<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 February 28, 1997
Commission file number 1-9085
MORGAN STANLEY GROUP INC.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
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
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</TABLE>
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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 March 31, 1997, there were 158,005,138 shares of Common Stock,
$1 par value, outstanding.
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TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statement of Financial Condition at
February 28, 1997 (Unaudited) and November 30, 1996.
Condensed Consolidated Statement of Income (Unaudited) for
the Three Months Ended February 28, 1997 and February 29,
1996.
Condensed Consolidated Statement of Cash Flows (Unaudited)
for the Three Months Ended February 28, 1997 and February
29, 1996.
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 6. Exhibits and Reports on Form 8-K
Signatures
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
MORGAN STANLEY GROUP INC.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
(IN MILLIONS)
ASSETS
<TABLE>
<CAPTION>
February 28,
1997 November 30,
(Unaudited) 1996
-------------- --------------
<S> <C> <C>
Cash and interest-bearing equivalents $ 4,488 $ 4,545
Cash and securities deposited with clearing organizations or segregated
under federal and other regulations (securities at market value of
$990 at February 28, 1997 and $2,474
at November 30, 1996) 1,490 3,164
Financial instruments owned:
U.S. government and agency securities 15,219 11,079
Other sovereign government obligations 18,205 19,473
Corporate and other debt 17,905 15,978
Corporate equities 14,242 12,622
Derivative contracts 12,818 11,220
Physical commodities 287 375
Securities purchased under agreements to resell 70,029 60,457
Securities borrowed 50,394 39,680
Receivables:
Customers 10,368 5,761
Brokers, dealers and clearing organizations 1,995 5,421
Interest and dividends 1,495 1,320
Fees and other 1,029 745
Property, equipment and leasehold improvements, at cost, net of
accumulated depreciation and amortization of $655 at February 28,
1997 and $614
at November 30, 1996 1,274 1,301
Other assets 3,534 3,305
------------- -------------
Total assets $ 224,772 $ 196,446
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</TABLE>
See Notes to Condensed Consolidated Financial Statements.
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MORGAN STANLEY GROUP INC.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
(IN MILLIONS, EXCEPT SHARE DATA)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
February 28,
1997 November 30,
(Unaudited) 1996
--------- ---------
<S> <C> <C>
Short-term borrowings $ 22,241 $ 20,461
Financial instruments sold, not yet purchased:
U.S. government and agency securities 13,991 10,196
Other sovereign government obligations 8,355 6,513
Corporate and other debt 1,242 1,112
Corporate equities 8,762 8,889
Derivative contracts 11,006 9,982
Physical commodities 36 476
Securities sold under agreements to repurchase 95,919 83,296
Securities loaned 10,432 8,975
Payables:
Customers 21,041 18,629
Brokers, dealers and clearing organizations 4,113 1,820
Interest and dividends 1,244 1,478
Other liabilities and accrued expenses 1,344 972
Accrued compensation and benefits 1,081 1,746
Long-term borrowings 16,470 14,498
--------- ---------
217,277 189,043
--------- ---------
Capital Units 999 865
--------- ---------
Commitments and contingencies
Stockholders' equity:
Preferred stock 1,027 1,223
Common stock, $1.00 par value; authorized
600,000,000 shares; issued 163,821,105
shares at February 28, 1997 and 163,236,893
shares at November 30, 1996 164 163
Paid-in capital 892 1,144
Retained earnings 4,767 4,504
Cumulative translation adjustments (14) (11)
--------- ---------
Subtotal 6,836 7,023
Less:
Note receivable related to sale of
preferred stock to ESOP 76 78
Common stock held in treasury, at cost
(5,796,887 shares at February 28, 1997 and
9,894,271 shares at November 30, 1996) 264 407
--------- ---------
Total stockholders' equity 6,496 6,538
--------- ---------
Total liabilities and stockholders' equity $ 224,772 $ 196,446
========= =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
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MORGAN STANLEY GROUP INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(IN MILLIONS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended
February 28, February 29,
1997 1996
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<S> <C> <C>
Revenues:
Investment banking $ 442 $ 399
Principal transactions:
Trading 751 704
Investments 56 (7)
Commissions 182 154
Interest and dividends 2,367 1,933
Asset management and administration 278 122
Other -- 3
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Total revenues 4,076 3,308
Interest expense 2,282 1,859
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Net revenues 1,794 1,449
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Expenses excluding interest:
Compensation and benefits 879 705
Occupancy and equipment 100 86
Brokerage, clearing and exchange
fees 84 66
Communications 40 33
Business development 59 37
Professional services 60 42
Other 62 40
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Total expenses excluding
interest 1,284 1,009
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Income before income taxes 510 440
Provision for income taxes 194 167
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Net income $ 316 $ 273
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Earnings applicable to common shares (1) $ 297 $ 257
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Average common and common equivalent
shares outstanding (1) 158,307,567 156,549,243
============= =============
Primary earnings per share $ 1.88 $ 1.64
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Fully diluted earnings per share $ 1.80 $ 1.57
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</TABLE>
(1) Amounts shown are used to calculate primary earnings per share.
See Notes to Condensed Consolidated Financial Statements.
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MORGAN STANLEY GROUP INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(IN MILLIONS)
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<CAPTION>
Three Months Ended
February 28, February 29,
1997 1996
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<S> <C> <C>
Cash flows from operating activities:
Net income $ 316 $ 273
Adjustments to reconcile net income
to net cash used for operating activities:
Non-cash charges included in net income (1) 28
Changes in assets and liabilities:
Cash and securities deposited with
clearing organizations or segregated
under federal and other regulations 1,674 (416)
Financial instruments owned, net of
financial instruments sold, not yet purchased (1,705) 4,878
Securities borrowed, net of securities loaned (9,257) (4,551)
Receivables and other assets (2,045) (6,074)
Payables and other liabilities 4,179 (225)
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Net cash used for operating activities (6,839) (6,087)
Cash flows from investing activities:
Net payments for:
Property, equipment and leasehold
improvements (16) (47)
Purchase of Miller Anderson & Sherrerd, LLP, net
of cash acquired -- (200)
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Net cash used for investing activities (16) (247)
Cash flows from financing activities:
Net proceeds related to short-term borrowings 1,780 1,213
Securities sold under agreements to
repurchase, net of securities
purchased under agreements to resell 3,051 3,269
Proceeds from:
Issuance of common stock 15 39
Issuance of long-term borrowings 3,434 2,814
Issuance of Capital Units 134 --
Payments for:
Repurchases of common stock (62) (350)
Repayments of long-term borrowings (1,306) (207)
Redemption of 8.88% Cumulative Preferred Stock (195) --
Cash dividends (53) (49)
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Net cash provided by financing activities 6,798 6,729
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Net (decrease)/increase in cash and interest-bearing equivalents (57) 395
Cash and interest-bearing equivalents, at
beginning of period 4,545 2,471
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Cash and interest-bearing equivalents, at end of period $ 4,488 $ 2,866
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</TABLE>
See Notes to Condensed Consolidated Financial Statements.
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MORGAN STANLEY GROUP INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(IN MILLIONS)
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
In connection with the Company's fiscal 1996 acquisition of Miller Anderson &
Sherrerd, LLP, the Company issued approximately $66 million of notes payable,
as well as 2,012,264 shares of common stock having a fair value on the date of
acquisition, January 3, 1996, of approximately $83 million.
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MORGAN STANLEY GROUP INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. Basis of Presentation
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 on Form 10-K for the fiscal year ended November 30, 1996
(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 1997 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 trading positions generally are
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 derivative
contracts are derived from pricing models which consider current market
and contractual prices for the underlying financial instruments 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 on a net-by-counterparty
basis 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 consistent with 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 asset and liability management are recognized
ratably over the term of the contract as an adjustment to interest
expense.
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 costs. The carrying
value of such equity securities is adjusted when changes in the underlying
fair values are readily ascertainable, generally as evidenced by listed
market prices of transactions which directly affect the value of such
equity securities. 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. The carrying value of
investments made in connection with principal real estate activities which
do not involve equity securities are adjusted periodically based on
independent appraisals, estimates prepared by the Company of discounted
future cash flows of the underlying real estate assets or other indicators
of fair value.
Loans made in connection with merchant banking and investment banking
activities are carried at cost plus accrued interest less reserves, if
deemed necessary, for estimated losses.
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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.
On April 3, 1996, the Company's stockholders approved an increase in the
number of authorized shares of common stock from 300,000,000 to
600,000,000.
2. Long-Term Borrowings
Long-term borrowings at February 28, 1997 scheduled to mature within one
year aggregate $2,626 million.
During the three month period ended February 28, 1997, the Company issued
senior notes aggregating $3,424 million, including non-U.S. dollar
currency notes aggregating $295 million, primarily pursuant to its public
debt shelf registration statements. The weighted average coupon interest
rate of these notes at February 28, 1997 was 6.1%; 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 of these notes for the fiscal
years ending November 30 are as follows: 1997, $12 million; 1998, $64
million; 1999, $652 million; 2000, $567 million; 2001, $21 million; and
thereafter, $2,108 million. As of February 28, 1997, the aggregate
outstanding principal amount of the Company's Senior Indebtedness (as
defined in the aforementioned registration statements) was approximately
$32.5 billion.
From March 1, 1997 to March 31, 1997, additional senior notes aggregating
$226 million were issued primarily pursuant to the Company's public debt
shelf registration statements. These notes have maturities from 1999 to
2002.
3. Derivative Contracts and Other 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 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 on
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", and Note 5 to the Consolidated Financial
Statements, included in the Form 10-K.
These derivative 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
indices underlying these contracts ultimately may result in cash
settlements exceeding fair value 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.
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The Company's exposure to credit risk with respect to these derivative
instruments at any point in time is represented by the fair value of the
contracts reported as assets. These amounts are presented on a
net-by-counterparty basis consistent with FASB Interpretation No. 39, 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
February 28, 1997 and November 30, 1996 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:
<TABLE>
<CAPTION>
February 28, 1997
- ----------------------------------------------------------------------------------------------------
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) and
other fixed
income securities
contracts $ 968 $ 1,679 $ 2,154 $ 567 $ 19 $ 292 $ 5,679
Foreign exchange
forward contracts
and options 1,102 1,634 829 70 -- 109 3,744
Mortgage-backed
securities forward
contracts, swaps
and options 68 45 53 15 -- 9 190
Equity securities
contracts
(including equity
swaps, warrants
and options) 757 475 387 95 384 9 2,107
Commodity forwards,
options and swaps 99 329 264 252 4 150 1,098
------- ------- ------- ------- ------- ------- -------
Total $ 2,994 $ 4,162 $ 3,687 $ 999 $ 407 $ 569 $12,818
======= ======= ======= ======= ======= ======= =======
Percent of total 23% 32% 29% 8% 3% 5% 100%
======= ======= ======= ======= ======= ======= =======
</TABLE>
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<TABLE>
<CAPTION>
November 30, 1996
- ----------------------------------------------------------------------------------------------------
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) and
other fixed
income securities
contracts $ 792 $ 1,445 $ 2,018 $ 696 $ 31 $ 183 $ 5,165
Foreign exchange
forward contracts
and options 727 824 539 28 -- 50 2,168
Mortgage-backed
securities forward
contracts, swaps
and options 66 65 64 19 -- 5 219
Equity securities
contracts
(including equity
swaps, warrants
and options) 1,074 274 408 60 426 43 2,285
Commodity forwards,
options and swaps 95 318 318 280 72 300 1,383
------- ------- ------- ------- ------- ------- -------
Total $ 2,754 $ 2,926 $ 3,347 $ 1,083 $ 529 $ 581 $11,220
======= ======= ======= ======= ======= ======= =======
Percent of total 24% 26% 30% 10% 5% 5% 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 and other principal investment
activities, often involve substantial amounts and significant exposure to
individual issuers and businesses, including non-investment grade issuers.
The Company seeks to limit concentration 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 $2.9 billion of letters of credit
outstanding at February 28, 1997 to satisfy various collateral
requirements.
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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 and Capital Units
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
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February 28, November 30, February 28, November 30,
1997 1996 1997 1996
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(in millions)
<S> <C> <C> <C> <C>
ESOP Convertible
Preferred Stock,
liquidation preference
$35.88 3,687,031 3,699,302 $ 132 $ 133
Series A Fixed/Adjustable
Rate Cumulative Preferred
Stock, stated value $200 1,725,000 1,725,000 345 345
7-3/4% Cumulative
Preferred Stock,
stated value $200 1,000,000 1,000,000 200 200
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 - 195
8-3/4% Cumulative
Preferred Stock,
stated value $200 750,000 750,000 150 150
-------------- --------------
Total $ 1,027 $ 1,223
============== ==============
</TABLE>
On December 3, 1996, the Company announced that it had called for
redemption, on January 3, 1997, all 975,000 shares of its 8.88% Cumulative
Preferred Stock at a redemption price of $201.632 per share, which
reflects the stated value of $200 per share together with an amount equal
to all dividends accrued and unpaid to, but excluding, January 3, 1997.
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Included in the Company's Condensed Consolidated Statement of Financial
Condition at February 28, 1997 and November 30, 1996 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 having maturities from 2013 to 2017, and
(b) a related Purchase Contract issued by the Company, which may be
accelerated by the Company beginning approximately one year after the
issuance of each Capital Unit, requiring the holder to purchase one
Depositary Share representing shares (or fractional shares) of the
Company's Cumulative Preferred Stock.
In the first quarter of fiscal 1997, the Company and MS plc issued 8.03%
Capital Units in an aggregate amount of $134 million.
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 Commodity Futures Trading
Commission. MS&Co. has consistently operated in excess of these
requirements with aggregate net capital, as defined, totaling $1,596
million at February 28, 1997, which exceeded the amount required by $1,255
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"), a Tokyo-based broker-dealer, is subject to the capital
requirements of the Japanese Ministry of Finance. MSIL and MSJL have
consistently operated in excess of their respective regulatory 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.
6. Acquisitions
During the first quarter of fiscal 1996, the Company completed its
acquisition of Miller Anderson & Sherrerd, LLP ("MAS"), a
Philadelphia-based institutional investment manager, for approximately
$350 million. The Company's results for the three months ended February
29, 1996 include the results of MAS from January 3, 1996, the date of
acquisition.
In the fourth quarter of fiscal 1996, the Company completed its purchase
of Van Kampen American Capital, Inc. ("VKAC") for $1.175 billion. The
consideration for the purchase of the equity of VKAC consisted of cash and
approximately $26 million of preferred securities issued by one of the
Company's subsidiaries and exchangeable into common stock of the Company.
On April 3, 1997, the Company announced the acquisition of the
institutional global custody business of Barclays PLC ("Barclays"). The
amount of consideration for this business is to be fixed over a period of
time based on account retention. The transaction involves approximately
$250 billion of assets currently administered by Barclays, and the
combination of Barclays with the Company's global custody businesses would
have increased the Company's assets under administration at February 28,
1997 to approximately $400 billion on a pro forma basis (assuming that
current clients of Barclays agree to become clients of the Company).
Barclays has agreed to provide global subcustodial services to the Company
for a period of time after completion of the acquisition.
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The goodwill and other intangible assets associated with these
transactions are amortized on a straight-line basis over periods from five
to 25 years and are periodically evaluated for impairment.
7. Announced Merger with Dean Witter, Discover & Co.
On February 5, 1997, the Company and Dean Witter Discover & Co. ("DWD")
announced a definitive agreement to merge. The combined company would be a
pre-eminent global financial services firm with leading market positions
in the securities, asset management and credit services businesses. Under
the terms of the agreement unanimously approved by the Boards of both
companies, each of the Company's common shares will be exchanged for 1.65
DWD common shares. Shares of the Company's preferred stock outstanding
will be exchanged for preferred stock of DWD having substantially
identical terms. The transaction, which is expected to be completed in
mid-1997, is intended to be accounted for as a pooling of interests and is
subject to customary closing conditions, including certain regulatory
approvals and the approval of shareholders of both companies.
8. New Accounting Pronouncement
In February, 1997, the FASB issued Statement of Financial Accounting
Standards No. 128, "Earnings per Share" ("SFAS No. 128"). SFAS No. 128
establishes standards for computing and presenting earnings per share
("EPS"). SFAS No. 128 replaces the presentation of primary EPS with basic
EPS and fully diluted EPS with diluted EPS. Basic EPS excludes dilution
and is calculated by dividing income available to common shareholders by
the weighted average number of common shares outstanding for the period.
Diluted EPS is computed similarly to fully diluted EPS.
SFAS No. 128 is effective for financial statement periods ending after
December 15, 1997, and requires restatement of all prior period EPS data.
The adoption of SFAS No. 128 would not have had, and is not expected to
have, a material impact on the Company's EPS computations.
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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 great certainty, including variations in the fair
value of securities and other financial products and the volatility and
liquidity of trading markets. Fluctuations also occur due to the level of
market activity and the size, number and timing of transactions or assignments
(including realization of returns from the Company's principal and merchant
banking investments). 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; the availability of credit; inflation; and legislative and regulatory
developments. Such factors also may have an impact on the Company's ability to
achieve its strategic objectives, including (without limitation) profitable
global expansion.
The Company's results of operations also may be materially affected by
competitive factors. In addition to competition from firms traditionally
engaged in the securities business, there has been increased competition from
other sources, such as commercial banks, insurance companies and other
companies offering financial services. As a result of recent or pending
legislative and regulatory initiatives in the U.S. to remove or relieve certain
restrictions on commercial banks, competition in some markets which have
traditionally been dominated by investment banks has increased and may continue
to increase in the near future. Such competition, among other things, affects
the Company's ability to attract and retain highly skilled individuals. In
addition, the two complementary trends in the financial services industry of
consolidation and globalization present, among other things, technological,
risk management and other infrastructure challenges that will require effective
resource allocation in order for the Company to remain competitive.
The robust global financial markets experienced during fiscal 1995 and fiscal
1996 continued through the first quarter of fiscal 1997, leading to record
revenues and earnings for the Company. The Company's operating results have
benefited from a combination of a healthy U.S. economy, continued high levels
of cash inflows into mutual funds, a relatively stable bond market, a strong
U.S. dollar, better than expected fourth quarter corporate earnings and
relatively stable levels of inflation and interest rates despite the multi-year
economic growth. The Company's two businesses - securities (which includes
investment banking and sales and trading) and asset management - generated
higher revenues than the comparable prior year period, influenced by strong
activity in underwriting and merger and acquisition transactions and the
continuance of heightened investor trading activity in most markets. Asset
management and administration revenues also increased significantly as a result
of the Company's continuing strategic emphasis on these businesses.
- --------
* Except for the historical information contained herein, this Management's
Discussion and Analysis of Financial Condition and Results of Operations
contains forward-looking statements, as well as a discussion of some of the
risks and uncertainties involved in the Company's business that could
affect the matters referred to in such statements, including (without
limitation) the risks and uncertainties set forth herein and in the
Company's Annual Report on Form 10-K for the fiscal year ended November 30,
1996 (Part I, Item 1 and Part II, Item 7).
Page 15
<PAGE> 16
Concerns over mounting inflationary pressures in the U.S. economy led the
Federal Reserve Board to raise short-term interest rates by .25% on March 25,
1997 and may lead to additional increases this year in an effort to forestall
higher levels of inflation. Higher interest rates domestically, coupled with
economic sluggishness and high rates of unemployment in Europe, may well lead
to less favorable market conditions in the future. The Company's financial
results for the remainder of fiscal 1997 will reflect whether favorable market
and economic conditions continue to persist, as well as the effectiveness of
the Company's efforts to manage costs and risk management processes.
For a description of the Company's business, including its trading in cash
instruments and derivative products, its merchant banking and other principal
investment 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 1, of the Company's Annual Report on Form 10-K for
the fiscal year ended November 30, 1996 ("Form 10-K").
Announced Merger with Dean Witter, Discover & Co.
On February 5, 1997, the Company and Dean Witter, Discover & Co. ("DWD")
announced a definitive agreement to merge. The combined company would be a
pre-eminent global financial services firm with leading market positions in the
securities, asset management and credit services businesses. The new company
will be named Morgan Stanley, Dean Witter, Discover & Co. Under the terms of
the merger agreement unanimously approved by the Boards of both companies, each
of the Company's common shares will be exchanged for 1.65 DWD common shares.
Shares of the Company's preferred stock outstanding will be exchanged for
preferred stock of DWD having substantially identical terms. The transaction,
which is expected to be completed in mid-1997, is intended to be a tax-free
exchange and accounted for as a pooling of interests and is subject to
customary closing conditions, including certain regulatory approvals and the
approval of shareholders of both companies.
Three Months Ended February 28, 1997 Compared with Three Months Ended February
29, 1996 (Amounts for the three months ended February 29, 1996 are given in
parentheses).
Revenues net of interest expense (net revenues) were $1,794 million ($1,449
million) and net income totaled $316 million ($273 million), primarily
reflecting higher levels of asset management and administration revenues,
investment banking revenues and increased principal transaction trading and
investment revenues, partially offset by higher incentive-based compensation
and non-compensation expenses. Primary earnings per share was $1.88 ($1.64) and
fully diluted earnings per share was $1.80 ($1.57). Earnings per share for the
quarter ended February 28, 1997, excluding the amortization of goodwill
associated with the Company's fiscal 1996 acquisitions of Van Kampen American
Capital, Inc. ("VKAC") and Miller Anderson & Sherrerd, LLP ("MAS"), was $1.93
on a primary basis, and $1.85 on a fully diluted basis.* The Company's return
on common equity for the quarter was 21.8% (23.4%). Excluding the amortization
of goodwill, return on common equity was 22.4% for the first quarter of fiscal
1997.
- ------------
* These primary and fully diluted earnings per share amounts are an
indication of the Company's financial performance exclusive of the non-cash
amortization of goodwill. However, these amounts should not be construed as
an alternative to primary and fully diluted earnings per share as
determined in accordance with generally accepted accounting principles.
Page 16
<PAGE> 17
Investment banking revenues increased to $442 million ($399 million), primarily
reflecting underwriting revenues which continued to remain strong. Fixed income
underwriting revenues increased, primarily from investment grade debt
securities as the issuance of long-dated debt was favorably received by
investors. Equity financing revenues also increased despite slower underwriting
volumes as many companies are sufficiently capitalized, reducing the need for
equity offerings. Revenues from merger, acquisition and restructuring
activities continued to be strong as the market for these transactions
continued at unprecedented levels and global transaction volumes remained high.
Merger and acquisition activity was diversified across many industries, with
the financial services, technology, public utility and real estate sectors
contributing the greatest level of activity. Fees from real estate transactions
declined in comparison to the high level of real estate revenues generated in
the first quarter of fiscal 1996.
Secondary revenues (combined principal trading, commissions and net interest
revenues) increased to $1,018 million ($932 million). Principal transaction
revenues from trading activities, including derivatives, were $751 million
($704 million). Fixed income trading revenues increased to record levels,
reflecting higher revenues from investment grade debt, securitized debt and
swaps trading, partially offset by lower revenues from government debt trading.
The quarter's results benefited from increased customer activity as well as
higher volatility in the global fixed income markets as a result of uncertainty
related to possible interest rate increases resulting from the Federal Reserve
Board's taking measures to curb inflationary pressures, in addition to growing
uncertainty regarding the approaching European Monetary Union. Equity trading
revenues were comparable with prior year levels, as higher revenues from cash
products were offset by lower equity derivatives trading revenues. Equity cash
products benefited from the continued flow of funds into equity-related mutual
funds, as well as increased market share of customer business. Equity
derivatives revenues were impacted by increased competition and pressure on
pricing levels. Trading revenues from commodity products represented the second
highest level recorded by the Company, surpassed only by the comparable prior
year quarter. Revenues from energy-related products benefited from high
volatility, primarily in natural gas, heating oil and crude oil. This resulted
from expectations of colder temperatures and low inventory levels in the
beginning of the quarter, followed by unseasonably warm weather and replenished
inventory levels towards the end of the quarter. Foreign exchange trading
revenues rose to record quarterly levels, primarily resulting from a
strengthening U.S. dollar driven largely by stable interest rates and economic
growth in the U.S., coupled with weaker economies and lower interest rates in
Germany and Japan. This led to higher levels of market volatility and
contributed to increased customer trading volume.
Commission revenues increased to $182 million ($154 million), principally
reflecting higher levels of securities transactions driven by market
volatility, as well as continued cash flows into the equity markets from
investors.
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Net interest and dividend revenues increased to $85 million ($74 million).
Interest and dividend revenues rose to $2,367 million ($1,933 million), and
interest expense increased to $2,282 million ($1,859 million). While the
overall level of interest rates was comparable to the prior year period, the
Company's interest bearing assets and liabilities increased significantly.
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. 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.
Principal transaction investment gains aggregating $56 million were recognized
in the first quarter of fiscal 1997, primarily in connection with increases in
the carrying value of certain merchant banking investments and real estate
investment gains. This compares with losses of $7 million that were recognized
in the first quarter of fiscal 1996, which primarily resulted from the
writedown of certain merchant banking equity securities.
Asset management and administration revenues, which include fees for asset
management and non-interest revenues earned from correspondent clearing and
custody services, increased significantly to $278 million ($122 million). The
majority of this increase is attributable to revenues from VKAC, which was
acquired on October 31, 1996, and from MAS, which was acquired on January 3,
1996. Revenues from international equity and emerging market products resulting
from inflows of client assets and market appreciation also contributed to the
increase. Customer assets under management or supervision increased to $176
billion ($93 billion), including $60 billion associated with the acquisition of
VKAC as well as continued inflows of new assets and appreciation in the value
of existing customer portfolios. As of February 28, 1997, the Company was the
sponsor of 132 open-end proprietary mutual funds (as well as 60 VKAC open-end
funds), 51 proprietary closed-end funds and the supervisor of approximately
2,500 unit investment trusts. At February 28, 1997, the Company's $176 billion
of assets under management or supervision included approximately $39 billion
related to international products, and was composed of approximately $66
billion of open-end mutual funds, $17 billion of closed-end funds, $8 billion
of unit investment trusts, $19 billion of fiduciary accounts and $66 billion of
separate accounts, pooled vehicles and other arrangements.
Customer assets under administration increased to $152 billion ($121 billion),
primarily reflecting appreciation in the value of customer portfolios and
additional assets placed under custody with the Company, including new customer
accounts as well as additional assets from existing customers.
On April 3, 1997, the Company announced the acquisition of the institutional
global custody business of Barclays PLC ("Barclays"). The amount of
consideration for this business is to be fixed over a period of time based on
account retention. The transaction involves approximately $250 billion of
assets currently administered by Barclays, and the combination of Barclays with
the Company's global custody businesses would have increased the Company's
assets under administration at February 28, 1997 to approximately $400 billion
on a pro forma basis (assuming that current clients of Barclays agree to become
clients of the Company). Barclays has agreed to provide global subcustodial
services to the Company for a period of time after completion of the
acquisition.
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Total expenses excluding interest increased to $1,284 million ($1,009 million).
Within that total, compensation and benefits expense increased $174 million to
$879 million ($705 million), principally reflecting increased levels of
incentive compensation based on higher levels of revenues and earnings, as well
as the impact of salaries and benefits relating to additional personnel hired
during fiscal 1996 or joining the Company as a result of the MAS and VKAC
acquisitions. Non-compensation expenses, excluding brokerage, clearing and
exchange fees, increased $83 million to $321 million. Approximately $39 million
of this increase was attributable to the expenses of VKAC. Occupancy and
equipment expenses increased $14 million, primarily related to higher costs for
information technology equipment and data processing, as well as the occupancy
costs of VKAC. Business development expenses increased $22 million, reflecting
increased travel and entertainment costs as the Company continues to develop
new business, as well as advertising costs associated with VKAC's retail mutual
funds. Professional services expenses increased $18 million, primarily
reflecting higher consulting and executive recruitment costs associated with
the Company's increased global business activities. Communications expenses
increased $7 million, primarily due to the impact of increased rates for
certain data services and additional employees hired during fiscal 1996. Other
expenses increased $22 million, which includes $15 million of goodwill
amortization related to the acquisitions of MAS and VKAC.
Excluding expenses associated with VKAC, the Company's non-compensation
expenses for the first quarter of fiscal 1997 were approximately $22 million
lower than the fourth quarter of fiscal 1996. This decline primarily reflects
lower levels of travel and entertainment, consulting, legal and executive
recruitment expenses. In addition, total non-compensation expenses (excluding
occupancy and equipment) as a percentage of net revenues were 17% for the first
quarter of fiscal 1997, which is comparable to historical levels. The Company
continuously monitors these expenses in order to control the level of
discretionary spending.
Page 19
<PAGE> 20
Liquidity and Capital Resources
The Company's total assets increased from $196.4 billion at November 30, 1996
to $224.8 billion at February 28, 1997, primarily reflecting growth in resale
agreements, securities borrowed and customer receivables. 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 often
reviewed by counterparties and creditors in order to evaluate a securities
firm's overall financial risk. Details of ending assets, month-end average
assets and leverage ratios for the three months ended February 28, 1997 and for
fiscal 1996 are as follows:
<TABLE>
<CAPTION>
Average
Assets for
the Three Average
Months Assets
Assets at Ended Assets at for
February 28, February 28, November 30, Fiscal
(Dollars in Millions) 1997 1997 1996 1996
- ------------------------------- ---------------------------------------------------------
<S> <C> <C> <C> <C>
Cash, deposits and receivables $ 20,865 $ 20,392 $ 20,956 $ 15,809
Financial instruments owned 78,676 75,168 70,747 61,082
Securities purchased under
agreements to resell and
securities borrowed 120,423 102,261 100,137 92,959
Property, equipment and
leasehold improvements
and other assets 4,808 4,731 4,606 2,677
------------ ------------ ------------ ------------
Total assets $ 224,772 $ 202,552 $ 196,446 $ 172,527
============ ============ ============ ============
Leverage ratios:
Total assets/equity 34.6x 31.2x 30.1x 31.8x
Total assets (excluding
goodwill)/equity 34.4x 31.0x 29.9x 31.7x
Net assets (1)/equity 23.8x 22.6x 20.8x 21.1x
</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 and capital 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,
reviews the foreign exchange risk of the Company, and oversees the liquidity
and interest rate sensitivity of the Company's asset and liability position.
The primary goal of the Company's funding and liquidity activities is to ensure
the stability of the Company's funding base and to provide adequate financing
sources over a wide range of potential credit ratings and market environments.
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<PAGE> 21
The Company views return on equity to be an important measure of its
performance, in the context of both the particular business environment in
which the Company is operating as well as its peer group's results. In this
regard, the Company actively manages its consolidated capital position based
upon, among other things, business opportunities, capital availability and
rates of return together with internal capital policies, regulatory
requirements and rating agency guidelines and therefore may, in the future,
expand or contract its capital base to address the changing needs of its
businesses. The Company has also returned internally generated equity capital
which is in excess of the needs of its businesses through common stock
repurchases and dividends.
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; letters of credit; unsecured bond
borrows; 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.
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 and availability of financing generally are 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 derivative transactions. The Company's
short-term and long-term senior debt ratings as of February 28, 1997 are as
follows:
<TABLE>
<CAPTION>
Agency Short-Term Rating Long-Term Rating
- -------------------------------------------- ------------------------------ ----------------------------
<S> <C> <C>
Moody's Investors Service 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.
In connection with the announcement of the Company's proposed merger with DWD,
with respect to the Company's long-term debt ratings, Moody's Investors Service
("Moody's") placed the Company's rating (A1) on review for possible upgrade,
and Standard & Poor's ("S&P") affirmed the Company's rating (A+). With respect
to the Company's short-term debt ratings, Moody's affirmed its rating (P1), and
S&P placed the Company's rating (A1+) on CreditWatch with negative
implications. The overall effect of these ratings announcements has not had a
material impact on the Company's cost and availability of financing or business
activities.
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<PAGE> 22
As the Company continues its global expansion and as revenues are increasingly
derived from various currencies, foreign currency management is a key element
of the Company's financial policies. The Company benefits from operating in a
number of different currencies because weakness in any particular currency is
often offset by strength in another currency. The Company closely monitors its
exposure to fluctuations in currencies and, where cost-justified, adopts
strategies to reduce the impact of these fluctuations on the Company's
financial performance. These strategies include engaging in various hedging
activities to manage income and cash flows denominated in foreign currencies
and using foreign currency borrowings, when appropriate, to finance investments
outside the U.S.
During the three month period ended February 28, 1997, the Company issued
senior notes aggregating $3,424 million, including non-U.S. dollar currency
notes aggregating $295 million. These notes have maturities from 1997 to 2012
and a weighted average coupon interest rate of 6.1%; 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. As of
February 28, 1997 the aggregate outstanding principal amount of the Company's
Senior Indebtedness (as defined in the Company's public debt shelf registration
statements) was approximately $32.5 billion. During the first quarter of fiscal
1997, the Company filed a shelf registration statement for the issuance of up
to $6 billion of debt securities, warrants, preferred stock or purchase
contracts or any combination thereof in the form of units.
In the first quarter of fiscal 1997, the Company and Morgan Stanley Finance
plc, a U.K. subsidiary ("MS plc"), issued 8.03% Capital Units in an aggregate
amount of $134 million. 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 Depositary Share
representing shares (or fractional shares) of the Company's Cumulative
Preferred Stock.
In the first quarter of fiscal 1997, the Company redeemed all 975,000 shares of
its 8.88% Cumulative Preferred Stock at a redemption price of $201.632 per
share, which reflects the stated value of $200 per share together with an
amount equal to all dividends accrued and unpaid to, but excluding, the
redemption date.
Between March 1, 1997 and March 31, 1997, additional senior notes aggregating
$226 million were issued. These notes have maturities from 1999 to 2002.
The Company maintains a senior revolving credit agreement 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 maintains a master collateral facility that enables 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 maintains
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 $1.5 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.
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<PAGE> 23
The Company also maintains a revolving committed financing facility that
enables Morgan Stanley & Co. International Limited ("MSIL"), the Company's U.K.
broker-dealer subsidiary, to secure committed funding from a syndicate of banks
by providing a broad range of collateral under repurchase agreements. Such
banks are committed to provide up to an aggregate of $1.55 billion available in
12 major currencies for up to 364 days. Any amounts outstanding on the
commitment termination date may, at MSIL's option, be extended to mature on or
before the first anniversary of the commitment termination date. There were no
borrowings outstanding under any of the foregoing credit, collateral or
committed financing facilities at February 28, 1997; however, the Company
anticipates utilizing these facilities for short-term funding from time to
time.
The Company is a party to numerous credit facilities, indentures and other
similar agreements. Consummation of the proposed merger with DWD may require
the consent of, or waivers from, the other parties to certain of such
agreements.
During the three month period ended February 28, 1997, the Company repurchased
approximately 1.1 million shares of its common stock at an aggregate cost of
approximately $62 million and an average cost per share of $56.53. The Company
ceased open market repurchases of its common stock upon announcement of the
merger agreement with DWD on February 5, 1997. At the time of the merger
announcement, the Company's unused stock repurchase authorization was
approximately $593 million. In light of the merger announcement, the Company's
board of directors formally rescinded its existing stock repurchase
authorization.
At February 28, 1997, certain assets of the Company, such as real property,
equipment and leasehold improvements of $1.3 billion, and goodwill and other
intangible assets of $1.2 billion, are illiquid. In addition, 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 or indirectly through funds managed by the Company) in privately and
publicly held companies. As of February 28, 1997, the aggregate carrying value
of the Company's equity investments in privately held companies (including
direct investments and partnership interests) was $101 million, and its
aggregate investment in publicly held companies was $285 million.
The Company acts as an underwriter of and as a market-maker in mortgage-backed
pass-through securities, collateralized mortgage obligations and related
instruments, and as a market-maker in commercial, residential and real estate
loan products. In this capacity, the Company takes positions in market segments
where liquidity can vary greatly from time to time. The carrying value of the
portion of the Company's mortgage-related portfolio at February 28, 1997 traded
in markets that the Company believed was experiencing lower levels of liquidity
than traditional mortgage-backed pass-through securities approximated $1,761
million.
Page 23
<PAGE> 24
In addition, at February 28, 1997, the aggregate value of high-yield debt
securities and emerging market loans and securitized instruments held in
inventory was $1,659 million (a substantial portion of which was subordinated
debt) with not more than 5%, 11% and 19% 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 be, characterized by periods of
volatility and illiquidity. The Company has in place credit and other risk
policies and procedures 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 and merchant
banking activities. The Company may provide extensions of credit to leveraged
companies in the form of senior or subordinated debt, as well as bridge
financing on a select basis (which may be in connection with the Company's
commitment to the Morgan Stanley Bridge Fund, LLC). At February 28, 1997, the
Company had a loan of $225 million outstanding in connection with its
securitized debt underwriting activities. Subsequent to February 28, 1997, this
$225 million loan was repaid, and the Company entered into two commitments to
provide an aggregate of approximately $460 million of loans in connection with
its securitized debt and high-yield underwriting activities.
The Company also engages in senior lending activities, including origination,
syndication and trading of senior secured loans of non-investment grade
companies. Such companies are more sensitive to adverse economic conditions
than investment grade issuers, but the loans are generally made on a secured
basis and are senior to any non-investment grade securities of these issuers
that trade in the capital markets. As of February 28, 1997, the aggregate value
of senior secured loans and positions held by the Company was $210 million, and
aggregate senior secured loan commitments were $26 million. Subsequent to
February 28, 1997, the Company entered into six senior secured loan commitments
in the aggregate amount of $280 million.
At February 28, 1997, 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 and indices) related to financial instruments and commodities with
an aggregate net replacement cost of $12.8 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 associated cash instruments in a manner consistent with the
Company's overall risk management policies and procedures. The Company manages
its credit exposure to derivative products through various means, which include
reviewing counterparty financial soundness periodically; entering into master
netting agreements and collateral arrangements with counterparties in
appropriate circumstances; and limiting the duration of exposure.
Page 24
<PAGE> 25
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The following litigation was recently commenced against Morgan Stanley
& Co. Incorporated.
IN RE SUMITOMO COPPER LITIGATION. On April 10, 1997, a consolidated
amended class action complaint was filed in the United States District Court
for the Southern District of New York against Sumitomo Corporation, Sumitomo
Corporation of America (together, "Sumitomo"), Global Minerals and Metals Corp.
("Global"), Winchester (USA) Inc., Winchester Holdings USA Inc. (together
"Winchester"), certain individuals associated with Sumitomo, Global and
Winchester, Merrill Lynch & Co., Merrill Lynch Commodity Financing Inc.,
Merrill Lynch Pierce Fenner & Smith (Brokers & Dealers) Limited and Morgan
Stanley & Co. Incorporated ("Morgan Stanley"). The amended complaint alleges
that Sumitomo, Global and certain individuals associated with each of them,
conspired to manipulate and artifically inflate the price of copper futures
contracts on the Comex Division of the New York Mercantile Exchange, and that
the other defendants, including Morgan Stanley, aided and abetted that
manipulation. The plaintiff class purportedly consists of all persons who
purchased copper futures contracts between February 6, 1995 and June 15, 1996
or between June 24, 1993 and September 9, 1993. The amended complaint asserts
a manipulation claim under the Commodity Exchange Act against all of the
defendants, and a RICO claim against certain of the defendants other than
Morgan Stanley. The amended complaint seeks compensatory damages in an
unspecified amount, treble damages for the RICO claim, interest, costs and
attorneys' fees.
ITEM 2. CHANGES IN SECURITIES.
On December 3, 1996, the Company announced that it had called for
redemption all 975,000 issued and outstanding shares of the Company's 8.88%
Cumulative Preferred Stock. The shares were redeemed on January 3, 1997 at a
price of $201.632 per share, reflecting the stated value of $200 per share
together with an amount equal to all dividends accrued and accumulated and
unpaid to, but excluding, January 3, 1997.
In December 1996, the Company and Morgan Stanley Finance plc, a U.K.
subsidiary ("MS plc"), issued 134,000 8.03% Capital Units in an aggregate
amount of $134,000,000. Each Capital Unit consists of (i) an 8.03% Subordinated
Debenture of MS plc due February 28, 2017 in the principal amount of $1,000
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, 2016, to
purchase one Depositary Share representing ownership of five shares of the
Company's 8.03% Cumulative Preferred Stock, stated value $200 per share.
Exhibit 4.1 to this Form 10-Q sets forth the designation, preferences and
rights of the 8.03% Cumulative Preferred Stock and the following summary is
qualified in its entirety by reference thereto.
The 8.03% 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, 8-3/4% Cumulative Preferred Stock, 7-3/8% Cumulative Preferred Stock,
7-3/4% Cumulative Preferred Stock, Series A Fixed/Adjustable Rate 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), 7.80% Cumulative Preferred Stock (if
issued in connection with the 7.80% Capital Units), 8.40% Cumulative Preferred
Stock (if issued in connection with the 8.40% Capital Units) and 8.20%
Cumulative Preferred Stock (if issued in connection with the 8.20% Capital
Units). The holders of the 8.03% Cumulative Preferred Stock are entitled to
receive, when declared out of funds legally available therefor, cash dividends
payable quarterly at the rate of 8.03% per annum, calculated as a percentage of
the stated value.
Unless full cumulative dividends on the 8.03% 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
to or on a parity with the 8.03% 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 8.03% 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 per share
(equivalent to $1,000 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 other Preferred Stock of the Company ranking
junior to the 8.03% Cumulative Preferred Stock as to rights upon liquidation,
dissolution or winding up of the Company.
Page 25
<PAGE> 26
Holders of 8.03% Cumulative Preferred Stock will have voting rights
only as required by the laws of the State of Delaware or whenever dividends
payable on the 8.03% Cumulative Preferred Stock or any other class or series of
stock ranking on a parity with the 8.03% 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 8.03% Cumulative Preferred Stock will be entitled to
one vote for each share of 8.03% 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 8.03% Cumulative Preferred Stock is redeemable in whole or in part
at the Company's option on or after February 28, 2007, at a redemption price
beginning at $205.354 per share (equivalent to $1,026.77 per Depositary Share),
plus accrued and accumulated but unpaid dividends and declining to $200 per
share (equivalent to $1,000 per Depositary Share), plus accrued and accumulated
but unpaid dividends on or after February 28, 2012. The 8.03% Cumulative
Preferred Stock is also redeemable prior to February 28, 2007 in the event of
changes to the Internal Revenue Code of 1986 to reduce the dividends received
deduction to 50% or less.
If full cumulative dividends on the 8.03% Cumulative Preferred Stock
have not been paid, the 8.03% Cumulative Preferred Stock may not be redeemed in
part and the Company may not purchase or acquire any shares of 8.03% Cumulative
Preferred Stock other than pursuant to a purchase or exchange offer made on the
same terms to all holders of the 8.03% Cumulative Preferred Stock.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
Exhibit 4.1 - Restated Certificate of Incorporation of
the Company, 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 The Chase
Manhattan Bank (formerly known as 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,
The Chase Manhattan Bank (formerly known as
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 8.03% Cumulative
Preferred Stock (stated value $200.00 per
share) related to 8.03% 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.
Page 26
<PAGE> 27
Exhibit 12 - Statement Re: Computation of Ratio of
Earnings to Fixed Charges and Preferred
Stock Dividends.
Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K
1. Form 8-K dated December 18, 1997, Items 5 and 7.
2. Form 8-K dated December 26, 1997, Item 7 only.
3. Form 8-K dated January 7, 1997, Items 5 and 7.
4. Form 8-K dated January 24, 1997, Items 5 and 7.
5. Form 8-K dated February 4, 1997, Items 5 and 7.
6. Form 8-K dated February 5, 1997, Items 5 and 7.
7. Form 8-K dated February 20, 1997, Items 5 and 7.
8. Form 8-K dated February 28, 1997, Items 5 and 7.
Page 27
<PAGE> 28
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: April 14, 1997 /s/ Eileen K. Murray
---------------------
Eileen K. Murray
Treasurer and Chief Accounting Officer
Date: April 14, 1997 /s/ Jonathan M. Clark
----------------------
Jonathan M. Clark
General Counsel and Secretary
Page 28
<PAGE> 29
EXHIBIT INDEX
-------------
Exhibit No. Description
----------- -----------
4.1 - Restated Certificate of Incorporation of
the Company, as amended to date
4.2 - Subordinated Indenture dated as of November
15, 1993 among MS plc, as Issuer, the
Company, as Guarantor, and The Chase
Manhattan Bank (formerly known as 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).
4.3 - Capital Unit Agreement dated as of August
1, 1995 among the Company, MS plc,
The Chase Manhattan Bank (formerly known as
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).
4.4 - Form of Certificate of 8.03% Cumulative
Preferred Stock (stated value $200.00 per
share) related to 8.03% Capital Units
(incorporated by reference to Exhibit 4-c
to the Company's Registration Statement on
Form S-3 (No. 33-57833)).
11 - Statement Re: Computation of Earnings per
Share.
12 - Statement Re: Computation of Ratio of
Earnings to Fixed Charges and Preferred
Stock Dividends.
27 - Financial Data Schedule.
<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(l) 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,
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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,
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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
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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
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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.
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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
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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
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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
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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
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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
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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
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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.
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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
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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
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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
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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
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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
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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> 127
CERTIFICATE OF DESIGNATION OF PREFERENCES AND RIGHTS
OF THE
8.20% 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 October 13, 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 862,500 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> 128
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 8.20% 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 862,500. 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 8.20% 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> 129
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> 130
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> 131
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> 132
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 November 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> 133
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> 134
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 (viii) if issued, the Corporation's 9.00%
Cumulative Preferred Stock, with a liquidation value of
$200.00 per share and (ix) if issued, the Corporation's 8.40%
Cumulative Preferred Stock, with a liquidation value of
$200.00 per share.
<PAGE> 135
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 13th day of October, 1995.
MORGAN STANLEY GROUP INC.
By /s/ Richard B. Fisher
---------------------------------
Name: Richard B. Fisher
Title: Chairman of the Board
[SEAL]
Attest:
By /s/ Patricia A. Kurtz
----------------------------------
Name: Patricia A. Kurtz
Title: Assistant Secretary
<PAGE> 136
CERTIFICATE OF DECREASE
OF
AUTHORIZED NUMBER OF SHARES
OF
8.20% 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
8.20% Cumulative Preferred Stock, was filed in said Office of the Secretary of
State on October 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 April 12,
1995 (the "Resolutions"), the Pricing Committee fixed certain designations,
preferences and rights of the aforesaid 8.20% 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 October 27, 1995 duly adopted
a resolution authorizing and directing a decrease in the authorized number of
shares of the 8.20% Cumulative Preferred Stock of the Corporation, from 862,500
shares to 847,500 shares and providing that the 15,000 shares of the 8.20%
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 31st day of October, 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> 137
CERTIFICATE OF AMENDMENT
TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF
MORGAN STANLEY GROUP INC.
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 its 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 1 of the Restated Certificate of Incorporation
is hereby amended in full to read as follows:
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 630,000,000 shares, which shall include:
(a) 30,000,000 shares of preferred stock of no par value each
(hereinafter referred to as "Preferred Stock"); and
(b) 600,000,000 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".
IN WITNESS WHEREOF, MORGAN STANLEY GROUP INC. has caused this
certificate to be signed by Richard B. Fisher, its Chairman, and attested by
Jonathan M. Clark, its General Counsel and Secretary, this 16th day of April,
1996.
MORGAN STANLEY GROUP INC.
By /s/ Richard B. Fisher
---------------------------------
Name: Richard B. Fisher
Title: Chairman
ATTEST:
/s/ Jonathan M. Clark
- ---------------------------------
Name: Jonathan M. Clark
Title: General Counsel and Secretary
<PAGE> 138
CERTIFICATE OF DESIGNATION OF PREFERENCES AND RIGHTS
OF THE
7-3/4% 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
March 12, 1996, 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 17, 1996 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 the Committee, 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, 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 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 7-3/4% Cumulative Preferred
Stock, without par value, with a stated value of $200.00 per
share (the "Cumulative Preferred Stock"). The stated value per
<PAGE> 139
2
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 1,150,000. The Cumulative Preferred Stock is
issuable in whole shares only.
2. Dividends. (a) 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 7-3/4% 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 August 30, 1996
(each a "dividend payment date"). Dividends (including
Additional Dividends as such term is defined in paragraph 2(b)
below) 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 such term is 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 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;
<PAGE> 140
3
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.
(b) If one or more amendments to the Internal
Revenue Code of 1986, as amended (the "Code"), are enacted
that reduce the percentage of the dividends received deduction
as specified in Section 243(a)(1) of the Code or any successor
provision (the "Dividends Received Percentage") to below the
existing Dividends Received Percentage (currently 70%), the
amount of each dividend payable per share of the Cumulative
Preferred Stock for dividend payments made on or after the
date of enactment of such change will be adjusted by
multiplying the amount of the dividend payable determined as
described above (before adjustment) by a factor, which will be
the number determined in accordance with the following formula
(the "DRD Formula"), and rounding the result to the nearest
cent:
1 - (.35 (1 - .70))
-------------------------
1 - (.35 (1 - DRP))
For the purposes of the DRD Formula, "DRP" means the Dividends
Received Percentage applicable to the dividend in question. No
amendment to the Code, other than a change in the percentage
of the dividends received deduction set forth in Section
243(a)(1) of the Code or any successor provision, will give
rise to an adjustment. Notwithstanding the foregoing
provisions, in the event that, with respect to any such
amendment, the Corporation will receive either an unqualified
opinion of nationally recognized independent tax counsel
selected by the Corporation or a private letter ruling or
similar form of authorization from the Internal Revenue
Service to the effect that such an amendment would not apply
to dividends payable on the Cumulative Preferred Stock, then
any such amendment will not result in the adjustment provided
for pursuant to the DRD Formula. The opinion referenced in the
previous sentence will be based upon a specific exception in
the legislation amending the DRP or upon a published
pronouncement of the Internal Revenue Service addressing such
legislation. Unless the context otherwise requires, references
to dividends in this Certificate of Designation will mean
dividends as adjusted by the DRD Formula. The Corporation's
calculation of the dividends payable,
<PAGE> 141
4
as so adjusted and as certified accurate as to calculation and
reasonable as to method by the independent certified public
accountants then regularly engaged by the Corporation, will be
final and not subject to review absent manifest error.
If any amendment to the Code which reduces the Dividends
Received Percentage to below 70% is enacted after a dividend
payable on a dividend payment date has been declared, the
amount of dividend payable on such dividend payment date will
not be increased. Instead, an amount, equal to the excess of
(x) the product of the dividends paid by the Corporation on
such dividend payment date and the DRD Formula (where the DRP
used in the DRD Formula would be equal to the reduced
Dividends Received Percentage) over (y) the dividends paid by
the Corporation on such dividend payment date, will be payable
to holders of record on the next succeeding dividend payment
date in addition to any other amounts payable on such date.
In addition, if, prior to January 2, 1997, an amendment
to the Code is enacted that reduces the Dividends Received
Percentage to below 70% and such reduction retroactively
applies to a dividend payment date as to which the Corporation
previously paid dividends on the Cumulative Preferred Stock
(each an "Affected Dividend Payment Date"), holders of the
Cumulative Preferred Stock shall be entitled to receive when,
as and if declared by the Board out of assets of the
corporation legally available for payment, additional
dividends (the "Additional Dividends") on the next succeeding
dividend payment date (or if such amendment is enacted after
the dividend payable on such dividend payment date has been
declared, on the second succeeding dividend payment date
following the date of enactment) to holders of record on such
succeeding dividend payment date in an amount equal to the
excess of (x) the product of the dividends paid by the
Corporation on each Affected Dividend Payment Date and the DRD
Formula (where the DRP used in the DRD Formula would be equal
to the reduced Dividends Received Percentage applied to each
Affected Dividend Payment Date) over (y) the dividends paid by
the Corporation on each Affected Dividend Payment Date.
Additional Dividends will not be paid in respect of the
enactment of any amendment to the Code on or after January 2,
1997 which retroactively reduces the Dividends Received
Percentage to below 70%, or if prior to January 2, 1997, such
amendment would not result in an adjustment due to the
Corporation having received either an opinion of counsel or
tax ruling referred to in the third preceding paragraph. The
Corporation will only make one payment of Additional
Dividends.
In the event that the amount of dividends payable per
share of the Cumulative Preferred Stock will be adjusted
pursuant to the DRD Formula
<PAGE> 142
5
and/or Additional Dividends are to be paid, the Corporation
will cause notice of each such adjustment and, if applicable,
any Additional Dividends, to be sent to the 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.
In the event that the Dividends Received Percentage is
reduced to 40% or less, the Corporation may, at its option,
redeem the Cumulative Preferred Stock, in whole but not in
part, as described in paragraph 6 hereof.
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
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
<PAGE> 143
6
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 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
<PAGE> 144
7
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 Cumulative Preferred
Stock shall have been redeemed or called for redemption
and sufficient funds shall have been deposited in trust
to effect such redemption.
<PAGE> 145
8
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, 2001, except as stated below. 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.
Notwithstanding the foregoing provisions, if the
Dividends Received Percentage is equal to or less than 40%
and, as a result, the amount of dividends on the Cumulative
Preferred Stock payable on any dividend payment
<PAGE> 146
9
date will be or is adjusted upwards as described in paragraph
2(b) hereof, the Corporation, at its option, may redeem all,
but not less than all, of the outstanding shares of the
Cumulative Preferred Stock (and the Depositary Shares) (a
"Dividends Received Deduction Redemption"), provided that
within sixty days of the date on which an amendment to the
Code is enacted which reduces the Dividends Received
Percentage to 40% or less, the Corporation sends notice to
holders of the Cumulative Preferred Stock relating to any
Dividends Received Deduction Redemption of such redemption. A
redemption of the Cumulative Preferred Stock will take place
on the date specified in the notice, which shall be not less
than thirty nor more than sixty days from the date such notice
is sent to holders of the Cumulative Preferred Stock. A
Dividends Received Deduction Redemption shall be at the
applicable redemption price set forth in the following table,
in each case plus accrued and unpaid dividends (whether or not
declared) thereon to but excluding the date fixed for
redemption, including any changes in dividends payable due to
changes in the Dividends Received Percentage and Additional
Dividends, if any:
Redemption Period Redemption Price
- ----------------- ----------------
Per Share Per Depositary Share
--------- --------------------
July 22, 1996 to August 29, 1997......... $210.00 $52.50
August 30, 1997 to August 29, 1998....... 208.00 52.00
August 30, 1998 to August 29, 1999....... 206.00 51.50
August 30, 1999 to August 29, 2000....... 204.00 51.00
August 30, 2000 to August 29, 2001....... 202.00 50.50
On or after August 30, 2001.............. 200.00 50.00
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.
<PAGE> 147
10
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.
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
<PAGE> 148
11
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, (viii) if issued, the
Corporation's 9.00% Preferred Stock, with a liquidation value
of $200.00 per share, (ix) if issued, the Corporation's 8.40%
Preferred Stock, with a liquidation value of $200.00 per share
and (x) if issued, the Corporation's 8.20% Preferred Stock,
with a liquidation value of $200.00 per share.
<PAGE> 149
12
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 of the Board, and attested by Patricia A. Kurtz, an
Assistant Secretary of the Corporation, this 18th day of July, 1996.
MORGAN STANLEY GROUP INC.
By: /s/ Richard B. Fisher
-------------------------------
Name: Richard B. Fisher
Title: Chairman of the Board
[SEAL]
Attest:
/s/ Patricia A. Kurtz
- --------------------------
Assistant Secretary
<PAGE> 150
CERTIFICATE OF DESIGNATION OF PREFERENCES AND RIGHTS
OF THE
SERIES A FIXED/ADJUSTABLE RATE 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
March 12, 1996, 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 8, 1996, pursuant to authority delegated to it by the Board pursuant
to the provisions of Section 141(c)(1) 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 1,725,000 of the 30,000,000 shares of Preferred Stock
which the Corporation now has authority to issue, is authorized, and
the Board and the Committee, pursuant to the authority expressly
granted to the Committee by the Board pursuant to the provisions of
Section 141(c)(1) of the General Corporation Law of the State of
Delaware and the Certificate of Incorporation, 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> 151
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 Series A Fixed/Adjustable Rate
Cumulative Preferred Stock, without par value, with a stated
value of $200.00 per share (the "Series A Fixed/Adjustable
Rate Preferred Stock"). The stated value per share of Series A
Fixed/Adjustable Rate 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 Series A Fixed/Adjustable
Rate Preferred Stock shall be 1,725,000. The Series A
Fixed/Adjustable Rate Preferred Stock is issuable in whole
shares only.
2. Dividends. (a) Holders of shares of Series A
Fixed/Adjustable Rate Preferred Stock will be entitled to
receive cash dividends, when, as and if declared by the Board
or the Committee out of assets of the Corporation legally
available for payment. Dividends on the Series A
Fixed/Adjustable Rate Preferred Stock, calculated as a
percentage of the stated value, will be payable quarterly on
February 28, May 30, August 30 and November 30 of each year
(each a "dividend payment date"), commencing February 28,
1997. From the date of issuance of the Series A
Fixed/Adjustable Rate Preferred Stock and continuing through
November 30, 2001, the rate of such dividend will be 5.91% per
annum.
After November 30, 2001, dividends on the Series A
Fixed/Adjustable Rate Preferred Stock will be payable
quarterly on each dividend payment date at the Applicable Rate
(as defined in paragraph 3) from time to time in effect. The
Applicable Rate per annum for any dividend period beginning on
or after November 30, 2001 will be equal to .37% plus the
highest of the Treasury Bill Rate, the Ten-Year Constant
Maturity Rate and the Thirty-Year Constant Maturity Rate (each
as defined in paragraph 3), as determined in advance of such
dividend period. The Applicable Rate per annum for any
dividend period beginning on or after November 30, 2001, will
not be less than 6.41% nor greater than 12.41% (without taking
into account any adjustments set forth in paragraph 2(b)).
Dividends on shares of the Series A Fixed/Adjustable
Rate Preferred Stock will be cumulative from the date of
initial issuance of such shares of Series A Fixed/Adjustable
Rate 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
<PAGE> 152
3
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
10(b)) 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 Series A Fixed/Adjustable Rate Preferred Stock,
like dividends for all dividend payment periods of the Series
A Fixed/Adjustable Rate 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 Series A
Fixed/Adjustable Rate 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 Series A Fixed/Adjustable
Rate 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 Series A Fixed/Adjustable
Rate 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 Series A Fixed/Adjustable Rate 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 Series A Fixed/Adjustable Rate 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 Series A
Fixed/Adjustable Rate Preferred Stock as to dividends.
(b) If one or more amendments to the Internal Revenue
Code of 1986, as amended (the "Code"), are enacted that reduce
the percentage of the dividends received deduction as
specified in Section 243(a)(1) of the Code or any successor
provision (the "Dividends Received Percentage") to below the
existing Dividends Received Percentage (currently 70%), the
amount of each dividend payable per share of the Series A
Fixed/Adjustable Rate Preferred
<PAGE> 153
4
Stock for dividend payments made on or after the date of
enactment of such change will be adjusted by multiplying the
amount of the dividend payable determined as described above
(before adjustment) by a factor, which will be the number
determined in accordance with the following formula (the "DRD
Formula"), and rounding the result to the nearest cent:
1 - (.35 (1 - .70))
-------------------
1 - (.35 (1 - DRP))
For the purposes of the DRD Formula, "DRP" means the Dividends
Received Percentage applicable to the dividend in question. No
amendment to the Code, other than a change in the percentage
of the dividends received deduction set forth in Section
243(a)(1) of the Code or any successor provision, will give
rise to an adjustment. Notwithstanding the foregoing
provisions, in the event that, with respect to any such
amendment, the Corporation will receive either an unqualified
opinion of nationally recognized independent tax counsel
selected by the Corporation or a private letter ruling or
similar form of authorization from the Internal Revenue
Service to the effect that such an amendment would not apply
to dividends payable on the Series A Fixed/Adjustable Rate
Preferred Stock, then any such amendment will not result in
the adjustment provided for pursuant to the DRD Formula. The
opinion referenced in the previous sentence will be based upon
a specific exception in the legislation amending the DRP or
upon a published pronouncement of the Internal Revenue Service
addressing such legislation. Unless the context otherwise
requires, references to dividends in this Certificate of
Designation will mean dividends as adjusted by the DRD
Formula. The Corporation's calculation of the dividends
payable, as so adjusted and as certified accurate as to
calculation and reasonable as to method by the independent
certified public accountants then regularly engaged by the
Corporation, will be final and not subject to review absent
manifest error.
If any amendment to the Code which reduces the
Dividends Received Percentage to below 70% is enacted after a
dividend payable on a dividend payment date has been declared,
the amount of dividend payable on such dividend payment date
will not be increased. Instead, an amount, equal to the excess
of (x) the product of the dividends paid by the Corporation on
such dividend payment date and the DRD Formula (where the DRP
used in the DRD Formula would be equal to the reduced
Dividends Received Percentage) over (y) the dividends paid by
the Corporation on such dividend payment date, will be payable
on the next succeeding dividend payment date to holders of
record in addition to any other amounts payable on such date.
In addition, if prior to May 31, 1997, an amendment
to the Code is enacted that reduces the Dividends Received
Percentage to below 70% and
<PAGE> 154
5
such reduction retroactively applies to a dividend payment
date as to which the Corporation previously paid dividends on
the Series A Fixed/Adjustable Rate Preferred Stock (each an
"Affected Dividend Payment Date"), holders of the Series A
Fixed/Adjustable Rate Preferred Stock shall be entitled to
receive when, as and if declared by the Board out of assets of
the corporation legally available for payment, additional
dividends (the "Additional Dividends") on the next succeeding
dividend payment date (or if such amendment is enacted after
the dividend payable on such dividend payment date has been
declared and on or before such dividend is paid, on the second
succeeding dividend payment date following the date of
enactment) payable on such succeeding dividend payment date to
holders of record in an amount equal to the excess of (x) the
product of the dividends paid by the Corporation on each
Affected Dividend Payment Date and the DRD Formula (where the
DRP used in the DRD Formula would be equal to the reduced
Dividends Received Percentage applied to each Affected
Dividend Payment Date) over (y) the dividends paid by the
Corporation on each Affected Dividend Payment Date.
Additional Dividends will not be paid in respect of
the enactment of any amendment to the Code on or after May 31,
1997 which retroactively reduces the Dividends Received
Percentage to below 70%, or if prior to May 31, 1997, such
amendment would not result in an adjustment due to the
Corporation having received either an opinion of counsel or
tax ruling referred to in the third preceding paragraph. The
Corporation will only make one payment of Additional
Dividends.
In the event that the amount of dividends payable per
share of the Series A Fixed/Adjustable Rate Preferred Stock
will be adjusted pursuant to the DRD Formula and/or Additional
Dividends are to be paid, the Corporation will cause notice of
each such adjustment and, if applicable, any Additional
Dividends, to be sent to the holders of record as they appear
on the stock books of the Corporation on such record date, not
more than 60 days nor less than 10 days preceding the payment
date thereof as shall be fixed by the Board or the Committee.
In the event that the Dividends Received Percentage
is reduced to 50% or less, the Corporation may, at its option,
redeem the Series A Fixed/Adjustable Rate Preferred Stock, in
whole but not in part, as described in paragraph 7 hereof.
3. Applicable Rate. Except as provided above in
paragraph 2, the "Applicable Rate" per annum for any dividend
period beginning on or after November 30, 2001 will be equal
to .37% plus the Effective Rate (as defined herein), but not
less than 6.41% nor greater than 12.41% (without taking into
account any adjustments as described in paragraph 2(b)). The
"Effective Rate"
<PAGE> 155
6
for any dividend period beginning on or after November 30,
2001 will be equal to the highest of the Treasury Bill Rate,
the Ten-Year Constant Maturity Rate and the Thirty-Year
Constant Maturity Rate (each as defined herein) for such
dividend period. If the Corporation determines in good faith
that for any reason: (i) any one of the Treasury Bill Rate,
the Ten-Year Constant Maturity Rate or the Thirty-Year
Constant Maturity Rate cannot be determined for any dividend
period beginning on or after November 30, 2001, then the
Effective Rate for such dividend period will be equal to the
higher of whichever two of such rates can be so determined;
(ii) only one of the Treasury Bill Rate, the Ten-Year Constant
Maturity Rate or the Thirty-Year Constant Maturity Rate can be
determined for any dividend period beginning on or after
November 30, 2001, then the Effective Rate for such dividend
period will be equal to whichever such rate can be so
determined; or (iii) none of the Treasury Bill Rate, the
Ten-Year Constant Maturity Rate or the Thirty-Year Constant
Maturity Rate can be determined for any dividend period
beginning on or after November 30, 2001, then the Effective
Rate for the preceding dividend period will be continued for
such dividend period.
The "Treasury Bill Rate" for each dividend period
will be the arithmetic average of the two most recent weekly
per annum market discount rates (or the one weekly per annum
market discount rate, if only one such rate is published
during the relevant Calendar Period (as defined herein) for
three-month U.S. Treasury bills, as published weekly by the
Federal Reserve Board (as defined herein) during the Calendar
Period immediately preceding the tenth calendar day preceding
the dividend period for which the dividend rate on the Series
A Fixed/Adjustable Rate Preferred Stock is being determined.
The "Ten-Year Constant Maturity Rate" for each
dividend period will be the arithmetic average of the two most
recent weekly per annum Ten-Year Average Yields (as defined
herein) (or the one weekly per annum Ten-Year Average Yield,
if only one such yield is published during the relevant
Calendar Period), as published weekly by the Federal Reserve
Board during the Calendar Period immediately preceding the
tenth calendar day preceding the dividend period for which the
dividend rate on the Series A Fixed/Adjustable Rate Preferred
Stock is being determined.
The "Thirty-Year Constant Maturity Rate" for each
dividend period will be the arithmetic average of the two most
recent weekly per annum Thirty-Year Average Yields (as defined
herein) or the one weekly per annum Thirty-Year Average Yield,
if only one such yield is published during the relevant
Calendar Period), as published weekly by the Federal Reserve
Board during the Calendar Period immediately preceding the
tenth calendar day preceding the dividend period for which the
dividend rate on the Series A Fixed/Adjustable Rate Preferred
Stock is being determined.
<PAGE> 156
7
If the Federal Reserve Board does not publish a
weekly per annum market discount rate, Ten-Year Average Yield
or Thirty-Year Average Yield during any applicable Calendar
Period, then the Treasury Bill Rate, Ten-Year Constant
Maturity Rate or Thirty-Year Constant Maturity Rate, as the
case may be, for such dividend period will be the arithmetic
average of the two most recent weekly per annum market
discount rates for three-month U.S. Treasury bills, Ten-Year
Average Yields or Thirty-Year Average Yields, as the case may
be (or the one weekly per annum rate, if only one such rate is
published during the relevant Calendar Period), as published
weekly during such Calendar Period by any Federal Reserve Bank
or by any U.S. Government department or agency selected by the
Corporation. If any such rate is not published by the Federal
Reserve Board or by any Federal Reserve Bank or by any U.S.
Government department or agency during such Calendar Period,
then the Treasury Bill Rate, Ten-Year Constant Maturity Rate
or Thirty-Year Constant Maturity Rate for such dividend period
will be the arithmetic average of the two most recent weekly
per annum (i) in the case of the Treasury Bill Rate, market
discount rates (or the one weekly per annum market discount
rate, if only one such rate is published during the relevant
Calendar Period) for all of the U.S. Treasury bills then
having remaining maturities of not less than 80 nor more than
100 days, and (ii) in the case of the Ten-Year Constant
Maturity Rate, average yields to maturity (or the one weekly
per annum average yield to maturity, if only one such yield is
published during the relevant Calendar Period) for all of the
actively traded marketable U.S. Treasury fixed interest rate
securities (other than Special Securities (as defined herein)
then having remaining maturities of not less than eight nor
more than twelve years, and (iii) in the case of the
Thirty-Year Constant Maturity Rate, average yields to maturity
(or the one weekly per annum average yield to maturity, if
only one such yield is published during the relevant Calendar
Period) for all of the actively traded marketable U.S.
Treasury fixed interest rate securities (other than Special
Securities) then having remaining maturities of not less than
twenty-eight nor more than thirty years, in each case as
published during such Calendar Period by the Federal Reserve
Board or, if the Federal Reserve Board does not publish such
rates, by any Federal Reserve Bank or by any U.S. Government
department or agency selected by the Corporation. If the
Corporation determines in good faith that for any reason (i)
no such U.S. Treasury bill rates are published as provided
above during such Calendar Period or (ii) the Corporation
cannot determine the Treasury Bill Rate for any dividend
period; then the Treasury Bill Rate for such dividend period
will be the arithmetic average of the per annum market
discount rates based upon the closing bids during such
Calendar Period for each of the issues of marketable
non-interest-bearing U.S. Treasury securities with a remaining
maturity of not less than 80 nor more than 100 days from the
date of each such quotation, as chosen and quoted daily for
each business day in New York City (or less frequently if
daily quotations are not generally available) to the
Corporation by at least three recognized dealers in U.S.
Government securities selected by the Corporation.
<PAGE> 157
8
If the Corporation determines in good faith that for any
reason the Corporation cannot determine the Ten-Year Constant
Maturity Rate or Thirty-Year Constant Maturity Rate for any
dividend period as provided above, then the applicable rate
for such dividend period will be the arithmetic average of the
per annum average yields to maturity based upon the closing
bids during such Calendar Period for each of the issues of
actively traded marketable U.S. Treasury fixed interest rate
securities (other than Special Securities) with a final
maturity date (i) in the case of the Ten-Year Constant
Maturity Rate, not less than eight nor more than twelve years
from the date of each such quotation, and (ii) in the case of
the Thirty-Year Constant Maturity Rate, not less than
twenty-eight nor more than thirty years from the date of each
such quotation, in each case as chosen and quoted daily for
each business day in New York City (or less frequently if
daily quotations are not generally available) to the
Corporation by at least three recognized dealers in the United
States.
The Treasury Bill Rate, the Ten-Year Constant
Maturity Rate and the Thirty-Year Constant Maturity Rate will
each be rounded to the nearest five hundredths of a percent,
with .025% being rounded upward.
The Applicable Rate with respect to each dividend
period beginning on or after November 30, 2001 will be
calculated as promptly as practicable by the Corporation
according to the appropriate method described above. The
Corporation will cause notice of each Applicable Rate to be
given to the holders of Series A Fixed/Adjustable Rate
Preferred Stock when payment is made of the dividend for the
immediately preceding dividend period.
As used in this paragraph 3, the term "Calendar
Period" means a period of fourteen calendar days; the term
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System; the term "Special Securities" means
securities which can, at the option of the holder, be
surrendered at face value in payment of any Federal estate tax
or which provide tax benefits to the holder and are priced to
reflect such tax benefits or which were originally issued at a
deep or substantial discount; the term "Ten-Year Average
Yield" means the average yield to maturity for actively traded
marketable U.S. Treasury fixed interest rate securities
(adjusted to constant maturities of ten years); and the term
"Thirty-Year Average Yield" means the average yield to
maturity for actively traded marketable U.S. Treasury fixed
interest rate securities (adjusted to constant maturities of
thirty years).
4. Liquidation Preference. The shares of Series A
Fixed/Adjustable Rate 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 Series A
Fixed/Adjustable Rate Preferred Stock as to rights upon
liquidation, dissolution or winding up of the
<PAGE> 158
9
Corporation, so that in the event of any liquidation,
dissolution or winding up of the Corporation, whether
voluntary or involuntary, the holders of the Series A
Fixed/Adjustable Rate 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 Series A Fixed/Adjustable Rate
Preferred Stock) plus an amount equal to all dividends
(whether or not earned or declared) accrued and accumulated
and unpaid on the shares of Series A Fixed/Adjustable Rate
Preferred Stock to the date of final distribution. The holders
of the Series A Fixed/Adjustable Rate 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 Series A Fixed/Adjustable
Rate 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 Series A
Fixed/Adjustable Rate 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.
5. Conversion. The Series A Fixed/Adjustable Rate
Preferred Stock is not convertible into shares of any other
class or series of stock of the Corporation.
6. Voting Rights. The holders of shares of Series A
Fixed/Adjustable Rate 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 Series A
Fixed/Adjustable Rate 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 Series
<PAGE> 159
10
A Fixed/Adjustable Rate 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 Series A Fixed/Adjustable Rate 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 Series A
Fixed/Adjustable Rate 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 Series A Fixed/Adjustable Rate
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 Series A Fixed/Adjustable Rate 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 Series A Fixed/Adjustable Rate
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 Series A
Fixed/Adjustable Rate Preferred Stock remain
outstanding, the consent of the holders of at least
two-thirds of the shares of Series A Fixed/Adjustable
Rate 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
<PAGE> 160
11
in paragraph 10(a) hereof) to the shares of
the Series A Fixed/Adjustable Rate
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 Series A Fixed/Adjustable Rate
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 Series A Fixed/Adjustable
Rate 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
Series A Fixed/Adjustable Rate Preferred Stock shall
have been redeemed or called for redemption and
sufficient funds shall have been deposited in trust
to effect such redemption.
7. Redemption. The shares of the Series A
Fixed/Adjustable Rate 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 Series A
Fixed/Adjustable Rate Preferred Stock shall not be redeemable
prior to November 30, 2001, except as stated below. Subject to
the foregoing, on or after such date, shares of the Series A
Fixed/Adjustable Rate 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 Series A
Fixed/Adjustable Rate Preferred Stock have not been paid, the
Series A Fixed/Adjustable Rate Preferred Stock may not be
redeemed in part and the Corporation may not purchase or
acquire any shares of the Series A Fixed/Adjustable Rate
Preferred Stock otherwise than pursuant to a purchase or
exchange offer made on the same terms
<PAGE> 161
12
to all holders of the Series A Fixed/Adjustable Rate Preferred
Stock. If fewer than all the outstanding shares of Series A
Fixed/Adjustable Rate 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 7 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 Series A Fixed/Adjustable Rate 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.
Notwithstanding the foregoing provisions, if the
Dividends Received Percentage is equal to or less than 50%
and, as a result, the amount of dividends on the Series A
Fixed/Adjustable Rate Preferred Stock payable on any dividend
payment date will be or is adjusted upwards as described in
paragraph 2(b) hereof, the Corporation, at its option, may
redeem all, but not less than all, of the outstanding shares
of the Series A Fixed/Adjustable Rate Preferred Stock (the
Depositary Shares) (a "Dividends Received Deduction
Redemption") provided that within sixty days of the date on
which an amendment to the Code is enacted which reduces the
Dividends Received Percentage to 50% or less, the Corporation
sends notice to holders of the Series A Fixed/Adjustable Rate
Preferred Stock of such redemption. A Dividends Received
Deduction Redemption, in accordance with this paragraph, will
take place on the date specified in the notice, which shall be
not less than thirty nor more than sixty days from the date
such notice is sent to holders of the Series A
Fixed/Adjustable Rate Preferred Stock. A Dividends Received
Deduction Redemption shall be at the applicable redemption
price set forth in the following table, in each case plus
accrued and unpaid dividends (whether or not declared) thereon
to but excluding
<PAGE> 162
13
the date fixed for redemption, including any changes in
dividends payable due to changes in the Dividends Received
Percentage and Additional Dividends, if any:
<TABLE>
<CAPTION>
Redeemable Price
----------------
Redemption Period Per Share Per Depositary Share
----------------- --------- --------------------
<S> <C> <C>
November 14, 1996 to November 29, 1997... $210.00 $ 52.50
November 30, 1997 to November 29, 1998... 208.00 52.00
November 30, 1998 to November 29, 1999... 206.00 51.50
November 30, 1999 to November 29, 2000... 204.00 51.00
November 30, 2000 to November 29, 2001... 202.00 50.50
On or after November 30, 2001............ 200.00 50.00
</TABLE>
8. Authorization and Issuance of Other Securities. No
consent of the holders of the Series A Fixed/Adjustable Rate
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 Series A
Fixed/Adjustable Rate 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.
9. 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 Series A Fixed/Adjustable
Rate 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.
10. 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 Series A
Fixed/Adjustable Rate 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 Series A Fixed/Adjustable Rate
Preferred Stock;
(b) on a parity with shares of the Series A
Fixed/Adjustable Rate 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 Series A Fixed/Adjustable Rate
<PAGE> 163
14
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 Series A Fixed/Adjustable Rate Preferred
Stock (the term "Parity Preferred Stock" being used
to refer to any stock on a parity with the shares of
Series A Fixed/Adjustable Rate 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 Series A
Fixed/Adjustable Rate 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 Series A Fixed/Adjustable Rate
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 Series A Fixed/Adjustable Rate 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, (viii) if
issued, the Corporation's 9.00% Cumulative Preferred Stock,
with a liquidation value of $200.00 per share, (ix) if issued,
the Corporation's 8.40% Cumulative Preferred Stock, with a
liquidation value of $200.00 per share, (x) if issued, the
Corporation's 8.20% Cumulative Preferred Stock, with a
liquidation value of $200.00 per share and (xi) the
Corporation's 7-3/4% Cumulative Preferred Stock, with a
liquidation value of $200.00 per share.
<PAGE> 164
15
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 of the Board, and attested by Patricia Kurtz, Assistant
Secretary of the Corporation, this 8th day of November, 1996.
MORGAN STANLEY GROUP INC.
By: /s/ Richard B. Fisher
-----------------------------
Name: Richard B. Fisher
Title: Chairman of the Board
[SEAL]
Attest:
/s/ Patricia A. Kurtz
- --------------------------
Assistant Secretary
<PAGE> 165
CERTIFICATE OF DESIGNATION OF PREFERENCES AND RIGHTS
OF THE
8.03% 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 December 13, 1996, pursuant to authority delegated to it by the Board
pursuant to the provisions of Section 141(c)(1) 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 670,000 of the 30,000,000 shares of Preferred Stock
which the Corporation now has authority to issue, is authorized, and
the Board and the Committee, pursuant to the authority expressly
granted to the Committee by the Board pursuant to the provisions of
Section 141(c)(1) of the General Corporation Law of the State of
Delaware and the Certificate of Incorporation, 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> 166
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 8.03% 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 the 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 the Cumulative Preferred
Stock shall be 670,000. The Cumulative Preferred Stock is
issuable in whole shares only.
2. Dividends. (a) Holders of shares of the 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 at
the rate of 8.03% per annum. Dividends on the Cumulative
Preferred Stock will be payable quarterly on February 28, May
30, August 30 and November 30 of each year (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 the 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
<PAGE> 167
3
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.
(b) If one or more amendments to the Internal Revenue
Code of 1986, as amended (the "Code"), are enacted that reduce
the percentage of the dividends received deduction as
specified in Section 243(a)(1) of the Code or any successor
provision (the "Dividends Received Percentage") to below the
existing Dividends Received Percentage (70% at the date
hereof), the amount of each dividend payable per share of the
Cumulative Preferred Stock for dividend payments made on or
after the date of enactment of such change, and so long as the
Dividends Received Percentage remains below 70%, will be
adjusted by multiplying the amount of the dividend payable
determined as described above (before adjustment) by a factor,
which will be the number determined in accordance with the
following formula (the "DRD Formula"), and rounding the result
to the nearest cent:
1 - (.35 (1 - .70))
-------------------
1- (.35 (1 - DRP))
For the purposes of the DRD Formula, "DRP" means the Dividends
Received Percentage applicable to the dividend in question. No
amendment to the Code, other than a change in the percentage
of the dividends received deduction set forth in Section
243(a)(1) of the Code or any successor provision, will give
rise to an adjustment. Notwithstanding the foregoing
provisions, in the event that, with respect to any such
amendment, the Corporation will receive either an unqualified
opinion of nationally recognized independent tax counsel
<PAGE> 168
4
selected by the Corporation or a private letter ruling or
similar form of authorization from the Internal Revenue
Service to the effect that such an amendment would not apply
to dividends payable on the Cumulative Preferred Stock, then
any such amendment will not result in the adjustment provided
for pursuant to the DRD Formula. The opinion referenced in the
previous sentence will be based upon a specific exception in
the legislation amending the DRP or upon a published
pronouncement of the Internal Revenue Service addressing such
legislation. Unless the context otherwise requires, references
to dividends in this Certificate of Designation will mean
dividends as adjusted by the DRD Formula. The Corporation's
calculation of the dividends payable, as so adjusted and as
certified accurate as to calculation and reasonable as to
method by the independent certified public accountants then
regularly engaged by the Corporation, will be final and not
subject to review absent manifest error.
If any amendment to the Code which reduces the
Dividends Received Percentage to below 70% is enacted after a
dividend payable on a dividend payment date has been declared
and on or before such dividend is paid, the amount of dividend
payable on such dividend payment date will not be increased.
Instead, an amount, equal to the excess of (x) the product of
the dividends paid by the Corporation on such dividend payment
date and the DRD Formula (where the DRP used in the DRD
Formula would be equal to the reduced Dividends Received
Percentage) over (y) the dividends paid by the Corporation on
such dividend payment date, will be payable on the next
succeeding dividend payment date to holders of record on the
record date for such next succeeding dividend payment in
addition to any other amounts payable on such date.
In the event that the amount of dividends payable per
share of the Cumulative Preferred Stock will be adjusted
pursuant to the DRD Formula, the Corporation will cause notice
of each such adjustment to be sent to the holders of record as
they appear on the stock books of the Corporation on such
record date, not more than 60 days nor less than 10 days
preceding the payment date thereof as shall be fixed by the
Board or the Committee.
In the event that the Dividends Received Percentage is
reduced to 50% or less, the Corporation may, at its option,
redeem the Cumulative Preferred Stock, in whole but not in
part, as described in paragraph 6 hereof.
3. Liquidation Preference. The shares of the
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
<PAGE> 169
5
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
the 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 the 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 the 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 the
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
<PAGE> 170
6
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
the 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 the 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 the
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 the 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 the 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 the 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 the 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
<PAGE> 171
7
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 the 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 the 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
the 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 February 28, 2007, except as stated below. Subject to the
foregoing, on or after such date, shares of the Cumulative
Preferred Stock are redeemable at the option of the
Corporation, in whole or in part, upon not less than 30 days'
notice at the redemption prices set forth below, plus accrued
and accumulated but unpaid dividends to but
<PAGE> 172
8
excluding the date fixed for redemption, if redeemed during
the twelve-month period beginning on February 28 of the years
indicated below:
Year Redemption Price Per Share
---- --------------------------
2007............................. $205.354
2008............................. 204.282
2009............................. 203.212
2010............................. 202.142
2011............................. 201.070
On or after 2012................. 200.000
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 share 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
the Cumulative Preferred Stock are to be redeemed, the
Corporation will select those to be redeemed by lot or a
substantially equivalent method.
Notwithstanding the foregoing provisions, if the
Dividends Received Percentage is equal to or less than 50%
and, as a result, the amount of dividends on the Cumulative
Preferred Stock payable on any dividend payment date will be
or is adjusted upwards as described in paragraph 2(b) hereof,
the Corporation, at its option, may redeem all, but not less
than all, of the outstanding shares of the Cumulative
Preferred Stock (a "Dividends Received Deduction Redemption")
provided that within sixty days of the later of the date on
which an amendment to the Code is enacted which reduces the
Dividends Received Percentage to 50% or less and the date on
which notice of issuance of the Cumulative Preferred Stock is
given, the Corporation sends notice to holders of the
Cumulative Preferred Stock of such redemption. A Dividends
Received Deduction Redemption, in accordance with this
paragraph, will take place on the date specified in the
notice, which shall be not less than thirty nor more than
sixty days from the date such notice is sent to holders of the
Cumulative Preferred Stock. A Dividends Received Deduction
Redemption shall be at the applicable redemption price set
forth in the following table, in each case plus accrued and
accumulated but unpaid dividends thereon to but excluding the
date fixed for redemption, including any changes in dividends
payable due to changes in the Dividends Received Percentage
and Additional Dividends, if any:
<PAGE> 173
9
Redemption
Redemption Period Price Per Share
----------------- ---------------
February 28, 1998 to February 27, 1999......... $ 210.000
February 28, 1999 to February 27, 2000......... 208.889
February 28, 2000 to February 27, 2001......... 207.778
February 28, 2001 to February 27, 2002......... 206.667
February 28, 2002 to February 27, 2003......... 205.556
February 28, 2003 to February 27, 2004......... 204.444
February 28, 2004 to February 27, 2005......... 203.333
February 28, 2005 to February 27, 2006......... 202.222
February 28, 2006 to February 27, 2007......... 201.111
If a Dividends Received Deduction Redemption occurs on or
after February 28, 2007, the redemption prices shall be as set
forth in the first paragraph of this paragraph 6.
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 the 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.
<PAGE> 174
10
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 the Cumulative Preferred Stock (the term
"Parity Preferred Stock" being used to refer to any
stock on a parity with the shares of the 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> 175
11
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, (viii) if issued, the Corporation's 9.00%
Cumulative Preferred Stock, with a liquidation value of
$200.00 per share, (ix) if issued, the Corporation's 8.40%
Cumulative Preferred Stock, with a liquidation value of
$200.00 per share, (x) if issued, the Corporation's 8.20%
Cumulative Preferred Stock, with a liquidation value of
$200.00 per share (xi) the Corporation's 7-3/4% Cumulative
Preferred Stock, with a liquidation value of $200.00 per share
and (xii) the Corporation's Series A Fixed/Adjustable Rate
Cumulative Preferred Stock, with a liquidation value of
$200.00 per share.
<PAGE> 176
12
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 of the Board, and attested by Patricia Kurtz, Assistant
Secretary of the Corporation, this 16th day of December, 1996.
MORGAN STANLEY GROUP INC.
By: /s/ Richard B. Fisher
----------------------------
Name: Richard B. Fisher
Title: Chairman of the Board
[SEAL]
Attest:
/s/ Patricia A. Kurtz
- -------------------
Assistant Secretary
<PAGE> 177
CERTIFICATE OF RETIREMENT
OF PREFERRED STOCK
OF MORGAN STANLEY GROUP INC.
(Pursuant to Section 243 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"), certifies as follows:
FIRST: The Corporation's Restated Certificate of Incorporation
authorizes the issuance of 975,000 shares of 8.88% Cumulative Preferred Stock,
without par value, with a stated value of $200.00 per share (the "8.88%
Preferred Stock").
SECOND: The Executive Committee of the Board of Directors of
the Corporation redeemed and retired all the authorized shares of the 8.88%
Preferred Stock.
THIRD: The Restated Certificate of Incorporation of the
Corporation prohibits the reissue of shares of 8.88% Preferred Stock as shares
of the series to which they were originally designated.
FOURTH: Pursuant to the provisions of Section 243 of the
General Corporation Law of the State of Delaware, all references to the 8.88%
Preferred Stock in the Restated Certificate of Incorporation of the Corporation
are eliminated, and the shares that were designated to such series are returned
to the status of authorized but unissued shares of the Preferred Stock of the
Corporation, without designation as to series.
IN WITNESS WHEREOF, the Corporation has caused this
certificate to be signed by Richard B. Fisher, its Chairman, and attested by
Patricia A. Kurtz, its Assistant Secretary, this 26th day of February, 1997.
MORGAN STANLEY GROUP INC.
By: /s/Richard B. Fisher
---------------------------
Richard B. Fisher
Chairman of the Board
ATTEST:
/s/Patricia A. Kurtz
- --------------------
Patricia A. Kurtz
Assistant Secretary
<PAGE> 1
EXHIBIT 11
MORGAN STANLEY GROUP INC.
COMPUTATION OF EARNINGS PER SHARE
(IN MILLIONS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------
FEBRUARY 28, FEBRUARY 29,
1997 1996
------------ -------------
<S> <C> <C>
PRIMARY:
Common stock and common stock equivalents:
Average common shares outstanding 156,291,109 153,833,405
Average common shares issuable
under employee benefit plans 2,016,458 2,715,838
------------ ------------
Total average common and common
equivalent shares outstanding 158,307,567 156,549,243
============ ============
Earnings:
Net income $ 316 $ 273
Less: Preferred stock dividend
requirements 19 16
------------ ------------
Earnings applicable to common shares $ 297 $ 257
============ ============
Primary earnings per share $ 1.88 $ 1.64
============ ============
FULLY DILUTED:
Common stock and common stock equivalents:
Average common shares outstanding 156,291,109 153,833,405
Average common shares issuable
under employee benefit plans 2,330,704 3,008,014
Common shares issuable upon conversion
of ESOP preferred stock 7,391,289 7,509,495
------------ ------------
Total average common and common
equivalent shares outstanding 166,013,102 164,350,914
============ ============
Earnings:
Net income $ 316 $ 273
Less: Preferred stock dividend
requirements 18 15
------------ ------------
Earnings applicable to common shares $ 298 $ 258
============ ============
Fully diluted earnings per share $ 1.80 $ 1.57
============ ============
</TABLE>
<PAGE> 1
EXHIBIT 12
RATIO OF EARNINGS TO FIXED CHARGES
AND RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED FISCAL YEAR PERIOD
------------------------ ENDED ENDED FISCAL YEAR ENDED JANUARY 31,
FEBRUARY 28, FEBRUARY 29, NOVEMBER 30, NOVEMBER 30, --------------------------------
1997 1996 1996 1995 1995 1994 1993
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
RATIO OF EARNINGS TO FIXED CHARGES
Earnings:
Income before income taxes $ 510 $ 440 $1,572 $ 883 $ 594 $1,200 $ 793
Add: Fixed charges, net 2,293 1,870 7,407 5,538 5,916 5,055 4,397
------ ------ ------ ------ ------ ------ ------
Income before income taxes and
fixed charges, net $2,803 $2,310 $8,979 $6,421 $6,510 $6,255 $5,190
====== ====== ====== ====== ====== ====== ======
Fixed charges:
Total interest expense (1) $2,282 $1,859 $7,368 $5,512 $5,899 $5,020 $4,362
Interest factor in rents (2) 11 11 38 37 41 35 35
------ ------ ------ ------ ------ ------ ------
Total fixed charges $2,293 $1,870 $7,406 $5,549 $5,940 $5,055 $4,397
====== ====== ====== ====== ====== ====== ======
Ratio of earnings to fixed charges 1.2 1.2 1.2 1.2 1.1 1.2 1.2
RATIO OF EARNINGS TO FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
Earnings:
Income before income taxes $ 510 $ 440 $1,572 $ 883 $ 594 $1,200 $ 793
Add: Fixed charges, net 2,293 1,870 7,407 5,538 5,916 5,055 4,397
------ ------ ------ ------ ------ ------ ------
Income before income taxes and
fixed charges, net $2,803 $2,310 $8,979 $6,421 $6,510 $6,255 $5,190
====== ====== ====== ====== ====== ====== ======
Fixed charges:
Total interest expense (1) $2,282 $1,859 $7,368 $5,512 $5,899 $5,020 $4,362
Interest factor in rents (2) 11 11 38 37 41 35 35
Preferred stock dividends (3) 31 26 101 80 97 85 82
------ ------ ------ ------ ------ ------ ------
Total fixed charges and preferred
stock dividends $2,324 $1,896 $7,507 $5,629 $6,037 $5,140 $4,479
====== ====== ====== ====== ====== ====== ======
Ratio of earnings to fixed charges and
preferred stock dividends 1.2 1.2 1.2 1.1 1.1 1.2 1.2
</TABLE>
(1) Total interest expense for the period ended November 30, 1995 and the fiscal
year ended January 31, 1995 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>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION AT FEBRUARY 28, 1997
(UNAUDITED) AND THE CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE THREE
MONTHS ENDED FEBRUARY 28, 1997 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> FEB-28-1997
<CASH> 5,978
<RECEIVABLES> 14,887
<SECURITIES-RESALE> 70,029
<SECURITIES-BORROWED> 50,394
<INSTRUMENTS-OWNED> 78,676
<PP&E> 1,274
<TOTAL-ASSETS> 224,772
<SHORT-TERM> 22,241
<PAYABLES> 27,742
<REPOS-SOLD> 95,919
<SECURITIES-LOANED> 10,432
<INSTRUMENTS-SOLD> 43,392
<LONG-TERM> 16,470
0
1,027
<COMMON> 164
<OTHER-SE> 5,305
<TOTAL-LIABILITY-AND-EQUITY> 224,772
<TRADING-REVENUE> 751
<INTEREST-DIVIDENDS> 2,367
<COMMISSIONS> 182
<INVESTMENT-BANKING-REVENUES> 442
<FEE-REVENUE> 278
<INTEREST-EXPENSE> 2,282
<COMPENSATION> 879
<INCOME-PRETAX> 510
<INCOME-PRE-EXTRAORDINARY> 510
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 316
<EPS-PRIMARY> 1.88
<EPS-DILUTED> 1.80
</TABLE>
