-----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, Qksudy+b9zuH/RkZKsSBHPh+gljyQSAFFfjdqbTgXoWArJbz3fiPoF4qqIxN8OJF 3DFqYu7ZUZ34L6b+JTH5Vg== 0000950103-96-000862.txt : 19960509 0000950103-96-000862.hdr.sgml : 19960509 ACCESSION NUMBER: 0000950103-96-000862 CONFORMED SUBMISSION TYPE: 8-A12B PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19960508 SROS: AMEX 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: 8-A12B SEC ACT: 1934 Act SEC FILE NUMBER: 001-09085 FILM NUMBER: 96557918 BUSINESS ADDRESS: STREET 1: 1585 BROADWAY CITY: NEW YORK STATE: NY ZIP: 10036 BUSINESS PHONE: 2127034000 8-A12B 1 ============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _________________ FORM 8-A FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 MORGAN STANLEY GROUP INC. (Exact name of registrant as specified in its charter) DELAWARE 13-2838811 (State of incorporation) (I.R.S. employer identification number) 1585 BROADWAY NEW YORK, NEW YORK (Address of principal 10036 executive offices) (Zip code) If this Form relates to the If this Form relates to the registration of a class of registration of a class of debt debt securities and is securities and is to become effective upon filing pur- effective simultaneously with suant to General Instruction the effectiveness of a A(c)(1) please check the concurrent registration following box. [ ] statement under the Securities Act of 1933 pursuant to General Instruction A(c)(2) please check the following box. [ ] Securities to be registered pursuant to Section 12(b) of the Act: Title of each Class Name of each Exchange on which to be so registered each Class is to be registered Protected Exchangeable THE AMERICAN STOCK EXCHANGE EQuity-Linked Securities Due May 2001 Securities to be registered pursuant to Section 12(g) of the Act: None ============================================================================== Item 1. Description of the Registrant's Securities to be Registered. ----------------------------------------------------------- The title of the class of securities to be registered hereunder is: "Protected Exchangeable EQuity-linked Securities Due May 2001" (the "PEEQS"). A description of the PEEQS is set forth under the caption "Description of Debt Securities" in the prospectus included within the Registration Statement of the Company on Form S-3 (registration no. 333-01655) (the "Registration Statement"), as supplemented by the information under the caption "Description of Securities" in the registrant's preliminary prospectus supplement filed on April 22, 1996, pursuant to Rule 424(b)(2) under the Securities Act of 1933, as amended (the "Act"), which description is incorporated herein by reference. The description of the PEEQS contained in the final prospectus supplement to be filed pursuant to Rule 424(b) under the Act, which will contain the final terms and provisions of the PEEQS, is hereby deemed to be incorporated by reference into this Registration Statement and to be a part hereof. Item 2. Exhibits. -------- The following documents are filed as exhibits hereto: 4.1 Proposed form of Certificated Note evidencing the PEEQS. 4.2 Proposed form of Global Note evidencing the PEEQS. SIGNATURE Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized. MORGAN STANLEY GROUP INC. (Registrant) Date: May 7, 1996 By: /s/ Patricia A. Kurtz ________________________________ Name: Patricia A. Kurtz Title: Assistant Secretary INDEX TO EXHIBITS Exhibit No. Page No. - ----------- -------- 4.1 Proposed form of Certificated Note evidencing the PEEQS. 4.2 Proposed form of Global Note evidencing the PEEQS. EX-4.1 2 DRAFT CERTIFICATED NOTE EXHIBIT 4.1 PROTECTED EXCHANGEABLE EQUITY-LINKED SECURITIES (PEEQS) NUMBER OF PEEQS REPRESENTED BY THIS NOTE: REGISTERED REGISTERED No. R- CUSIP: 617446BG3 MORGAN STANLEY GROUP INC. PROTECTED EXCHANGEABLE EQUITY-LINKED SECURITIES (PEEQS) As used herein, the following terms shall have the following meanings: ORIGINAL ISSUE DATE: PRINCIPAL AMOUNT: May , 1996 $ times the number of PEEQS represented by this Note MATURITY DATE: May , 2001 INTEREST RATE: There will be no periodic payments PEEQS: of interest. A PEEQS is a Protected Exchangeable EQuity-linked Security having a principal amount of $ . AMOUNT PAYABLE AT MATURITY: At maturity (including as a result of acceleration or otherwise), the holder of this Note shall receive, subject to a prior exercise of the Exchange Right with respect to this Note, the greater of (i) the principal amount of this Note and (ii) the product of (A) an amount in dollars equal to 10% of the Final Index Value of the S&P 500 Composite Stock Price Index (the "S&P 500 Index"), published by Standard & Poor's ("S&P"), a Division of the McGraw-Hill Companies, Inc. and (B) the number of PEEQS represented by this Note. The Issuer shall cause the Calculation Agent to provide written notice to the Trustee and the Paying Agent at its New York office, on which notice the Trustee and the Paying Agent may conclusively rely, of the Amount Payable at Maturity, on or prior to 11:00 a.m. on the Business Day preceding the Maturity Date. Additional terms and provisions, including, without limitation, terms and provisions related to the discontinuance of the S&P 500 Index and alteration of the method of calculation thereof, are set forth on the reverse hereof. EXCHANGE RIGHT: On any Exchange Date, the holder of this Note shall be entitled upon (i) completion by the holder and delivery to the Issuer and the Calculation Agent of the "Official Notice of Exchange" in substantially the form set forth on the reverse hereof, prior to 11:00 a.m. New York City time on such date and (ii) delivery on such date of this Note to the Trustee, to exchange a minimum of 100 PEEQS for an amount in dollars per PEEQS equal to 10% of the Index Value on the Determination Date with respect to such Exchange Date. Upon any such exchange, the Issuer shall pay an amount in cash per PEEQS equal to 10% of the Index Value as of the applicable Determination Date, as determined by the Calculation Agent. Additional terms, including, without limitation, terms related to the Exchange Right, have the meanings set forth on the reverse hereof. Morgan Stanley Group Inc., a Delaware corporation (together with its successors and assigns, the "Issuer"), for value received, hereby promises to pay, subject to a prior exercise of the Exchange Right, to , or registered assigns, on the Maturity Date the Amount Payable at Maturity determined in accordance with the procedures described herein. The Amount Payable at Maturity shall be determined by the Calculation Agent and written notice thereof shall be provided to the Trustee and the Paying Agent as provided on the face hereof. The Calculation Agent's determination of the Amount Payable at Maturity shall be conclusive and binding absent manifest error. Subject to certain exceptions described herein, payment of the principal in respect of this Note shall be made in immediately available funds upon presentation and surrender of this Note at the office or agency of the Paying Agent maintained for that purpose in the Borough of Manhattan, The City of New York, if this Note is presented to the Paying Agent in time for it to make such payments in accordance with its normal procedures. Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Note shall not be entitled to any benefit under the Senior Indenture, as defined on the reverse hereof, or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Issuer has caused this Note to be duly executed. DATED: MORGAN STANLEY GROUP INC. By _______________________ Name: Philip N. Duff Title: Chief Financial Officer and Treasurer TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Notes referred to in the within-mentioned Senior Indenture. CHEMICAL BANK, as Trustee By________________________ Authorized Officer This Note is issuable under a Senior Indenture, dated as of April 15, 1989, as supplemented by a First Supplemental Indenture dated as of May 15, 1991 and a Second Supplemental Indenture dated as of April 15, 1996 (as so supplemented, the "Senior Indenture"), between the Issuer and Chemical Bank, as Trustee (the "Trustee," which term includes any successor trustee under the Senior Indenture), to which Senior Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities of the Issuer, the Trustee and holders of the Notes and the terms upon which the Notes are, and are to be, authenticated and delivered. The Issuer has appointed Chemical Bank at its corporate trust office in The City of New York as the paying agent (the "Paying Agent," which term includes any additional or successor Paying Agent appointed by the Issuer) with respect to the Notes. To the extent not inconsistent herewith, the terms of the Senior Indenture are hereby incorporated by reference herein. This Note is one of a series of debt securities having the designation and terms as set forth on the face hereof (the "Notes"). This Note will not be subject to any sinking fund, will not be redeemable by the Issuer or subject to repayment at the option of the holder prior to maturity and will not be subject to the defeasance provisions set forth in the Senior Indenture. Upon exercise of the Exchange Right, prior to 9:30 a.m. on the first Business Day succeeding the Determination Date with respect to the applicable Exchange Date, the Issuer shall, or shall cause the Calculation Agent to, provide written notice to the Trustee and the Paying Agent at its New York office, on which notice the Trustee and the Paying Agent may conclusively rely, (i) of its receipt of the applicable "Official Notice of Exchange", (ii) of the number of PEEQS to be exchanged and (iii) of the amount of cash to be paid per PEEQS to be exchanged. The Issuer shall, or shall cause the Calculation Agent to, deliver such cash to the Paying Agent for delivery to the holders. Such delivery or payment shall be made five Business Days after the Determination Date with respect to such Exchange Date, subject to delivery of this Note to the Trustee on the Exchange Date as aforesaid. If the number of PEEQS to be exchanged is less than the number represented by this Note, the Trustee shall issue to the holder of this Note, a new Note having identical terms and provisions and representing a number of PEEQS equal to the difference between the number of PEEQS represented by this Note and the number of PEEQS so exchanged by the Holder. All such exchanges will be free of charge, but the Issuer may require payment of a sum sufficient to cover any tax or other governmental charge in connection therewith. All dollar amounts resulting from any calculation of the payment amounts due upon exchange or at maturity with respect to this Note shall be rounded to the nearest cent with one-half cent being rounded upwards. If S&P discontinues publication of the S&P 500 Index and S&P or another entity publishes a successor or substitute index that the Calculation Agent determines, in its sole discretion, to be comparable to the discontinued S&P 500 Index (such index being referred to herein as a "Successor Index"), then the relevant Index Value shall be determined by reference to the value of such Successor Index at the close of trading on the NYSE, the AMEX, NASDAQ NMS or the relevant exchange or market for the Successor Index on the applicable Determination Date. Upon any selection by the Calculation Agent of a Successor Index, the Calculation Agent shall cause written notice thereof to be furnished to the Trustee, to the Issuer and to the holder of this Note within three Trading Days of such selection. If S&P discontinues publication of the S&P 500 Index prior to, and such discontinuance is continuing on, the applicable Determination Date and the Calculation Agent determines that no Successor Index is available at such time, then on such Determination Date, the Calculation Agent shall determine the applicable Index Value for such Determination Date. The Index Value shall be computed by the Calculation Agent in accordance with the formula for and method of calculating the S&P 500 Index last in effect prior to such discontinuance, using the closing price (or, if trading in the relevant securities has been materially suspended or materially limited, its good faith estimate of the closing price that would have prevailed but for such suspension or limitation) on such Determination Date of each security most recently comprising the S&P 500 Index. If at any time the method of calculating the S&P 500 Index or a Successor Index, or the value thereof, is changed in a material respect, or if the S&P 500 Index or a Successor Index is in any other way modified so that such index does not, in the opinion of the Calculation Agent, fairly represent the value of the S&P 500 Index or such Successor Index had such changes or modifications not been made, then, from and after such time, the Calculation Agent shall, at the close of business in New York City on the applicable Determination Date, make such calculations and adjustments as, in the good faith judgment of the Calculation Agent, may be necessary in order to arrive at a value of a stock index comparable to the S&P 500 Index or such Successor Index, as the case may be, as if such changes or modifications had not been made, and calculate the applicable Index Value or, if applicable, the Final Index Value with reference to the S&P 500 Index or such Successor Index, as adjusted. Accordingly, if the method of calculating the S&P 500 Index or a Successor Index is modified so that the value of such index is a fraction of what it would have been if it had not been modified (e.g., due to a split in the index), then the Calculation Agent shall adjust such index in order to arrive at a value of the S&P 500 Index or such Successor Index as if it had not been modified (e.g., as if such split had not occurred). Neither the Trustee nor any Paying Agent shall at any time be under any duty or responsibility to any holder of this Note to determine whether any facts exist which may require any adjustment to the Index Value or the Final Index Value or with respect to the nature or extent of any such adjustment when made or with respect to the method employed in making the same. If the Maturity Date does not fall on a Business Day, payment of principal otherwise payable on such date need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the Maturity Date. This Note and all the obligations of the Issuer hereunder are direct, unsecured obligations of the Issuer and rank without preference or priority among themselves and pari passu with all other existing and future unsecured and unsubordinated indebtedness of the Issuer, subject to certain statutory exceptions in the event of liquidation upon insolvency. This Note, and any Note or Notes issued upon transfer or exchange hereof, is issuable only in fully registered form, without coupons, and, is issuable only in denominations representing a whole number of PEEQS. The Trustee has been appointed registrar for the Notes, and the Trustee will maintain at its office in The City of New York a register for the registration and transfer of the Notes. This Note may be transferred at the aforesaid office of the Trustee by surrendering this Note for cancellation, accompanied by a written instrument of transfer in form satisfactory to the Trustee and duly executed by the registered holder hereof in person or by the holder's attorney duly authorized in writing, and thereupon the Trustee shall issue in the name of the transferee or transferees, in exchange herefor, a new Note or Notes having identical terms and provisions and having an aggregate principal amount and Amount Payable at Maturity in U.S. Dollars, equal to the amounts set forth on the face of this Note, subject to the terms and conditions set forth herein. Notes are exchangeable at said office for other Notes of other authorized denominations having an aggregate principal amount and Amount Payable at Maturity equal to the amounts set forth on the face of this Note and having otherwise identical terms and provisions. All such exchanges and transfers of Notes will be free of charge, but the Issuer may require payment of a sum sufficient to cover any tax or other governmental charge in connection therewith. All Notes surrendered for exchange shall be accompanied by a written instrument of transfer in form satisfactory to the Trustee and executed by the registered holder in person or by the holder's attorney duly authorized in writing. In case any Note shall at any time become mutilated, defaced or be destroyed, lost or stolen and such Note or evidence of the loss, theft or destruction thereof (together with the indemnity hereinafter referred to and such other documents or proof as may be required in the premises) shall be delivered to the Trustee, a new Note of like tenor will be issued by the Issuer in exchange for the Note so mutilated or defaced, or in lieu of the Note so destroyed or lost or stolen, but, in the case of any destroyed or lost or stolen Note, only upon receipt of evidence satisfactory to the Trustee and the Issuer that such Note was destroyed or lost or stolen and, if required, upon receipt also of indemnity satisfactory to each of them. All expenses and reasonable charges associated with procuring such indemnity and with the preparation, authentication and delivery of a new Note shall be borne by the owner of the Note mutilated, defaced, destroyed, lost or stolen. The Issuer may, at its option, elect to make Notes available in book-entry form. If the Issuer makes such an election, the holder hereof will have the option (the "Conversion Option") to convert the form in which such holder holds his Note from definitive to book-entry form. The Conversion Option will be available for a period of 45 calendar days (the "Conversion Option Period") commencing on a date designated by the Issuer and notified to the Trustee and the holder hereof by first class mail. After the last date of the Conversion Option Period, the Depositary (as defined below) will not be required to accept delivery of Notes in exchange for book-entry Notes, but the Depositary may permit such Notes to be exchanged on a case by case basis. In order to be exchanged for a Note in book-entry form, this Note must be delivered in proper form for deposit to The Depository Trust Company (the "Depositary") by a participant. Accordingly, if the holder hereof is not a participant, such holder must deliver this Note, in proper form for deposit, to a participant, either directly or through an indirect participant (such as a bank, brokerage firm, dealer or trust company that clears through, or maintains a custodial relationship with, a participant) or brokerage firm which maintains an account with a participant, in order to have its Note exchanged for a Note in book-entry form. Notes received by the Depositary for exchange during the Conversion Option Period will be exchanged for a Note in book-entry form by the close of business on the Business Day that such Notes are received by the Depositary (if received by the Depositary by its then applicable cut-off time for same day credit) or on the following Business Day (if received by the Depositary by its then applicable cut-off time for next day credit). Notes surrendered at any time for exchange for book-entry Notes may not be transferred until such exchange has been effected. The Senior Indenture provides that, (a) if an Event of Default (as defined in the Senior Indenture) due to the default in payment of principal of, premium, if any, or interest on, any series of debt securities issued under the Senior Indenture or due to the default in the performance or breach of any other covenant or warranty of the Issuer applicable to the debt securities of such series but not applicable to all outstanding debt securities issued under the Senior Indenture shall have occurred and be continuing, either the Trustee or the holders of not less than 25% in principal amount of the debt securities of each affected series (voting as a single class) may then declare the principal of all debt securities of all such series and interest accrued thereon to be due and payable immediately and (b) if an Event of Default due to a default in the performance of any other of the covenants or agreements in the Senior Indenture applicable to all outstanding debt securities issued thereunder, including this Note, or due to certain events of bankruptcy, insolvency and reorganization of the Issuer, shall have occurred and be continuing, either the Trustee or the holders of not less than 25% in principal amount of all debt securities issued under the Senior Indenture then outstanding (treated as one class) may declare the principal of all such debt securities and interest accrued thereon to be due and payable immediately, but upon certain conditions such declarations may be annulled and past defaults may be waived (except a continuing default in payment of principal (or premium, if any) or interest on such debt securities) by the holders of a majority in principal amount of the debt securities of all affected series then outstanding. If the principal of this Note is declared to be due and payable prior to the Maturity Date, then the amount payable with respect to this Note shall equal the Amount Payable at Maturity hereof (calculated as if the date of such declaration were the Determination Date. If a Market Disruption Event occurs on the date of such declaration, then the Calculation Agent shall determine the value of the S&P 500 Index on such date in accordance with the formula for and method of calculating the S&P 500 Index last in effect prior to the commencement of the Market Disruption Event, using the closing price (or, if trading in the relevant securities has been materially suspended or materially limited, its good faith estimate of the closing price that would have prevailed but for such suspension or limitation) on such Trading Day of each security most recently comprising the S&P 500 Index. For the purpose of any vote of securityholders taken pursuant to the Senior Indenture prior to the acceleration of payment of this Note, the principal amount hereof shall equal the amount that would be due and payable hereon, calculated as set forth in the immediately preceding sentence, if this Note were declared to be due and payable on the date of any such vote. For the purpose of any vote of securityholders taken pursuant to the Senior Indenture following the acceleration of payment of this Note, the principal amount hereof shall equal the Amount Payable at Maturity hereof, also calculated as set forth above. The Senior Indenture permits the Issuer and the Trustee, with the consent of the holders of not less than a majority in aggregate principal amount of the debt securities of all series issued under the Senior Indenture then outstanding and affected (voting as one class), to execute supplemental indentures adding any provisions to or changing in any manner the rights of the holders of each series so affected; provided that the Issuer and the Trustee may not, without the consent of the holder of each outstanding debt security affected thereby, (a) extend the final maturity of any such debt security, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, or reduce any amount payable on redemption or repayment thereof, or change the currency of payment thereof, or impair or affect the rights of any holder to institute suit for the payment thereof without the consent of the holder of each debt security so affected; or (b) reduce the aforesaid percentage in principal amount of debt securities the consent of the holders of which is required for any such supplemental indenture, without the consent of the holders of each debt security so affected. So long as this Note shall be outstanding, the Issuer will cause to be maintained an office or agency for the payment of the principal of this Note as herein provided in the Borough of Manhattan, The City of New York, and an office or agency in said Borough of Manhattan for the registration, transfer and exchange as aforesaid of the Notes. The Issuer may designate other agencies for the payment of said principal at such place or places (subject to applicable laws and regulations) as the Issuer may decide. So long as there shall be such an agency, the Issuer shall keep the Trustee advised of the names and locations of such agencies, if any are so designated. With respect to moneys paid by the Issuer and held by the Trustee or any Paying Agent for payment of the principal of any Notes that remain unclaimed at the end of two years after such principal shall have become due and payable (whether at maturity or otherwise), (i) the Trustee or such Paying Agent shall notify the holders of such Notes that such moneys shall be repaid to the Issuer and any person claiming such moneys shall thereafter look only to the Issuer for payment thereof and (ii) such moneys shall be so repaid to the Issuer. Upon such repayment all liability of the Trustee or such Paying Agent with respect to such moneys shall thereupon cease, without, however, limiting in any way any obligation that the Issuer may have to pay the principal of this Note as the same shall become due. No provision of this Note or of the Senior Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of this Note at the time and place, and in the coin or currency, herein prescribed unless otherwise agreed between the Issuer and the registered holder of this Note. Prior to due presentment of this Note for registration of transfer, the Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the holder in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note be overdue, and none of the Issuer, the Trustee or any such agent shall be affected by notice to the contrary. No recourse shall be had for the payment of the principal of this Note, for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Senior Indenture or any indenture supplemental thereto, against any incorporator, shareholder, officer or director, as such, past, present or future, of the Issuer or of any successor corporation, either directly or through the Issuer or any successor corporation, whether by virtue of any constitution, statute or rule of law or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released. As used herein: (a) the term "Exchange Date" means any Trading Day that falls during the period beginning November , 1997 and ending on April , 2001. (b) the term "Final Index Value" means the Index Value on the Determination Date with respect to the Maturity Date, as determined by the Calculation Agent. (c) the term "Index Value," as of any Determination Date, shall equal the closing value of the S&P 500 Index or any Successor Index at the regular official weekday close of trading on such Determination Date, as determined by the Calculation Agent. References herein to the S&P 500 Index shall be deemed to include any Successor Index, unless the context requires otherwise. (d) the term "Trading Day" means a day, as determined by the Calculation Agent, on which trading is generally conducted (i) on the New York Stock Exchange ("NYSE"), the American Stock Exchange, Inc. ("AMEX") and the NASDAQ National Market ("NASDAQ NMS"), (ii) on the Chicago Mercantile Exchange, (iii) on the Chicago Board of Options Exchange and (iv) in the over-the-counter market for equity securities in the United States. (e) the term "Business Day" means any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions are authorized or required by law or regulation to close in The City of New York. (f) the term "Determination Date" means (i) with respect to any Exchange Date, such Exchange Date and (ii) with respect to the Maturity Date, May , 2001, unless, in either case, there is a Market Disruption Event on such Trading Day. If a Market Disruption Event occurs on any such Trading Day, the Determination Date shall be the immediately succeeding Trading Day during which no Market Disruption Event shall have occurred; provided that if a Market Disruption Event has occurred on each of the five Trading Days immediately succeeding (a) such Exchange Date or (b) May , 2001, then the relevant Determination Date shall be deemed to be the earlier of (x) such fifth succeeding Trading Day or (y) the second scheduled Trading Day prior to the Maturity Date, notwithstanding the occurrence of a Market Disruption Event on such day (an "Extended Determination Date"). With respect to any such Extended Determination Date on which a Market Disruption Event occurs, the Calculation Agent shall determine the value of the S&P 500 Index on such Extended Determination Date in accordance with the formula for and method of calculating the S&P 500 Index last in effect prior to the commencement of the Market Disruption Event, using the closing price (or, if trading in the relevant securities has been materially suspended or materially limited, its good faith estimate of the closing price that would have prevailed but for such suspension or limitation) on such Trading Day of each security most recently comprising the S&P 500 Index. (g) the term "Market Disruption Event" means, with respect to the S&P 500 Index: (i) a suspension, absence or material limitation of trading of 100 or more of the securities included in the S&P 500 Index on the primary market for such securities 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, absence or material limitation of trading on the primary market for trading in futures or options contracts related to the S&P 500 Index 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 Issuer or any of its affiliates to unwind all or a material portion of the hedge with respect to the Protected Exchangeable Equity-linked Securities Due May , 2001. For purposes of determining whether a Market Disruption Event has occurred: (1) a limitation on the hours or number of days of trading shall not constitute a Market Disruption Event if it results from an announced change in the regular business hours of the relevant exchange or market, (2) a decision to permanently discontinue trading in the relevant futures or options contract shall 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 NYSE, 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 a futures or options contract on the S&P 500 Index by the primary securities market related to such contract by reason of (x) a price change exceeding limits set by such 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 shall constitute a suspension or material limitation of trading in futures or options contracts related to the S&P 500 Index and (5) "a suspension, absence or material limitation of trading" on the primary market on which futures or options contracts related to the S&P 500 Index are traded shall not include any time when such market is itself closed for trading under ordinary circumstances. (h) the term "Calculation Agent" means Morgan Stanley & Co. Incorporated. All determinations made by the Calculation Agent shall be at the sole discretion of the Calculation Agent and shall, in the absence of manifest error, be conclusive for all purposes and binding on the Issuer and the holder of this Note. (i) all terms used in this Note which are defined in the Senior Indenture and not otherwise defined herein shall have the meanings assigned to them in the Senior Indenture. This Note shall for all purposes be governed by, and construed in accordance with, the laws of the State of New York. OFFICIAL NOTICE OF EXCHANGE Dated:[On or after November , 1997] Morgan Stanley Group Inc. 1585 Broadway New York, New York 10036 Morgan Stanley & Co. Incorporated, as Calculation Agent 1585 Broadway New York, New York 10036 (Attn: Alan Thomas) Fax: 212-761-0028 Dear Sirs: The undersigned holder of the Protected Exchangeable Equity-linked Securities Due May , 2001 of Morgan Stanley Group Inc. (the "PEEQS") hereby irrevocably elects to exercise with respect to the number of PEEQS indicated below, as of the date hereof (or, if this letter is received after 11:00 a.m. on any Trading Day, as of the next Trading Day, provided that such day is on or prior to April , 2001, the Exchange Right as described in the Prospectus Supplement dated May , 1996 (the "Prospectus Supplement") and the Prospectus dated May 1, 1996 related to Registration Statement No. 333-01655. Capitalized terms not defined herein have the meanings given to such terms in the Prospectus Supplement. Please date and acknowledge receipt of this notice in the place provided below on the date of receipt, and fax a copy to the fax number indicated. Upon receipt of this notice, the Company will deliver five Business Days after the Determination Date with respect to such Exchange Date, an amount in dollars, as determined by the Calculation Agent, equal to 10% of the Index Value of the S&P 500 Index, in accordance with the terms of the PEEQS, as described in the Prospectus Supplement. Very truly yours, [Name of Holder] By: [Title] [Fax No.] Number of PEEQS (minimum of 100) surrendered for exchange Receipt of the above Official Notice of Exchange is hereby acknowledged MORGAN STANLEY GROUP INC., as Issuer MORGAN STANLEY & CO. INCORPORATED, as Calculation Agent By MORGAN STANLEY & CO. INCORPORATED, as Calculation Agent By: Title: Date and time of acknowledgement ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM-as tenants in common TEN ENT-as tenants by the entireties JT TEN-as joint tenants with right of survivorship and not as tenants in common UNIF GIFT MIN ACT-...........Custodian.............. (Cust) (Minor) Under Uniform Gifts to Minors Act................... (State) Additional abbreviations may also be used though not in the above list. FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto [PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE] _______________________________________! ! _______________________________________!______________________________________ ______________________________________________________________________________ [PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE] ______________________________________________________________________________ the within Note and all rights thereunder, hereby irrevocably constituting and appointing ______________________________________________________________________________ attorney to transfer such Note on the books of the Issuer, with full power of substitution in the premises. Dated:_____________________ ______________________________________________________________________________ NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within Note in every particular without alteration or enlargement or any change whatsoever. EX-4.2 3 DRAFT GLOBAL NOTE EXHIBIT 4.2 PROTECTED EXCHANGEABLE EQUITY-LINKED SECURITIES (PEEQS) REGISTERED REGISTERED No. R- CUSIP: 617446BG3 Unless this certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) to the issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of The Depository Trust Company and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein. MORGAN STANLEY GROUP INC. PROTECTED EXCHANGEABLE EQUITY-LINKED SECURITIES (PEEQS) As used herein, the following terms shall have the following meanings: ORIGINAL ISSUE DATE: INTEREST RATE: May , 1996 There will be no periodic payments of interest. MATURITY DATE: May , 2001 PRINCIPAL AMOUNT: Amount stated under the caption PEEQS: "Total Principal Amount" on A PEEQS is a Protected Exchangeable Schedule A on the reverse hereof. EQuity-linked Security having a principal amount of $ . NUMBER OF PEEQS REPRESENTED BY THIS NOTE: The number stated under the caption "Total Number of PEEQS Represented by this Note" on Schedule A on the reverse hereof. AMOUNT PAYABLE AT MATURITY: At maturity (including as a result of acceleration or otherwise), the holder of this Note shall receive, subject to a prior exercise of the Exchange Right with respect to this Note, the greater of (i) the principal amount of this Note and (ii) the product of (A) an amount in dollars equal to 10% of the Final Index Value of the S&P 500 Composite Stock Price Index (the "S&P 500 Index"), published by Standard & Poor's ("S&P"), a Division of the McGraw-Hill Companies, Inc. and (B) the number of PEEQS represented by this Note. The Issuer shall cause the Calculation Agent to provide written notice to the Trustee and the Paying Agent at its New York office, on which notice the Trustee and the Paying Agent may conclusively rely, of the Amount Payable at Maturity, on or prior to 11:00 a.m. on the Business Day preceding the Maturity Date. Additional terms and provisions, including, without limitation, terms and provisions related to the discontinuance of the S&P 500 Index and alteration of the method of calculation thereof, are set forth on the reverse hereof. EXCHANGE RIGHT: On any Exchange Date, the holder of this Note shall be entitled upon (i) completion by the holder and delivery to the Issuer and the Calculation Agent of the "Official Notice of Exchange" in substantially the form set forth on the reverse hereof, prior to 11:00 a.m. New York City time on such date and (ii) delivery on such date of this Note to the Trustee, to exchange a minimum of 100 PEEQS for an amount in dollars per PEEQS equal to 10% of the Index Value on the Determination Date with respect to such Exchange Date. Upon any such exchange, the Issuer shall pay an amount in cash per PEEQS equal to 10% of the Index Value as of the applicable Determination Date, as determined by the Calculation Agent. Additional terms, including, without limitation, terms related to the Exchange Right, have the meanings set forth on the reverse hereof. Morgan Stanley Group Inc., a Delaware corporation (together with its successors and assigns, the "Issuer"), for value received, hereby promises to pay, subject to a prior exercise of the Exchange Right, to Cede & Co., or registered assigns, on the Maturity Date the Amount Payable at Maturity determined in accordance with the procedures described herein. The Amount Payable at Maturity shall be determined by the Calculation Agent and written notice thereof shall be provided to the Trustee and the Paying Agent as provided on the face hereof. The Calculation Agent's determination of the Amount Payable at Maturity shall be conclusive and binding absent manifest error. Subject to certain exceptions described herein, payment of the principal in respect of this Note shall be made in immediately available funds upon presentation and surrender of this Note at the office or agency of the Paying Agent maintained for that purpose in the Borough of Manhattan, The City of New York. Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Note shall not be entitled to any benefit under the Senior Indenture, as defined on the reverse hereof, or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Issuer has caused this Note to be duly executed. DATED: MORGAN STANLEY GROUP INC. By _______________________ Name: Philip N. Duff Title: Chief Financial Officer and Treasurer TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Notes referred to in the within-mentioned Senior Indenture. CHEMICAL BANK, as Trustee By________________________ Authorized Officer This Note is issuable under a Senior Indenture, dated as of April 15, 1989, as supplemented by a First Supplemental Indenture dated as of May 15, 1991 and a Second Supplemental Indenture dated as of April 15, 1996 (as so supplemented, the "Senior Indenture"), between the Issuer and Chemical Bank, as Trustee (the "Trustee," which term includes any successor trustee under the Senior Indenture), to which Senior Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities of the Issuer, the Trustee and holders of the Notes and the terms upon which the Notes are, and are to be, authenticated and delivered. The Issuer has appointed Chemical Bank at its corporate trust office in The City of New York as the paying agent (the "Paying Agent," which term includes any additional or successor Paying Agent appointed by the Issuer) with respect to the Notes. To the extent not inconsistent herewith, the terms of the Senior Indenture are hereby incorporated by reference herein. This Note is one of a series of debt securities having the designation and terms as set forth on the face hereof (the "Notes"). This Note will not be subject to any sinking fund, will not be redeemable by the Issuer or subject to repayment at the option of the holder prior to maturity and will not be subject to the defeasance provisions set forth in the Senior Indenture. Upon exercise of the Exchange Right, prior to 9:30 a.m. on the first Business Day succeeding the Determination Date with respect to the applicable Exchange Date, the Issuer shall, or shall cause the Calculation Agent to, provide written notice to the Trustee and the Paying Agent at its New York office and to The Depository Trust Company ("DTC"), on which notice the Trustee, the Paying Agent and DTC may conclusively rely, (i) of its receipt of the applicable "Official Notice of Exchange", (ii) of the number of PEEQS to be exchanged and (iii) of the amount of cash to be paid per PEEQS to be exchanged. The Issuer shall, or shall cause the Calculation Agent to, deliver such cash to the Paying Agent for delivery to the holders. Such delivery or payment shall be made five Business Days after the Determination Date with respect to such Exchange Date, subject to delivery of this Note to the Trustee on the Exchange Date as aforesaid. All such exchanges will be free of charge, but the Issuer may require payment of a sum sufficient to cover any tax or other governmental charge in connection therewith. All dollar amounts resulting from any calculation of the payment amounts due upon exchange or at maturity with respect to this Note shall be rounded to the nearest cent with one-half cent being rounded upwards. If S&P discontinues publication of the S&P 500 Index and S&P or another entity publishes a successor or substitute index that the Calculation Agent determines, in its sole discretion, to be comparable to the discontinued S&P 500 Index (such index being referred to herein as a "Successor Index"), then the relevant Index Value shall be determined by reference to the value of such Successor Index at the close of trading on the NYSE, the AMEX, NASDAQ NMS or the relevant exchange or market for the Successor Index on the applicable Determination Date. Upon any selection by the Calculation Agent of a Successor Index, the Calculation Agent shall cause written notice thereof to be furnished to the Trustee, to the Issuer and to the holder of this Note within three Trading Days of such selection. If S&P discontinues publication of the S&P 500 Index prior to, and such discontinuance is continuing on, the applicable Determination Date and the Calculation Agent determines that no Successor Index is available at such time, then on such Determination Date, the Calculation Agent shall determine the applicable Index Value for such Determination Date. The Index Value shall be computed by the Calculation Agent in accordance with the formula for and method of calculating the S&P 500 Index last in effect prior to such discontinuance, using the closing price (or, if trading in the relevant securities has been materially suspended or materially limited, its good faith estimate of the closing price that would have prevailed but for such suspension or limitation) on such Determination Date of each security most recently comprising the S&P 500 Index. If at any time the method of calculating the S&P 500 Index or a Successor Index, or the value thereof, is changed in a material respect, or if the S&P 500 Index or a Successor Index is in any other way modified so that such index does not, in the opinion of the Calculation Agent, fairly represent the value of the S&P 500 Index or such Successor Index had such changes or modifications not been made, then, from and after such time, the Calculation Agent shall, at the close of business in New York City on the applicable Determination Date, make such calculations and adjustments as, in the good faith judgment of the Calculation Agent, may be necessary in order to arrive at a value of a stock index comparable to the S&P 500 Index or such Successor Index, as the case may be, as if such changes or modifications had not been made, and calculate the applicable Index Value or, if applicable, the Final Index Value with reference to the S&P 500 Index or such Successor Index, as adjusted. Accordingly, if the method of calculating the S&P 500 Index or a Successor Index is modified so that the value of such index is a fraction of what it would have been if it had not been modified (e.g., due to a split in the index), then the Calculation Agent shall adjust such index in order to arrive at a value of the S&P 500 Index or such Successor Index as if it had not been modified (e.g., as if such split had not occurred). Neither the Trustee nor any Paying Agent shall at any time be under any duty or responsibility to any holder of this Note to determine whether any facts exist which may require any adjustment to the Index Value or the Final Index Value or with respect to the nature or extent of any such adjustment when made or with respect to the method employed in making the same. If the Maturity Date does not fall on a Business Day, payment of principal otherwise payable on such date need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the Maturity Date. This Note and all the obligations of the Issuer hereunder are direct, unsecured obligations of the Issuer and rank without preference or priority among themselves and pari passu with all other existing and future unsecured and unsubordinated indebtedness of the Issuer, subject to certain statutory exceptions in the event of liquidation upon insolvency. This Note, and any Note or Notes issued upon transfer or exchange hereof, is issuable only in fully registered form, without coupons, and, is issuable only in denominations representing a whole number of PEEQS. The Trustee has been appointed registrar for the Notes, and the Trustee will maintain at its office in The City of New York a register for the registration and transfer of the Notes. This Note may be transferred at the aforesaid office of the Trustee by surrendering this Note for cancellation, accompanied by a written instrument of transfer in form satisfactory to the Trustee and duly executed by the registered holder hereof in person or by the holder's attorney duly authorized in writing, and thereupon the Trustee shall issue in the name of the transferee or transferees, in exchange herefor, a new Note or Notes having identical terms and provisions and having an aggregate principal amount and Amount Payable at Maturity in U.S. Dollars, equal to the amounts set forth on the face of this Note, subject to the terms and conditions set forth herein. Notes are exchangeable at said office for other Notes of other authorized denominations having an aggregate principal amount and Amount Payable at Maturity equal to the amounts set forth on the face of this Note and having otherwise identical terms and provisions. All such exchanges and transfers of Notes will be free of charge, but the Issuer may require payment of a sum sufficient to cover any tax or other governmental charge in connection therewith. All Notes surrendered for exchange shall be accompanied by a written instrument of transfer in form satisfactory to the Trustee and executed by the registered holder in person or by the holder's attorney duly authorized in writing. In case any Note shall at any time become mutilated, defaced or be destroyed, lost or stolen and such Note or evidence of the loss, theft or destruction thereof (together with the indemnity hereinafter referred to and such other documents or proof as may be required in the premises) shall be delivered to the Trustee, a new Note of like tenor will be issued by the Issuer in exchange for the Note so mutilated or defaced, or in lieu of the Note so destroyed or lost or stolen, but, in the case of any destroyed or lost or stolen Note, only upon receipt of evidence satisfactory to the Trustee and the Issuer that such Note was destroyed or lost or stolen and, if required, upon receipt also of indemnity satisfactory to each of them. All expenses and reasonable charges associated with procuring such indemnity and with the preparation, authentication and delivery of a new Note shall be borne by the owner of the Note mutilated, defaced, destroyed, lost or stolen. The Senior Indenture provides that, (a) if an Event of Default (as defined in the Senior Indenture) due to the default in payment of principal of, premium, if any, or interest on, any series of debt securities issued under the Senior Indenture or due to the default in the performance or breach of any other covenant or warranty of the Issuer applicable to the debt securities of such series but not applicable to all outstanding debt securities issued under the Senior Indenture shall have occurred and be continuing, either the Trustee or the holders of not less than 25% in principal amount of the debt securities of each affected series (voting as a single class) may then declare the principal of all debt securities of all such series and interest accrued thereon to be due and payable immediately and (b) if an Event of Default due to a default in the performance of any other of the covenants or agreements in the Senior Indenture applicable to all outstanding debt securities issued thereunder, including this Note, or due to certain events of bankruptcy, insolvency and reorganization of the Issuer, shall have occurred and be continuing, either the Trustee or the holders of not less than 25% in principal amount of all debt securities issued under the Senior Indenture then outstanding (treated as one class) may declare the principal of all such debt securities and interest accrued thereon to be due and payable immediately, but upon certain conditions such declarations may be annulled and past defaults may be waived (except a continuing default in payment of principal (or premium, if any) or interest on such debt securities) by the holders of a majority in principal amount of the debt securities of all affected series then outstanding. If the principal of this Note is declared to be due and payable prior to the Maturity Date, then the amount payable with respect to this Note shall equal the Amount Payable at Maturity hereof (calculated as if the date of such declaration were the Determination Date. If a Market Disruption Event occurs on the date of such declaration, then the Calculation Agent shall determine the value of the S&P 500 Index on such date in accordance with the formula for and method of calculating the S&P 500 Index last in effect prior to the commencement of the Market Disruption Event, using the closing price (or, if trading in the relevant securities has been materially suspended or materially limited, its good faith estimate of the closing price that would have prevailed but for such suspension or limitation) on such Trading Day of each security most recently comprising the S&P 500 Index. For the purpose of any vote of securityholders taken pursuant to the Senior Indenture prior to the acceleration of payment of this Note, the principal amount hereof shall equal the amount that would be due and payable hereon, calculated as set forth in the immediately preceding sentence, if this Note were declared to be due and payable on the date of any such vote. For the purpose of any vote of securityholders taken pursuant to the Senior Indenture following the acceleration of payment of this Note, the principal amount hereof shall equal the Amount Payable at Maturity hereof, also calculated as set forth above. The Senior Indenture permits the Issuer and the Trustee, with the consent of the holders of not less than a majority in aggregate principal amount of the debt securities of all series issued under the Senior Indenture then outstanding and affected (voting as one class), to execute supplemental indentures adding any provisions to or changing in any manner the rights of the holders of each series so affected; provided that the Issuer and the Trustee may not, without the consent of the holder of each outstanding debt security affected thereby, (a) extend the final maturity of any such debt security, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, or reduce any amount payable on redemption or repayment thereof, or change the currency of payment thereof, or impair or affect the rights of any holder to institute suit for the payment thereof without the consent of the holder of each debt security so affected; or (b) reduce the aforesaid percentage in principal amount of debt securities the consent of the holders of which is required for any such supplemental indenture, without the consent of the holders of each debt security so affected. So long as this Note shall be outstanding, the Issuer will cause to be maintained an office or agency for the payment of the principal of this Note as herein provided in the Borough of Manhattan, The City of New York, and an office or agency in said Borough of Manhattan for the registration, transfer and exchange as aforesaid of the Notes. The Issuer may designate other agencies for the payment of said principal at such place or places (subject to applicable laws and regulations) as the Issuer may decide. So long as there shall be such an agency, the Issuer shall keep the Trustee advised of the names and locations of such agencies, if any are so designated. With respect to moneys paid by the Issuer and held by the Trustee or any Paying Agent for payment of the principal of any Notes that remain unclaimed at the end of two years after such principal shall have become due and payable (whether at maturity or otherwise), (i) the Trustee or such Paying Agent shall notify the holders of such Notes that such moneys shall be repaid to the Issuer and any person claiming such moneys shall thereafter look only to the Issuer for payment thereof and (ii) such moneys shall be so repaid to the Issuer. Upon such repayment all liability of the Trustee or such Paying Agent with respect to such moneys shall thereupon cease, without, however, limiting in any way any obligation that the Issuer may have to pay the principal of this Note as the same shall become due. No provision of this Note or of the Senior Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of this Note at the time and place, and in the coin or currency, herein prescribed unless otherwise agreed between the Issuer and the registered holder of this Note. Prior to due presentment of this Note for registration of transfer, the Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the holder in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note be overdue, and none of the Issuer, the Trustee or any such agent shall be affected by notice to the contrary. No recourse shall be had for the payment of the principal of this Note, for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Senior Indenture or any indenture supplemental thereto, against any incorporator, shareholder, officer or director, as such, past, present or future, of the Issuer or of any successor corporation, either directly or through the Issuer or any successor corporation, whether by virtue of any constitution, statute or rule of law or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released. As used herein: (a) the term "Exchange Date" means any Trading Day that falls during the period beginning November , 1997 and ending on April , 2001. (b) the term "Final Index Value" means the Index Value on the Determination Date with respect to the Maturity Date, as determined by the Calculation Agent. (c) the term "Index Value," as of any Determination Date, shall equal the closing value of the S&P 500 Index or any Successor Index at the regular official weekday close of trading on such Determination Date, as determined by the Calculation Agent. References herein to the S&P 500 Index shall be deemed to include any Successor Index, unless the context requires otherwise. (d) the term "Trading Day" means a day, as determined by the Calculation Agent, on which trading is generally conducted (i) on the New York Stock Exchange ("NYSE"), the American Stock Exchange, Inc. ("AMEX") and the NASDAQ National Market ("NASDAQ NMS"), (ii) on the Chicago Mercantile Exchange, (iii) on the Chicago Board of Options Exchange and (iv) in the over-the-counter market for equity securities in the United States. (e) the term "Business Day" means any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions are authorized or required by law or regulation to close in The City of New York. (f) the term "Determination Date" means (i) with respect to any Exchange Date, such Exchange Date and (ii) with respect to the Maturity Date, May , 2001, unless, in either case, there is a Market Disruption Event on such Trading Day. If a Market Disruption Event occurs on any such Trading Day, the Determination Date shall be the immediately succeeding Trading Day during which no Market Disruption Event shall have occurred; provided that if a Market Disruption Event has occurred on each of the five Trading Days immediately succeeding (a) such Exchange Date or (b) May , 2001, then the relevant Determination Date shall be deemed to be the earlier of (x) such fifth succeeding Trading Day or (y) the second scheduled Trading Day prior to the Maturity Date, notwithstanding the occurrence of a Market Disruption Event on such day (an "Extended Determination Date"). With respect to any such Extended Determination Date on which a Market Disruption Event occurs, the Calculation Agent shall determine the value of the S&P 500 Index on such Extended Determination Date in accordance with the formula for and method of calculating the S&P 500 Index last in effect prior to the commencement of the Market Disruption Event, using the closing price (or, if trading in the relevant securities has been materially suspended or materially limited, its good faith estimate of the closing price that would have prevailed but for such suspension or limitation) on such Trading Day of each security most recently comprising the S&P 500 Index. (g) the term "Market Disruption Event" means, with respect to the S&P 500 Index: (i) a suspension, absence or material limitation of trading of 100 or more of the securities included in the S&P 500 Index on the primary market for such securities 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, absence or material limitation of trading on the primary market for trading in futures or options contracts related to the S&P 500 Index 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 Issuer or any of its affiliates to unwind all or a material portion of the hedge with respect to the Protected Exchangeable Equity-linked Securities Due May , 2001. For purposes of determining whether a Market Disruption Event has occurred: (1) a limitation on the hours or number of days of trading shall not constitute a Market Disruption Event if it results from an announced change in the regular business hours of the relevant exchange or market, (2) a decision to permanently discontinue trading in the relevant futures or options contract shall 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 NYSE, 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 a futures or options contract on the S&P 500 Index by the primary securities market related to such contract by reason of (x) a price change exceeding limits set by such 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 shall constitute a suspension or material limitation of trading in futures or options contracts related to the S&P 500 Index and (5) "a suspension, absence or material limitation of trading" on the primary market on which futures or options contracts related to the S&P 500 Index are traded shall not include any time when such market is itself closed for trading under ordinary circumstances. (h) the term "Calculation Agent" means Morgan Stanley & Co. Incorporated. All determinations made by the Calculation Agent shall be at the sole discretion of the Calculation Agent and shall, in the absence of manifest error, be conclusive for all purposes and binding on the Issuer and the holder of this Note. (i) all terms used in this Note which are defined in the Senior Indenture and not otherwise defined herein shall have the meanings assigned to them in the Senior Indenture. This Note shall for all purposes be governed by, and construed in accordance with, the laws of the State of New York. ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM-as tenants in common TEN ENT-as tenants by the entireties JT TEN-as joint tenants with right of survivorship and not as tenants in common UNIF GIFT MIN ACT-...........Custodian.............. (Cust) (Minor) Under Uniform Gifts to Minors Act................... (State) Additional abbreviations may also be used though not in the above list. FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto [PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE] ______________________________________! ! ______________________________________!_______________________________________ ______________________________________________________________________________ [PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE] ______________________________________________________________________________ the within Note and all rights thereunder, hereby irrevocably constituting and appointing ______________________________________________________________________________ attorney to transfer such Note on the books of the Issuer, with full power of substitution in the premises. Dated:_____________________ ______________________________________________________________________________ NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within Note in every particular without alteration or enlargement or any change whatsoever. OFFICIAL NOTICE OF EXCHANGE Dated:[On or after November , 1997] Morgan Stanley Group Inc. 1585 Broadway New York, New York 10036 Morgan Stanley & Co. Incorporated, as Calculation Agent 1585 Broadway New York, New York 10036 (Attn: Alan Thomas) Fax: 212-761-0028 Dear Sirs: The undersigned holder of the Protected Exchangeable Equity-linked Securities Due May , 2001 of Morgan Stanley Group Inc. (the "PEEQS") hereby irrevocably elects to exercise with respect to the number of PEEQS indicated below, as of the date hereof (or, if this letter is received after 11:00 a.m. on any Trading Day, as of the next Trading Day, provided that such day is on or prior to April , 2001, the Exchange Right as described in the Prospectus Supplement dated May , 1996 (the "Prospectus Supplement") and the Prospectus dated May 1, 1996 related to Registration Statement No. 333-01655. Capitalized terms not defined herein have the meanings given to such terms in the Prospectus Supplement. Please date and acknowledge receipt of this notice in the place provided below on the date of receipt, and fax a copy to the fax number indicated. Upon receipt of this notice, the Company will deliver five Business Days after the Determination Date with respect to such Exchange Date, an amount in dollars, as determined by the Calculation Agent, equal to 10% of the Index Value of the S&P 500 Index, in accordance with the terms of the PEEQS, as described in the Prospectus Supplement. Very truly yours, [Name of Holder] By: [Title] [Fax No.] Number of PEEQS (minimum of 100) surrendered for exchange Receipt of the above Official Notice of Exchange is hereby acknowledged MORGAN STANLEY GROUP INC., as Issuer MORGAN STANLEY & CO. INCORPORATED, as Calculation Agent By MORGAN STANLEY & CO. INCORPORATED, as Calculation Agent By: Title: Date and time of acknowledgement Upon presentation to the Trustee of a definitive registered security having terms identical to the terms hereof (other than the principal amount thereof and the number of PEEQS represented thereby) for exchange for a beneficial interest in this Note, and upon confirmation by the Depositary that such exchange may be made in compliance with its procedures, the Trustee shall cancel the security so presented and shall annotate the schedule set forth below to reflect the increase in the "Total Number of PEEQS Represented by this Note" and the "Total Principal Amount" hereof. SCHEDULE A EXCHANGES FOR DEFINITIVE REGISTERED NOTES Total Number of Date of PEEQS Represented by Total Notation Made by or on Exchange this Note Principal Amount behalf of Trustee - ---------- -------------------- ---------------- ---------------------- - ---------- -------------------- ---------------- ---------------------- - ---------- -------------------- ---------------- ---------------------- - ---------- -------------------- ---------------- ---------------------- - ---------- -------------------- ---------------- ---------------------- - ---------- -------------------- ---------------- ---------------------- - ---------- -------------------- ---------------- ---------------------- - ---------- -------------------- ---------------- ---------------------- - ---------- -------------------- ---------------- ---------------------- - ---------- -------------------- ---------------- ---------------------- -----END PRIVACY-ENHANCED MESSAGE-----