,900 shares and providing that the 17,863 shares of the 9.00%
Cumulative Preferred Stock designated by the Pricing Committee but not issued
and outstanding resume the status of authorized and unissued Preferred Stock,
all in accordance with the provisions of Section 151 of The General Corporation
Law of the State of Delaware and the aforesaid Restated Certificate of
Incorporation of the Corporation.
IN WITNESS WHEREOF, said Morgan Stanley Group Inc., has caused
this certificate to be signed by Richard B. Fisher, its Chairman, and attested
by Patricia A. Kurtz, its Assistant Secretary, this 13th day of March, 1995.
By /s/ Richard B. Fisher
--------------------------------
Name: Richard B. Fisher
Title: Chairman
ATTEST:
By /s/ Patricia A. Kurtz
--------------------------------
Name: Patricia A. Kurtz
Title: Assistant Secretary
<PAGE> 117
CERTIFICATE OF DESIGNATION OF PREFERENCES AND RIGHTS
OF THE
8.40% CUMULATIVE PREFERRED STOCK
($200.00 Stated Value)
OF
MORGAN STANLEY GROUP INC.
--------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
--------------------------
The undersigned DOES HEREBY CERTIFY that the following
resolution was duly adopted by the Board of Directors (the "Board") of Morgan
Stanley Group Inc., a Delaware corporation (hereinafter called the
"Corporation"), by unanimous written consent in lieu of a meeting dated as of
April 12, 1995 with certain of the designations, preferences and rights having
been fixed by the Pricing Committee of the Board (the "Committee") at a meeting
on July 27, 1995, pursuant to authority delegated to it by the Board pursuant to
the provisions of Section 141(c) of the General Corporation Law of the State of
Delaware:
RESOLVED that, pursuant to authority expressly granted to and
vested in the Committee by the Board and in the Board by provisions of
the Restated Certificate of Incorporation of the Corporation, as
amended (the "Certificate of Incorporation"), the issuance of a series
of Preferred Stock, without par value (the "Preferred Stock"), which
shall consist of 1,006,250 of the 30,000,000 shares of Preferred Stock
which the Corporation now has authority to issue, is authorized, and
the Board and, pursuant to the authority expressly granted to the
Committee by the Board pursuant to the provisions of Section 141(c) of
the General Corporation Law of the State of Delaware and the
Certificate of Incorporation, the Committee fix the powers,
designations, preferences and relative, participating, optional or
other special rights, and the qualifications, limitations or
restrictions thereof, of the shares of such series (in addition to the
powers, designations, preferences and relative, participating, optional
or other special rights, and the qualifications, limitations or
restrictions thereof, set
<PAGE> 118
2
forth in the Certificate of Incorporation which may be applicable to
the Preferred Stock) as follows:
1. Designation and Amount; Fractional Shares. The
designation for such series of the Preferred Stock authorized
by this resolution shall be the 8.40% Cumulative Preferred
Stock, without par value, with a stated value of $200.00 per
share (the "Cumulative Preferred Stock"). The stated value per
share of Cumulative Preferred Stock shall not for any purpose
be considered to be a determination by the Board or the
Committee with respect to the capital and surplus of the
Corporation. The total number of shares of Cumulative
Preferred Stock shall be 1,006,250. The Cumulative Preferred
Stock is issuable in whole shares only.
2. Dividends. Holders of shares of Cumulative
Preferred Stock will be entitled to receive, when, as and if
declared by the Board or the Committee out of assets of the
Corporation legally available for payment, cash dividends
payable quarterly at the rate of 8.40% per annum. Dividends on
the Cumulative Preferred Stock will be payable quarterly on
February 28, May 30, August 30 and November 30 (each a
"dividend payment date"). Dividends on shares of the
Cumulative Preferred Stock will be cumulative from the date of
initial issuance of such shares of Cumulative Preferred Stock.
Dividends will be payable, in arrears, to holders of record as
they appear on the stock books of the Corporation on such
record dates, not more than 60 days nor less than 10 days
preceding the payment dates thereof, as shall be fixed by the
Board or the Committee. The amount of dividends payable for
the initial dividend period or any period shorter than a full
dividend period shall be calculated on the basis of a 360-day
year of twelve 30-day months. No dividends may be declared or
paid or set apart for payment on any Parity Preferred Stock
(as defined in paragraph 9(b) below) with regard to the
payment of dividends unless there shall also be or have been
declared and paid or set apart for payment on the Cumulative
Preferred Stock, like dividends for all dividend payment
periods of the Cumulative Preferred Stock ending on or before
the dividend payment date of such Parity Preferred Stock,
ratably in proportion to the respective amounts of dividends
(x) accumulated and unpaid or payable on such Parity Preferred
Stock, on the one hand, and (y) accumulated and unpaid through
the dividend payment period or periods of the Cumulative
Preferred Stock next preceding such dividend payment date, on
the other hand.
Except as set forth in the preceding sentence, unless
full cumulative dividends on the Cumulative Preferred Stock
have been paid, no dividends (other than in Common Stock of
the Corporation) may be paid or declared and set aside for
payment or other distribution made upon the Common Stock or on
any other stock of the Corporation ranking junior to or on a
parity with the
<PAGE> 119
3
Cumulative Preferred Stock as to dividends, nor may any Common
Stock or any other stock of the Corporation ranking junior to
or on a parity with the Cumulative Preferred Stock as to
dividends be redeemed, purchased or otherwise acquired for any
consideration (or any payment be made to or available for a
sinking fund for the redemption of any shares of such stock;
provided, however, that any moneys theretofore deposited in
any sinking fund with respect to any preferred stock of the
Corporation in compliance with the provisions of such sinking
fund may thereafter be applied to the purchase or redemption
of such preferred stock in accordance with the terms of such
sinking fund, regardless of whether at the time of such
application full cumulative dividends upon shares of the
Cumulative Preferred Stock outstanding to the last dividend
payment date shall have been paid or declared and set apart
for payment) by the Corporation; provided that any such junior
or parity Preferred Stock or Common Stock may be converted
into or exchanged for stock of the Corporation ranking junior
to the Cumulative Preferred Stock as to dividends.
3. Liquidation Preference. The shares of Cumulative
Preferred Stock shall rank, as to liquidation, dissolution or
winding up of the Corporation, prior to the shares of Common
Stock and any other class of stock of the Corporation ranking
junior to the Cumulative Preferred Stock as to rights upon
liquidation, dissolution or winding up of the Corporation, so
that in the event of any liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary, the
holders of the Cumulative Preferred Stock shall be entitled to
receive out of the assets of the Corporation available for
distribution to its stockholders, whether from capital,
surplus or earnings, before any distribution is made to
holders of shares of Common Stock or any other such junior
stock, an amount equal to $200.00 per share (the "Liquidation
Preference" of a share of Cumulative Preferred Stock) plus an
amount equal to all dividends (whether or not earned or
declared) accrued and accumulated and unpaid on the shares of
Cumulative Preferred Stock to the date of final distribution.
The holders of the Cumulative Preferred Stock will not be
entitled to receive the Liquidation Preference until the
liquidation preference of any other class of stock of the
Corporation ranking senior to the Cumulative Preferred Stock
as to rights upon liquidation, dissolution or winding up shall
have been paid (or a sum set aside therefor sufficient to
provide for payment) in full. After payment of the full amount
of the Liquidation Preference and such dividends, the holders
of shares of Cumulative Preferred Stock will not be entitled
to any further participation in any distribution of assets by
the Corporation. If, upon any liquidation, dissolution or
winding up of the Corporation, the assets of the Corporation,
or proceeds thereof, distributable among the holders of shares
of Parity Preferred Stock shall be insufficient to pay in full
the preferential amount aforesaid, then such assets, or the
proceeds thereof, shall be distributable among such holders
<PAGE> 120
4
ratably in accordance with the respective amounts which would
be payable on such shares if all amounts payable thereon were
paid in full. For the purposes hereof, neither a consolidation
or merger of the Corporation with or into any other
corporation, nor a merger of any other corporation with or
into the Corporation, nor a sale or transfer of all or any
part of the Corporation's assets for cash or securities shall
be considered a liquidation, dissolution or winding up of the
Corporation.
4. Conversion. The Cumulative Preferred Stock is not
convertible into shares of any other class or series of stock
of the Corporation.
5. Voting Rights. The holders of shares of Cumulative
Preferred Stock shall have no voting rights whatsoever, except
for any voting rights to which they may be entitled under the
laws of the State of Delaware, and except as follows:
(a) Whenever, at any time or times,
dividends payable on the shares of Cumulative
Preferred Stock or on any Parity Preferred Stock with
respect to payment of dividends, shall be in arrears
for an aggregate number of days equal to six calendar
quarters or more, whether or not consecutive, the
holders of the outstanding shares of Cumulative
Preferred Stock shall have the right, with holders of
shares of any one or more other class or series of
stock upon which like voting rights have been
conferred and are exercisable (voting together as a
class), to elect two of the authorized number of
members of the Board at the Corporation's next annual
meeting of stockholders and at each subsequent annual
meeting of stockholders until such arrearages have
been paid or set apart for payment, at which time
such right shall terminate, except as herein or by
law expressly provided, subject to revesting in the
event of each and every subsequent default of the
character above mentioned. Upon any termination of
the right of the holders of shares of Cumulative
Preferred Stock as a class to vote for directors as
herein provided, the term of office of all directors
then in office elected by the holders of shares of
Cumulative Preferred Stock shall terminate
immediately.
Any director who shall have been so elected pursuant
to this paragraph may be removed at any time, either
with or without cause. Any vacancy thereby created
may be filled only by the affirmative vote of the
holders of shares of Cumulative Preferred Stock
voting separately as a class (together with the
holders of shares of any other class or series of
stock upon which like voting rights have been
conferred and are exercisable). If the office of any
director elected by the holders of shares of
Cumulative Preferred Stock voting as a class becomes
vacant
<PAGE> 121
5
for any reason other than removal from office as
aforesaid, the remaining director elected pursuant to
this paragraph may choose a successor who shall hold
office for the unexpired term in respect of which
such vacancy occurred. At elections for such
directors, each holder of shares of Cumulative
Preferred Stock shall be entitled to one vote for
each share held (the holders of shares of any other
class or series of preferred stock having like voting
rights being entitled to such number of votes, if
any, for each share of such stock held as may be
granted to them).
(b) So long as any shares of Cumulative
Preferred Stock remain outstanding, the consent of
the holders of at least two-thirds of the shares of
Cumulative Preferred Stock outstanding at the time
and all other classes or series of stock upon which
like voting rights have been conferred and are
exercisable (voting together as a class) given in
person or by proxy, either in writing or at any
meeting called for the purpose, shall be necessary to
permit, effect or validate any one or more of the
following:
(i) the issuance or increase of the
authorized amount of any class or series of
shares ranking prior (as that term is
defined in paragraph 9(a) hereof) to the
shares of the Cumulative Preferred Stock; or
(ii) the amendment, alteration or
repeal, whether by merger, consolidation or
otherwise, of any of the provisions of the
Certificate of Incorporation, (including
this resolution or any provision hereof)
that would materially and adversely affect
any power, preference, or special right of
the shares of Cumulative Preferred Stock or
of the holders thereof; provided, however,
that any increase in the amount of
authorized Common Stock or authorized
Preferred Stock or any increase or decrease
in the number of shares of any series of
Preferred Stock or the creation and issuance
of other series of Common Stock or Preferred
Stock, in each case ranking on a parity with
or junior to the shares of Cumulative
Preferred Stock with respect to the payment
of dividends and the distribution of assets
upon liquidation, dissolution or winding up,
shall not be deemed to materially and
adversely affect such powers, preferences or
special rights.
(c) The foregoing voting provisions shall
not apply if, at or prior to the time when the act
with respect to which such vote would otherwise be
required shall be effected, all outstanding shares of
<PAGE> 122
6
Cumulative Preferred Stock shall have been redeemed
or called for redemption and sufficient funds shall
have been deposited in trust to effect such
redemption.
6. Redemption Shares. The shares of the Cumulative
Preferred Stock may be redeemed at the option of the
Corporation, as a whole, or from time to time in part, at any
time, upon not less than 30 days' prior notice mailed to the
holders of the shares to be redeemed at their addresses as
shown on the stock books of the Corporation; provided,
however, that shares of the Cumulative Preferred Stock shall
not be redeemable prior to August 30, 2000. Subject to the
foregoing, on or after such date, shares of the Cumulative
Preferred Stock are redeemable at $200.00 per share together
with an amount equal to all dividends (whether or not earned
or declared) accrued and accumulated and unpaid to, but
excluding, the date fixed for redemption.
If full cumulative dividends on the Cumulative
Preferred Stock have not been paid, the Cumulative Preferred
Stock may not be redeemed in part and the Corporation may not
purchase or acquire any shares of the Cumulative Preferred
Stock otherwise than pursuant to a purchase or exchange offer
made on the same terms to all holders of the Cumulative
Preferred Stock. If fewer than all the outstanding shares of
Cumulative Preferred Stock are to be redeemed, the Corporation
will select those to be redeemed by lot or a substantially
equivalent method.
If a notice of redemption has been given pursuant to
this paragraph 6 and if, on or before the date fixed for
redemption, the funds necessary for such redemption shall have
been set aside by the Corporation, separate and apart from its
other funds, in trust for the pro rata benefit of the holders
of the shares of Cumulative Preferred Stock so called for
redemption, then, notwithstanding that any certificates for
such shares have not been surrendered for cancellation, on the
redemption date dividends shall cease to accrue on the shares
to be redeemed, and at the close of business on the redemption
date the holders of such shares shall cease to be stockholders
with respect to such shares and shall have no interest in or
claims against the Corporation by virtue thereof and shall
have no voting or other rights with respect to such shares,
except the right to receive the moneys payable upon surrender
(and endorsement, if required by the Corporation) of their
certificates, and the shares evidenced thereby shall no longer
be outstanding. Subject to applicable escheat laws, any moneys
so set aside by the Corporation and unclaimed at the end of
two years from the redemption date shall revert to the general
funds of the Corporation, after which reversion the holders of
such shares so called for redemption shall look only to the
general funds of the Corporation for the payment of the
amounts payable upon such redemption. Any interest accrued on
funds so deposited shall be paid to the Corporation from time
to time.
<PAGE> 123
7
7. Authorization and Issuance of Other Securities. No
consent of the holders of the Cumulative Preferred Stock shall
be required for (a) the creation of any indebtedness of any
kind of the Corporation, (b) the creation, or increase or
decrease in the amount, of any class or series of stock of the
Corporation not ranking prior as to dividends or upon
liquidation, dissolution or winding up to the Cumulative
Preferred Stock or (c) any increase or decrease in the amount
of authorized Common Stock or any increase, decrease or change
in the par value thereof or in any other terms thereof.
8. Amendment of Resolution. The Board and the
Committee each reserves the right by subsequent amendment of
this resolution from time to time to increase or decrease the
number of shares that constitute the Cumulative Preferred
Stock (but not below the number of shares thereof then
outstanding) and in other respects to amend this resolution
within the limitations provided by law, this resolution and
the Certificate of Incorporation.
9. Rank. For the purposes of this resolution, any
stock of any class or classes of the Corporation shall be
deemed to rank:
(a) prior to shares of the Cumulative
Preferred Stock, either as to dividends or upon
liquidation, dissolution or winding up, or both, if
the holders of stock of such class or classes shall
be entitled by the terms thereof to the receipt of
dividends or of amounts distributable upon
liquidation, dissolution or winding up, as the case
may be, in preference or priority to the holders of
shares of the Cumulative Preferred Stock;
(b) on a parity with shares of the
Cumulative Preferred Stock, either as to dividends or
upon liquidation, dissolution or winding up, or both,
whether or not the dividend rates, dividend payment
dates, or redemption or liquidation prices per share
thereof be different from those of the Cumulative
Preferred Stock, if the holders of stock of such
class or classes shall be entitled by the terms
thereof to the receipt of dividends or of amounts
distributed upon liquidation, dissolution or winding
up, as the case may be, in proportion to their
respective dividend rates or liquidation prices,
without preference or priority of one over the other
as between the holders of such stock and the holders
of shares of Cumulative Preferred Stock (the term
"Parity Preferred Stock" being used to refer to any
stock on a parity with the shares of Cumulative
Preferred Stock, either as to dividends or upon
liquidation, dissolution or winding up, or both, as
the context may require); and
<PAGE> 124
8
(c) junior to shares of the Cumulative
Preferred Stock, either as to dividends or upon
liquidation, dissolution or winding up, or both, if
such class shall be Common Stock or if the holders of
the Cumulative Preferred Stock shall be entitled to
the receipt of dividends or of amounts distributable
upon liquidation, dissolution or winding up, as the
case may be, in preference or priority to the holders
of stock of such class or classes.
The Cumulative Preferred Stock shall rank prior, as
to dividends and upon liquidation, dissolution or winding up,
to the Common Stock and on a parity with (i) the Corporation's
ESOP Convertible Preferred Stock, with a liquidation value of
$35.88 per share, (ii) the Corporation's 9.36% Cumulative
Preferred Stock, with a liquidation value of $25.00 per share,
(iii) the Corporation's 8.88% Cumulative Preferred Stock, with
a liquidation value of $200.00 per share, (iv) the
Corporation's 8-3/4% Cumulative Preferred Stock, with a
liquidation value of $200.00 per share, (v) the Corporation's
7-3/8% Cumulative Preferred Stock, with a liquidation value of
$200.00 per share, (vi) if issued, the Corporation's 7.82%
Cumulative Preferred Stock, with a liquidation value of
$200.00 per share, (vii) if issued, the Corporation's 7.80%
Cumulative Preferred Stock, with a liquidation value of
$200.00 per share and (viii) if issued, the Corporation's
9.00% Cumulative Preferred Stock, with a liquidation value of
$200.00 per share.
<PAGE> 125
9
IN WITNESS WHEREOF, Morgan Stanley Group Inc. has
caused this Certificate to be made under the seal of the Corporation
and signed by Richard B. Fisher, its Chairman, and attested by Patricia
A. Kurtz, its Assistant Secretary, this 27th day of July, 1995.
MORGAN STANLEY GROUP INC.
By: /s/ Richard B. Fisher
--------------------------------
Name: Richard B. Fisher
Title: Chairman of the Board
[SEAL]
Attest:
/s/ Patricia A. Kurtz
- --------------------------
Patricia A. Kurtz
Assistant Secretary
<PAGE> 126
CERTIFICATE OF DECREASE
OF
AUTHORIZED NUMBER OF SHARES
OF
8.40% CUMULATIVE PREFERRED STOCK
Morgan Stanley Group Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Corporation"),
DOES HEREBY CERTIFY:
That the Restated Certificate of Incorporation of the
Corporation was filed in the Office of the Secretary of State of Delaware on
September 15, 1992 and forwarded for recording in the Office of the Recorder of
Deeds for Kent County, Delaware on September 15, 1992 and a Certificate of
Designation of Preferences and Rights ("Certificate of Designation") of the
8.40% Cumulative Preferred Stock, was filed in said Office of the Secretary of
State on July 31, 1995 and forwarded for recording in the office of the Recorder
of Deeds on even date therewith.
That pursuant to authority expressly granted to and vested in
the Pricing Committee of the Board of Directors of the Corporation (the "Pricing
Committee"), by resolutions duly adopted by said Board of Directors on April 12,
1995 (the "Resolutions"), the Pricing Committee fixed certain designations,
preferences and rights of the aforesaid 8.40% Cumulative Preferred Stock as set
forth in the Certificate of Designation.
That pursuant to authority expressly granted to and vested in
the Pricing Committee by the Resolutions, the Pricing Committee by a written
unanimous consent in lieu of a meeting dated as of September 6, 1995 duly
adopted a resolution authorizing and directing a decrease in the authorized
number of shares of the 8.40% Cumulative Preferred Stock of the Corporation,
from 1,006,250 shares to 996,776 shares and providing that the 9,474 shares of
the 8.40% Cumulative Preferred Stock designated by the Pricing Committee but
not issued and outstanding resume the status of authorized and unissued
Preferred Stock, all in accordance with the provisions of Section 151 of The
General Corporation Law of the State of Delaware and the aforesaid Restated
Certificate of Incorporation of the Corporation.
IN WITNESS WHEREOF, said Morgan Stanley Group Inc., has caused
this certificate to be signed by Richard B. Fisher, its Chairman, and attested
by Patricia A. Kurtz, its Assistant Secretary, this 6th day of September, 1995.
By /s/ Richard B. Fisher
-----------------------------------
Name: Richard B. Fisher
Title: Chairman
ATTEST:
By /s/ Patricia A. Kurtz
---------------------------------
Name: Patricia A. Kurtz
Title: Assistant Secretary
<PAGE> 1
Morgan Stanley Group Inc. Exhibit 11
Computation of Earnings Per Share
(In millions, except share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended Seven Months
----------------------------- ---------------------------- Ended
August 31, July 31, August 31, July 31, August 31,
1995 1994 1995 1994 1995
------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Primary:
Common stock and common stock equivalents:
Average common shares outstanding 77,211,630 77,790,902 77,149,916 77,806,247 76,915,953
Average common shares issuable
under employee benefit plans 1,406,829 1,814,603 1,252,776 1,935,119 1,161,910
------------ ----------- ----------- ----------- -----------
Total average common and common
equivalent shares outstanding 78,618,459 79,605,505 78,402,692 79,741,366 78,077,863
============ =========== =========== =========== ===========
Earnings:
Net income $209 $121 $375 $238 $413
Less: Preferred stock dividend
requirements 17 17 33 33 38
------------ ----------- ----------- ----------- -----------
Earnings applicable to common shares $192 $104 $342 $205 $375
============ =========== =========== =========== ===========
Primary earnings per share $2.45 $1.31 $4.36 $2.58 $4.80
============ =========== =========== =========== ===========
Fully diluted:
Common stock and common stock equivalents:
Average common shares outstanding 77,211,630 77,790,902 77,149,916 77,806,247 76,915,953
Average common shares issuable
under employee benefit plans 1,600,970 1,851,260 1,708,055 1,935,119 1,639,862
Common shares issuable upon conversion
of preferred stock 3,778,053 3,811,454 3,783,427 3,814,924 3,785,015
------------ ----------- ----------- ----------- -----------
Total average common and common
equivalent shares outstanding 82,590,653 83,453,616 82,641,398 83,556,290 82,340,830
============ =========== =========== =========== ===========
Earnings:
Net income $209 $121 $375 $238 $413
Less: Preferred stock dividend
requirements 16 16 31 31 37
------------ ----------- ----------- ----------- -----------
Earnings applicable to common shares $193 $105 $344 $207 $376
============ =========== =========== =========== ===========
Fully diluted earnings per share $2.34 $1.26 $4.16 $2.48 $4.57
============ =========== =========== =========== ===========
</TABLE>
<PAGE> 1
Morgan Stanley Group Inc. Exhibit 12
Ratio of Earnings to Fixed Charges
and Ratio of Earnings to Fixed Charges and Preferred Stock Dividends
(Dollars in millions)
<TABLE>
<CAPTION>
Seven
Three Months Ended Six Months Ended Months Ended
--------------------- --------------------- ------------
August 31, July 31, August 31, July 31, August 31,
1995 1994 1995 1994 1995
--------- -------- --------- -------- ------------
<S> <C> <C> <C> <C> <C>
RATIO OF EARNINGS TO FIXED CHARGES
Earnings:
Income before income taxes $298 $182 $549 $366 $607
Add: Fixed charges, net 1,762 1,360 3,429 2,772 3,990
--------- -------- --------- -------- -----------
Income before income taxes and
fixed charges, net $2,060 $1,542 $3,978 $3,138 $4,597
========= ======== ========= ======== ===========
Fixed charges:
Total interest expense (1) $1,745 $1,355 $3,415 $2,760 $3,974
Interest factor in rents (2) 11 11 22 20 25
--------- -------- --------- -------- -----------
Total fixed charges $1,756 $1,366 $3,437 $2,780 $3,999
========= ======== ========= ======== ===========
Ratio of earnings to fixed charges 1.2 1.1 1.2 1.1 1.1
RATIO OF EARNINGS TO FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
Earnings:
Income before income taxes $298 $182 $549 $366 $607
Add: Fixed charges, net 1,762 1,360 3,429 2,772 3,990
--------- -------- --------- -------- -----------
Income before income taxes and
fixed charges, net $2,060 $1,542 $3,978 $3,138 $4,597
========= ======== ========= ======== ===========
Fixed charges:
Total interest expense (1) $1,745 $1,355 $3,415 $2,760 $3,974
Interest factor in rents (2) 11 11 22 20 25
Preferred stock dividends (3) 23 24 48 50 56
--------- -------- --------- -------- -----------
Total fixed charges and preferred
stock dividends $1,779 $1,390 $3,485 $2,830 $4,055
========= ======== ========= ======== ===========
Ratio of earnings to fixed charges and
preferred stock dividends 1.2 1.1 1.1 1.1 1.1
</TABLE>
<TABLE>
<CAPTION>
Fiscal Year Ended Year Ended
January 31, December 31,
------------------------------ ------------------
1995 1994 1993 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
RATIO OF EARNINGS TO FIXED CHARGES
Earnings:
Income before income taxes $594 $1,200 $793 $772 $470
Add: Fixed charges, net 5,916 5,055 4,397 3,963 3,759
-------- -------- -------- -------- --------
Income before income taxes and
fixed charges, net $6,510 $6,255 $5,190 $4,735 $4,229
======== ======== ======== ======== ========
Fixed charges:
Total interest expense (1) $5,899 $5,020 $4,362 $3,946 $3,723
Interest factor in rents (2) 41 35 35 38 36
-------- -------- -------- -------- --------
Total fixed charges $5,940 $5,055 $4,397 $3,984 $3,759
======== ======== ======== ======== ========
Ratio of earnings to fixed charges 1.1 1.2 1.2 1.2 1.1
RATIO OF EARNINGS TO FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
Earnings:
Income before income taxes $594 $1,200 $793 $772 $470
Add: Fixed charges, net 5,916 5,055 4,397 3,963 3,794
-------- -------- -------- -------- --------
Income before income taxes and
fixed charges, net $6,510 $6,255 $5,190 $4,735 $4,264
======== ======== ======== ======== ========
Fixed charges:
Total interest expense (1) $5,899 $5,020 $4,362 $3,946 $3,723
Interest factor in rents (2) 41 35 35 38 36
Preferred stock dividends (3) 97 85 82 47 35
-------- -------- -------- -------- --------
Total fixed charges and preferred
stock dividends $6,037 $5,140 $4,479 $4,031 $3,794
======== ======== ======== ======== ========
Ratio of earnings to fixed charges and
preferred stock dividends 1.1 1.2 1.2 1.2 1.1
</TABLE>
(1) Total interest expense for the three, six, and seven months ended August
31, 1995, the three and six months ended July 31, 1994, the fiscal year
ended January 31, 1995, and the years ended December 31, 1991 and 1990
includes capitalized interest.
(2) Interest factor in rents represents one-third of rent expense which is
considered representative of the interest factor.
(3) The preferred stock dividend amounts represent pre-tax earnings required to
cover dividends on preferred stock.
<TABLE> <S> <C>
<ARTICLE> BD
<LEGEND>
MORGAN STANLEY GROUP INC.
FINANCIAL DATA SCHEDULE
(IN MILLIONS, EXCEPT SHARE DATA)
This schedule contains summary financial information extracted from the
Condensed Consolidated Statement of Financial Condition at August 31, 1995
(Unaudited) and the Condensed Consolidated Statement of Income for the Seven
Months Ended August 31, 1995 (Unaudited) and is qualified in its entirety by
reference to such condensed financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 7-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> AUG-31-1995
<CASH> 4,854
<RECEIVABLES> 6,766
<SECURITIES-RESALE> 47,849
<SECURITIES-BORROWED> 21,055
<INSTRUMENTS-OWNED> 49,947
<PP&E> 1,228
<TOTAL-ASSETS> 132,264
<SHORT-TERM> 6,707
<PAYABLES> 13,440
<REPOS-SOLD> 62,322
<SECURITIES-LOANED> 5,983
<INSTRUMENTS-SOLD> 28,159
<LONG-TERM> 9,111
<COMMON> 81
0
818
<OTHER-SE> 3,981
<TOTAL-LIABILITY-AND-EQUITY> 132,264
<TRADING-REVENUE> 904
<INTEREST-DIVIDENDS> 4,229
<COMMISSIONS> 298
<INVESTMENT-BANKING-REVENUES> 708
<FEE-REVENUE> 215
<INTEREST-EXPENSE> 3,965
<COMPENSATION> 1,188
<INCOME-PRETAX> 607
<INCOME-PRE-EXTRAORDINARY> 607
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 413
<EPS-PRIMARY> 4.80
<EPS-DILUTED> 4.57
</TABLE>
