-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Uhbdy0ij3vomw5ghTXfrpCePIgfES91wHEmlh4VTSTUThqtKoTZL3kxrTfk2ZKZq q+en7zMPGD5rgr0UO05RsQ== 0000950103-96-001038.txt : 19960807 0000950103-96-001038.hdr.sgml : 19960807 ACCESSION NUMBER: 0000950103-96-001038 CONFORMED SUBMISSION TYPE: 424B3 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19960806 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MORGAN STANLEY GROUP INC /DE/ CENTRAL INDEX KEY: 0000789625 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211] IRS NUMBER: 132838811 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 424B3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-01655 FILM NUMBER: 96604581 BUSINESS ADDRESS: STREET 1: 1585 BROADWAY CITY: NEW YORK STATE: NY ZIP: 10036 BUSINESS PHONE: 2127034000 424B3 1 PROSPECTUS Dated May 1, 1996 Pricing Supplement No. 29 to PROSPECTUS SUPPLEMENT Registration Statement No. 333-01655 Dated May 1, 1996 July 30, 1996 Rule 424(b)(3) $11,358,945 Morgan Stanley Group Inc. MEDIUM-TERM NOTES, SERIES C Senior Fixed Rate Notes MANDATORILY EXCHANGEABLE NOTES DUE AUGUST 15, 1997 Mandatorily Exchangeable For Shares of Common Stock of LEGG MASON INC. The Mandatorily Exchangeable Notes due August 15, 1997 (the "Notes") are Medium-Term Notes, Series C (Senior Fixed Rate Notes) of Morgan Stanley Group Inc. (the "Company"), as further described below and in the Prospectus Supplement under "Description of Notes - Fixed Rate Notes" and "- Exchangeable Notes." The principal amount of each of the Notes being offered hereby will be $292.50 (the "Issue Price"). The Notes will mature on August 15, 1997. Interest on the Notes, at the rate of 3.03% of the principal amount per annum, is payable quarterly in arrears on each February 15, May 15, August 15 and November 15, beginning November 15, 1996. At maturity (including as a result of acceleration or otherwise), the principal amount of each Note will be mandatorily exchanged by the Company into a number of shares of the common stock, par value $0.10 per share (the "LM Stock") of Legg Mason Inc. ("Legg Mason") at the Exchange Rate (or, at the Company's option, cash equal to $360.00 in the case of clause (a) below). The Exchange Rate for each $292.50 principal amount of any Note is equal to, subject to certain adjustments, (a) if the product of the Exchange Factor (as defined below) and the Market Price per share of LM Stock, determined as of the maturity of the Notes (as defined herein, the "Maturity Price"), is greater than $36.00 (the "Cap Price"), (i) the product of (x) the Exchange Factor and (y) the Cap Price divided by the Maturity Price times (ii) ten shares of LM Stock, (b) if the Maturity Price is greater than $23.875 (the "Floor Price") and less than or equal to the Cap Price, the product of the Exchange Factor and ten shares of LM Stock or (c) if the Maturity Price is less than or equal to the Floor Price, (i) the product of (x) the Exchange Factor and (y) the Floor Price divided by the Maturity Price times (ii) ten shares of LM Stock. The Exchange Factor will be set initially at 1.0, but will be subject to adjustment upon the occurrence of certain corporate events. See "Exchange at Maturity," "Maturity Price," "Exchange Factor" and "Antidilution Adjustments" in this Pricing Supplement. The opportunity for equity appreciation afforded by an investment in the Notes is less than that afforded by an investment in the LM Stock because at maturity a holder may receive less than ten shares of LM Stock per Note. The value of the LM Stock received by a holder of the Notes upon exchange at maturity, determined as described herein, may be more or less than the principal amount of the Notes. Legg Mason is not affiliated with the Company, is not involved in this offering of Notes and will have no obligations with respect to the Notes. The Market Price for LM Stock on the date of this Pricing Supplement was $28.125. See "Historical Information" in this Prospectus Supplement for information on the range of Market Prices for LM Stock. The Company will cause the Market Price, any adjustments to the Exchange Factor and any other antidilution adjustments to be determined by the Calculation Agent for The Chase Manhattan Bank, as Trustee under the Senior Debt Indenture. An investment in the Notes entails risks not associated with similar investments in a conventional debt security, as described under "Risk Factors" on PS-4 and PS-5 herein. ---------------- PRICE 100% AND ACCRUED INTEREST ---------------- Agent's Proceeds to Price to Public(1) Commissions(2) Company(1) -------------------- ---------------- ------------- Per Note.... 100% 0.25% 99.75% Total....... $11,358,945 $28,397 $11,330,548 _______________ (1) Plus accrued interest, if any, from August 7, 1996. (2) The Company has agreed to indemnify the Agent against certain liabilities, including liabilities under the Securities Act of 1933. MORGAN STANLEY & CO. Incorporated Capitalized terms not defined herein have the meanings given to such terms in the accompanying Prospectus Supplement. Principal Amount:.......... $11,358,945 Maturity Date:............. August 15, 1997 Interest Rate:............. 3.03% per annum Interest Payment Dates..... February 15, May 15, August 15 and November 15, beginning November 15, 1996 Specified Currency:........ U.S. Dollars Issue Price:............... 100% Original Issue Date (Settlement Date):......... August 7, 1996 Book Entry Note or Certificated Note:......... Book Entry Senior Note or Subordinated Note:...................... Senior Denominations:............. $292.50 and integral multiples thereof Trustee:................... The Chase Manhattan Bank Exchange at Maturity:...... At maturity (including as a result of acceleration or otherwise), the principal amount of each Note will be mandatorily exchanged by the Company, upon delivery of such Note to the Trustee, into a number of shares of LM Stock at the Exchange Rate (or, at the Company's option, cash equal to $360.00 in the case of clause (a) below). The Exchange Rate for each $292.50 principal amount of any Note is equal to (a) if the Maturity Price (as defined below) is greater than $36.00 (the "Cap Price"), (i) the product of (x) the Exchange Factor and (y) the Cap Price divided by the Maturity Price times (ii) ten shares of LM Stock, (b) if the Maturity Price is greater than $23.875 (the "Floor Price") and less than or equal to the Cap Price, the product of the Exchange Factor and ten shares of LM Stock or (c) if the Maturity Price is less than or equal to the Floor Price, (i) the product of (x) the Exchange Factor and (y) the Floor Price divided by the Maturity Price times (ii) ten shares of LM Stock, subject in each case to any applicable antidilution adjustments as set forth under "Antidilution Adjustments" below. The Company shall, or shall cause the Calculation Agent to, (i) provide written notice to the Trustee on or prior to 10:30 a.m. on the NYSE Trading Day immediately prior to maturity of the Notes of the Company's determination to deliver LM Stock or cash equal to $360.00 and (ii) deliver such shares of LM Stock or cash to the Trustee for delivery to the holders. The Calculation Agent shall calculate the Exchange Factor and determine the Exchange Rate applicable at the maturity of the Notes. References to payment "per Note" refer to each $292.50 principal amount of any Note. No Fractional Shares:...... Upon mandatory exchange of the Notes, the Company will pay cash in lieu of issuing fractional shares of LM Stock in an amount equal to the corresponding fractional Market Price of such fraction of LM Stock as determined by the Calculation Agent as of the maturity of the Notes. Exchange Factor:........... The Exchange Factor will be set initially at 1.0, but will be subject to adjustment upon the occurrence of certain corporate events through and including the second NYSE Trading Day immediately prior to maturity. See "Antidilution Adjustments" below. Initial Price:............. $28.125, the Market Price of LM Stock on the date of this Pricing Supplement. Maturity Price:............ Maturity Price means the product of (i) the Market Price of one share of LM Stock and (ii) the Exchange Factor, each determined as of the second NYSE Trading Day immediately prior to maturity. Cap Price:................. $36.00 Floor Price:............... $23.875 Market Price:.............. If LM Stock (or any other security for which a Market Price must be determined) is listed on a national securities exchange, is a security of The Nasdaq National Market ("NASDAQ NMS") or is included in the OTC Bulletin Board Service ("OTC Bulletin Board") operated by the National Association of Securities Dealers, Inc. (the "NASD"), the Market Price for one share of LM Stock (or one unit of any such other security) on any NYSE Trading Day means (i) the last reported sale price, regular way, on such day on the principal United States securities exchange registered under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), on which LM Stock (or any such other security) is listed or admitted to trading or (ii) if not listed or admitted to trading on any such securities exchange or if such last reported sale price is not obtainable, the last reported sale price on the over-the-counter market as reported on the NASDAQ NMS or OTC Bulletin Board on such day. If the last reported sale price is not available pursuant to clause (i) or (ii) of the preceding sentence, the Market Price for any NYSE Trading Day shall be the mean, as determined by the Calculation Agent, of the bid prices for LM Stock (or any such other security) obtained from as many dealers in such stock (or any such other security), but not exceeding three, as will make such bid prices available to the Calculation Agent. The term "NASDAQ NMS" shall include any successor to such system and the term "OTC Bulletin Board Service" shall include any successor service thereto. NYSE Trading Day:.......... A day on which trading is generally conducted in the over-the-counter market for equity securities in the United States and on the New York Stock Exchange, as determined by the Calculation Agent, and on which a Market Disruption Event (as defined below) has not occurred. Calculation Agent:......... Morgan Stanley & Co. Incorporated ("MS & Co.") Because the Calculation Agent is an affiliate of the Company, potential conflicts of interest may exist between the Calculation Agent and the holders of the Notes, including with respect to certain determinations and judgments that the Calculation Agent must make in making adjustments to the Exchange Factor or other antidilution adjustments or determining any Market Price or whether a Market Disruption Event has occurred. See "Antidilution Adjustments" and "Market Disruption Event" below. MS & Co. is obligated to carry out its duties and functions as Calculation Agent in good faith and using its reasonable judgment. Risk Factors:.............. An investment in the Notes entails significant risks not associated with similar investments in a conventional debt security, including the following: The Notes combine features of equity and debt instruments. Accordingly, the terms of the Notes differ from those of ordinary debt securities in that the value of the LM Stock that a holder of the Notes will receive upon mandatory exchange of the principal amount thereof at maturity is not fixed, but is based on the price of the LM Stock and the Exchange Rate as determined at such price. Because the price of the LM Stock is subject to market fluctuations, the value of the LM Stock received by a holder of Notes upon exchange at maturity, determined as described herein, may be more or less than the principal amount of the Notes. If the Maturity Price of the LM Stock is less than $29.25, the amount receivable upon exchange will be less than the principal amount of the Notes, in which case an investment in the Notes may result in a loss. The opportunity for equity appreciation afforded by an investment in the Notes is less than that afforded by an investment in the LM Stock because at maturity a holder will receive less than ten shares of LM Stock per Note if the value of a share of LM Stock (as adjusted by the Exchange Factor) has appreciated above the Cap Price. In addition, because the Exchange Rate and the Maturity Price are determined as of the second NYSE Trading Day prior to maturity of the Notes and because the price of LM Stock may fluctuate after such NYSE Trading Day and prior to its delivery at maturity, the value of any LM Stock delivered at maturity may be less than $360.00 even if the Maturity Price, as so determined, was greater than the Cap Price. The amount payable at maturity with respect to each Note will not under any circumstances exceed $360.00 per Note. Although the amount that holders of the Notes are entitled to receive at maturity is subject to adjustment for certain corporate events, such adjustments do not cover all events that could affect the Market Price of the LM Stock, including, without limitation, the occurrence of a partial tender or exchange offer for the LM Stock by Legg Mason or any third party. Such other events may adversely affect the market value of the Notes. There can be no assurance as to how the Notes will trade in the secondary market or whether such market will be liquid or illiquid. Securities with characteristics similar to the Notes are novel securities, and there is currently no secondary market for the Notes. The market value for the Notes will be affected by a number of factors in addition to the creditworthiness of the Company and the value of LM Stock, including, but not limited to, the volatility of LM Stock, the dividend rate on LM Stock, market interest and yield rates and the time remaining to the maturity of the Notes. In addition, the value of LM Stock depends on a number of interrelated factors, including economic, financial and political events, that can affect the capital markets generally and the market segment of which Legg Mason is a part and over which the Company has no control. The market value of the Notes is expected to depend primarily on changes in the Market Price of LM Stock. The price at which a holder will be able to sell Notes prior to maturity may be at a discount, which could be substantial, from the principal amount thereof, if, at such time, the Market Price of one share of LM Stock is below, equal to or not sufficiently above $29.25. As of the date of this Pricing Supplement, the Market Price of one share of LM Stock was below $29.25. Consequently, if the Market Price of LM Stock were to remain unchanged at the maturity of the Notes, holders of the Notes would experience a loss of principal. The historical Market Prices of LM Stock should not be taken as an indication of LM Stock's future performance during the term of any Note. The Notes will not be listed on any national securities exchange or accepted for quotation on a trading market and, as a result, pricing information for the Notes may be difficult to obtain. The Company is not affiliated with Legg Mason and, although the Company as of the date of this Pricing Supplement does not have any material non-public information concerning Legg Mason, corporate events of Legg Mason, including those described below in "Antidilution Adjustments," are beyond the Company's ability to control and are difficult to predict. Legg Mason is not involved in the offering of the Notes and has no obligations with respect to the Notes, including any obligation to take the interests of the Company or of holders of Notes into consideration for any reason. Legg Mason will not receive any of the proceeds of the offering of the Notes made hereby and is not responsible for, and has not participated in, the determination of the timing of, prices for or quantities of, the Notes offered hereby. Holders of the Notes will not be entitled to any rights with respect to the LM Stock (including, without limitation, voting rights, the rights to receive any dividends or other distributions in respect thereof and the right to tender or exchange LM Stock in any partial tender or exchange offer by Legg Mason or any third party) until such time as the Company shall deliver shares of LM Stock to holders of the Notes at maturity. Because the Calculation Agent is an affiliate of the Company, potential conflicts of interest may exist between the Calculation Agent and the holders of the Notes, including with respect to certain adjustments to the Exchange Factor and other antidilution adjustments that may influence the determination of the amount of LM Stock or other property receivable at the maturity of the Notes. See "Antidilution Adjustments" and "Market Disruption Event." It is suggested that prospective investors who consider purchasing the Notes should reach an investment decision only after carefully considering the suitability of the Notes in light of their particular circumstances. Investors should also consider the tax consequences of investing in the Notes. See "United States Federal Taxation" below. Antidilution Adjustments:.. The Exchange Factor (and, in the case of paragraph 5 below, the determination of the Exchange Rate) will be adjusted as follows: 1. If LM Stock is subject to a stock split or reverse stock split, then once such split has become effective, the Exchange Factor will be adjusted to equal the product of the prior Exchange Factor and the number of shares issued in such stock split or reverse stock split with respect to one share of LM Stock. 2. If LM Stock is subject to a stock dividend (issuance of additional shares of LM Stock) that is given ratably to all holders of shares of LM Stock, then once the dividend has become effective and LM Stock is trading ex-dividend, the Exchange Factor will be adjusted so that the new Exchange Factor shall equal the prior Exchange Factor plus the product of (i) the number of shares issued with respect to one share of LM Stock and (ii) the prior Exchange Factor. 3. There will be no adjustments to the Exchange Factor to reflect cash dividends or other distributions paid with respect to LM Stock other than distributions described in clause (v) of paragraph 5 below and Extraordinary Dividends as described below. A cash dividend or other distribution with respect to LM Stock will be deemed to be an "Extraordinary Dividend" if such dividend or other distribution exceeds the immediately preceding non-Extraordinary Dividend for LM Stock by an amount equal to at least 10% of the Market Price of LM Stock on the NYSE Trading Day preceding the ex-dividend date for the payment of such Extraordinary Dividend (the "ex-dividend date"). If an Extraordinary Dividend occurs with respect to LM Stock, the Exchange Factor with respect to LM Stock will be adjusted on the ex-dividend date with respect to such Extraordinary Dividend so that the new Exchange Factor will equal the product of (i) the then current Exchange Factor and (ii) a fraction, the numerator of which is the Market Price on the NYSE Trading Day preceding the ex-dividend date, and the denominator of which is the amount by which the Market Price on the NYSE Trading Day preceding the ex-dividend date exceeds the Extraordinary Dividend Amount. The "Extraordinary Dividend Amount" with respect to an Extraordinary Dividend for LM Stock will equal (i) in the case of cash dividends or other distributions that constitute quarterly dividends, the amount per share of such Extraordinary Dividend minus the amount per share of the immediately preceding non-Extraordinary Dividend for LM Stock or (ii) in the case of cash dividends or other distributions that do not constitute quarterly dividends, the amount per share of such Extraordinary Dividend. To the extent an Extraordinary Dividend is not paid in cash, the value of the non-cash component will be determined by the Calculation Agent, whose determination shall be conclusive. A distribution on the LM Stock described in clause (v) of paragraph 5 below that also constitutes an Extraordinary Dividend shall only cause an adjustment pursuant to clause (v) of paragraph 5. 4. If Legg Mason issues rights or warrants to all holders of LM Stock to subscribe for or purchase LM Stock at an exercise price per share less than the Market Price of the LM Stock on (i) the date the exercise price of such rights or warrants is determined and (ii) the expiration date of such rights or warrants, and if the expiration date of such rights or warrants precedes the maturity of the Notes, then the Exchange Factor will be adjusted to equal the product of the prior Exchange Factor and a fraction, the numerator of which shall be the number of shares of LM Stock outstanding immediately prior to the issuance of such rights or warrants plus the number of additional shares of LM Stock offered for subscription or purchase pursuant to such rights or warrants and the denominator of which shall be the number of shares of LM Stock outstanding immediately prior to the issuance of such rights or warrants plus the number of additional shares of LM Stock which the aggregate offering price of the total number of shares of LM Stock so offered for subscription or purchase pursuant to such rights or warrants would purchase at the Market Price on the expiration date of such rights or warrants, which shall be determined by multiplying such total number of shares offered by the exercise price of such rights or warrants and dividing the product so obtained by such Market Price. 5. If (i) there occurs any reclassification of LM Stock, (ii) Legg Mason, or any surviving entity or subsequent surviving entity of Legg Mason (a "Legg Mason Successor") has been subject to a merger, combination or consolidation and is not the surviving entity, (iii) any statutory exchange of securities of Legg Mason or any Legg Mason Successor with another corporation occurs (other than pursuant to clause (ii) above), (iv) Legg Mason is liquidated, (v) Legg Mason issues to all of its shareholders equity securities of an issuer other than Legg Mason (other than in a transaction described in clauses (ii), (iii) or (iv) above) (a "Spin-off Event") or (vi) a tender or exchange offer is consummated for all the outstanding shares of LM Stock (any such event in clauses (i) through (vi) a "Reorganization Event"), the method of determining the Exchange Rate in respect of the amount payable upon exchange at maturity for each Note will be adjusted to provide that each holder of Notes will receive at maturity, in respect of each $292.50 principal amount of each Note, securities, cash or any other assets distributed in any such Reorganization Event, including, in the case of a Spin-off Event, the share of LM Stock with respect to which the spun-off security was issued (collectively, the "Exchange Property") (or, at the sole option of the Company, cash equal to $360.00, in the case of clause (a) below) in an amount with a value equal to (a) if the Transaction Value (as defined below) is greater than the Cap Price, $360.00, (b) if the Transaction Value is greater than the Floor Price and less than or equal to the Cap Price, the Transaction Value times ten or (c) if the Transaction Value is less than or equal to the Floor Price, $238.75; provided that, if the Exchange Property received in any such Reorganization Event consists only of cash, the maturity date of the Notes will be deemed to be accelerated to the date on which such cash is distributed to holders of LM Stock. If Exchange Property consists of more than one type of property, holders of Notes will receive at maturity a pro rata share of each such type of Exchange Property. "Transaction Value" means the sum of (i) for any cash received in any such Reorganization Event, the amount of cash received per share of LM Stock, as adjusted by the Exchange Factor, (ii) for any property other than cash or securities received in any such Reorganization Event, the market value of such Exchange Property received for each share of LM Stock at the date of the receipt of such Exchange Property, as adjusted by the Exchange Factor, as determined by the Calculation Agent and (iii) for any security received in any such Reorganization Event, an amount equal to the Market Price per share of such security as of the second NYSE Trading Day immediately prior to the maturity of the Notes multiplied by the quantity of such security received for each share of LM Stock, as adjusted by the Exchange Factor. For purposes of paragraph 5 above, in the case of a consummated tender or exchange offer for all Exchange Property of a particular type, Exchange Property shall be deemed to include the amount of cash or other property paid by the offeror in the tender or exchange offer with respect to such Exchange Property (in an amount determined on the basis of the rate of exchange in such tender or exchange offer). In the event of a tender or exchange offer with respect to Exchange Property in which an offeree may elect to receive cash or other property, Exchange Property shall be deemed to include the kind and amount of cash and other property received by offerees who elect to receive cash. No adjustments to the Exchange Factor or Exchange Rate will be required unless such adjustment would require a change of at least 0.1% in the Exchange Factor or Exchange Rate then in effect. The Exchange Factor or Exchange Rate resulting from any of the adjustments specified above will be rounded to the nearest one thousandth with five ten-thousandths being rounded upward. No adjustments to the Exchange Factor or Exchange Rate will be made other than those specified above. The adjustments specified above do not cover all events that could affect the Market Price of the LM Stock, including, without limitation, a partial tender or exchange offer for the LM Stock. NOTWITHSTANDING THE FOREGOING, THE AMOUNT PAYABLE AT MATURITY WITH RESPECT TO EACH NOTE WILL NOT UNDER ANY CIRCUMSTANCES EXCEED $360.00 PER NOTE. The Calculation Agent shall be solely responsible for the determination and calculation of any adjustments to the Exchange Factor or Exchange Rate and of any related determinations and calculations with respect to any distributions of stock, other securities or other property or assets (including cash) in connection with any corporate event described in paragraph 5 above, and its determinations and calculations with respect thereto shall be conclusive. The Calculation Agent will provide information as to any adjustments to the Exchange Factor or Exchange Rate upon written request by any holder of the Notes. Market Disruption Event:... "Market Disruption Event" means, with respect to LM Stock: (i) a suspension, absence or material limitation of trading of LM Stock on the primary market for LM Stock for more than two hours of trading or during the one-half hour period preceding the close of trading in such market; or the suspension or material limitation on the primary market for trading in options contracts related to LM Stock, if available, during the one-half hour period preceding the close of trading in the applicable market, in each case as determined by the Calculation Agent in its sole discretion; and (ii) a determination by the Calculation Agent in its sole discretion that the event described in clause (i) above materially interfered with the ability of the Company or any of its affiliates to unwind all or a material portion of the hedge with respect to the Notes. For purposes of determining whether a Market Disruption Event has occurred: (1) a limitation on the hours or number of days of trading will not constitute a Market Disruption Event if it results from an announced change in the regular business hours of the relevant exchange, (2) a decision to permanently discontinue trading in the relevant option contract will not constitute a Market Disruption Event, (3) limitations pursuant to New York Stock Exchange Rule 80A (or any applicable rule or regulation enacted or promulgated by the New York Stock Exchange, any other self-regulatory organization or the Securities and Exchange Commission of similar scope as determined by the Calculation Agent) on trading during significant market fluctuations shall constitute a Market Disruption Event, (4) a suspension of trading in an options contract on LM Stock by the primary securities market trading in such options, if available, by reason of (x) a price change exceeding limits set by such securities exchange or market, (y) an imbalance of orders relating to such contracts or (z) a disparity in bid and ask quotes relating to such contracts will constitute a suspension or material limitation of trading in options contracts related to LM Stock and (5) a "suspension, absence or material limitation of trading" on the primary securities market on which options contracts related to LM Stock are traded will not include any time when such securities market is itself closed for trading under ordinary circumstances. LM Stock; Public Information................ LM Stock is registered under the Exchange Act. Companies with securities registered under the Exchange Act are required to file periodically certain financial and other information specified by the Securities and Exchange Commission (the "Commission"). Information provided to or filed with the Commission is available at the offices of the Commission specified under "Available Information" in the accompanying Prospectus. In addition, information regarding Legg Mason may be obtained from other sources including, but not limited to, press releases, newspaper articles and other publicly disseminated documents. The Company makes no representation or warranty as to the accuracy or completeness of such reports. THIS PRICING SUPPLEMENT RELATES ONLY TO THE NOTES OFFERED HEREBY AND DOES NOT RELATE TO LM STOCK OR OTHER SECURITIES OF LEGG MASON. ALL DISCLOSURES CONTAINED IN THIS PRICING SUPPLEMENT REGARDING LEGG MASON ARE DERIVED FROM THE PUBLICLY AVAILABLE DOCUMENTS DESCRIBED IN THE PRECEDING PARAGRAPH. NEITHER THE COMPANY NOR THE AGENT HAS PARTICIPATED IN THE PREPARATION OF SUCH DOCUMENTS OR MADE ANY DUE DILIGENCE INQUIRY WITH RESPECT TO LEGG MASON. NEITHER THE COMPANY NOR THE AGENT MAKES ANY REPRESENTATION THAT SUCH PUBLICLY AVAILABLE DOCUMENTS OR ANY OTHER PUBLICLY AVAILABLE INFORMATION REGARDING LEGG MASON ARE ACCURATE OR COMPLETE. FURTHERMORE, THERE CAN BE NO ASSURANCE THAT ALL EVENTS OCCURRING PRIOR TO THE DATE HEREOF (INCLUDING EVENTS THAT WOULD AFFECT THE ACCURACY OR COMPLETENESS OF THE PUBLICLY AVAILABLE DOCUMENTS DESCRIBED IN THE PRECEDING PARAGRAPH) THAT WOULD AFFECT THE TRADING PRICE OF LM STOCK (AND THEREFORE THE INITIAL PRICE , THE FLOOR PRICE AND THE CAP PRICE) HAVE BEEN PUBLICLY DISCLOSED. SUBSEQUENT DISCLOSURE OF ANY SUCH EVENTS OR THE DISCLOSURE OF OR FAILURE TO DISCLOSE MATERIAL FUTURE EVENTS CONCERNING LEGG MASON COULD AFFECT THE VALUE RECEIVED AT MATURITY WITH RESPECT TO THE NOTES AND THEREFORE THE TRADING PRICES OF THE NOTES. NEITHER THE COMPANY NOR ANY OF ITS AFFILIATES MAKES ANY REPRESENTATION TO ANY PURCHASER OF NOTES AS TO THE PERFORMANCE OF LM STOCK. The Company or its affiliates may presently or from time to time engage in business with Legg Mason including extending loans to, or making equity investments in, Legg Mason or providing advisory services to Legg Mason, including merger and acquisition advisory services. In the course of such business, the Company or its affiliates may acquire non-public information with respect to Legg Mason and, in addition, one or more affiliates of the Company may publish research reports with respect to Legg Mason. The Company does not make any representation to any purchaser of Notes with respect to any matters whatsoever relating to Legg Mason. Any prospective purchaser of a Note should undertake an independent investigation of Legg Mason as in its judgment is appropriate to make an informed decision with respect to an investment in LM Stock. Historical Information..... The following table sets forth the high and low Market Prices and Dividends per Share during 1993, 1994, 1995 and during 1996, through July 30, 1996. The Market Price on July 30, 1996 was $28.125. The Market Prices and Dividends per Share listed below were obtained from Bloomberg Financial Markets and the Company believes such information to be accurate. The historical prices of LM Stock should not be taken as an indication of future performance, and no assurance can be given that the price of LM Stock will not decrease so that the beneficial owners of the Notes will receive at maturity shares of LM Stock worth less than the principal amount of the Notes. Nor can assurance be given that the price of LM Stock will increase above $29.25 so that at maturity the beneficial owners of the Notes will receive an amount in excess of the principal amount of the Notes. Dividends per Legg Mason* High Low Share** - -------------------- ------------- ------- -------------- (CUSIP # 524901105) 1993: First Quarter....... $ 23 45/64 $ 20 1/2 $.08 Second Quarter...... 22 19/64 19 19/32 .08 Third Quarter....... 24 3/32 21 29/32 .10 Fourth Quarter...... 25 22 1/2 .10 1994: First Quarter....... 25 1/4 20 1/2 .10 Second Quarter...... 21 7/8 18 1/2 .10 Third Quarter....... 22 3/4 18 1/2 .11 Fourth Quarter...... 22 19 7/8 .11 1995: First Quarter....... 23 5/8 20 5/8 .11 Second Quarter...... 28 3/8 23 1/8 .11 Third Quarter....... 30 5/8 26 5/8 .12 Fourth Quarter...... 31 3/8 27 3/8 .12 1996: First Quarter....... 31 1/8 26 5/8 .12 Second Quarter...... 33 5/8 27 3/4 .12 Third Quarter through July 30, 1996..... 34 28 1/8 .13 * Historical prices and Dividends per Share have been adjusted for a 5 for 4 stock split of the LM Stock which became effective in the Third Quarter of 1993. The dividend for the Third Quarter of 1996 was declared on July 24, 1996, but has not been paid. **The Company makes no representation as to the amount of dividends, if any, that Legg Mason will pay in the future. In any event, holders of the Notes will not be entitled to receive dividends, if any, that may be payable on LM Stock. Use of Proceeds and Hedging: The net proceeds to be received by the Company from the sale of the Notes will be used for general corporate purposes and, in part, by the Company or one or more of its affiliates in connection with hedging the Company's obligations under the Notes. See also "Use of Proceeds" in the accompanying Prospectus. Prior to and on the date of this Pricing Supplement, the Company, through its subsidiaries and others, hedged its anticipated exposure in connection with the Notes by taking positions in LM Stock. Such hedging was carried out in a manner designed to minimize any impact on the price of LM Stock. Purchase activity could potentially have increased the price of LM Stock, and therefore effectively have increased the level to which LM Stock must rise before a holder of a Note would receive at maturity an amount of LM Stock worth as much as or more than the principal amount of the Notes. Although the Company has no reason to believe that its hedging activity had a material impact on the price of LM Stock, there can be no assurance that the Company did not, or in the future will not, affect such price as a result of its hedging activities. The Company, through its subsidiaries, is likely to modify its hedge position throughout the life of the Notes by purchasing and selling LM Stock, options contracts on LM Stock listed on major securities markets or positions in any other instruments that it may wish to use in connection with such hedging. United States Federal Taxation:.................. The Company currently intends to treat gain upon retirement of the Notes at maturity, to the extent attributable to the exchange at maturity feature, as interest income and to report such amount accordingly. See also "United States Federal Taxation" in the accompanying Prospectus Supplement. -----END PRIVACY-ENHANCED MESSAGE-----