-----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, Hgv4fci6VOiP9xHRoQ07R9NsO5RDrnOs/4+zLz3lnDoJ1FdERSFpK2WzN3bpWX1O wym8TYRE0odunItAqObgLQ== 0000950103-96-001024.txt : 19960729 0000950103-96-001024.hdr.sgml : 19960729 ACCESSION NUMBER: 0000950103-96-001024 CONFORMED SUBMISSION TYPE: 8-A12B PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19960726 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: 96599398 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 - ------------------- ------------------------------ Medium-Term Notes, THE NEW YORK STOCK EXCHANGE Series C ( % Senior Fixed Rate Notes), due July 31, 2003 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: "Medium-Term Notes, Series C ( % Senior Fixed Rate Notes), Nikkei 225 Protection Step-up Exchangeable Notes due July 31, 2003 (the "Nikkei 225 Exchangeable Notes"). A description of the Nikkei 225 Exchangeable Notes 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 Notes" in the registrant's prospectus supplement filed on May 1, 1996, pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the "Act"), which description is incorporated herein by reference, and as further supplemented by the description of the Nikkei 225 Exchangeable Notes contained in the pricing supplement to be filed pursuant to Rule 424(b) under the Act, which will contain the final terms and provisions of the Nikkei 225 Exchangeable Notes and is hereby deemed to be incorporated by reference into this Registration Statement and to be a part hereof. Item 2. Exhibits. The following documents is filed as exhibit hereto: 4.1 Proposed form of global Note evidencing the Nikkei 225 Exchangeable Notes. 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: July 26, 1996 By: /s/Ralph L. Pellecchio ------------------------------- Name: Ralph L. Pellecchio Title: Assistant Secretary and Counsel INDEX TO EXHIBITS ----------------- Exhibit No. Page No. - ------------------------------------------------------- ---------- 4.1 Proposed form of global Note evidencing 5 the Nikkei 225 Exchangeable Notes. EX-4.1 2 Draft Global Note Exhibit 4.1 Fixed Rate Senior Note REGISTERED REGISTERED No. FXR $50,000,000 CUSIP: 617446CK3 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. IF APPLICABLE, THE "TOTAL AMOUNT OF OID," "ORIGINAL YIELD TO MATURITY" AND "INITIAL ACCRUAL PERIOD OID" (COMPUTED UNDER THE APPROXIMATE METHOD) SET FORTH BELOW HAVE BEEN COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES. MORGAN STANLEY GROUP INC. SENIOR GLOBAL MEDIUM-TERM NOTE, SERIES C (Fixed Rate) % SENIOR FIXED RATE NOTES DUE JULY 31, 2003 NIKKEI 225 PROTECTION STEP-UP EXCHANGEABLE NOTES ORIGINAL ISSUE INITIAL INTEREST RATE: ORIGINAL MATURITY DATE: , REDEMPTION DATE: % per annum DATE: July 31, 1996 N/A Subsequent to any 2003 Par Step-Up Adjustment, interest with respect to each $1,000 principal amount of this Note shall accrue on the then current Par, as determined by the Calculation Agent. INTEREST INITIAL APPLICABILITY OF OPTIONAL REPAYMENT ACCRUAL DATE: REDEMPTION MODIFIED PAYMENT DATES(S): N/A , 1996 PERCENTAGE: N/A UPON ACCELERATION: N/A TOTAL AMOUNT OF ANNUAL REDEMPTION If yes, state Issue EXCHANGE RATE OID: N/A PERCENTAGE Price: AGENT: N/A REDUCTION: N/A ORIGINAL YIELD SPECIFIED TO MATURITY: CURRENCY: N/A U.S. Dollars INITIAL ACCRUAL INTEREST PAYMENT PERIOD: N/A DATE: Each January 31 and July 31, commencing January 31, 1997 APPLICABILITY INTEREST PAYMENT OF ISSUER's PERIOD: Semi-annually OPTION TO EXTEND ORIGINAL MATURITY DATE: N/A If yes, state APPLICABILITY OF Final Maturity ANNUAL INTEREST Date: PAYMENTS: N/A OTHER PROVISIONS: (See Below)
Issue Price:................... 100% Initial Par.................... $1,000 per $1,000 principal amount of this Note Exchange Right:................ On any Exchange Date (as defined below), the holder of this Note shall have the right, upon completion by the holder and delivery to the Issuer and the Calculation Agent of an Official Notice of Exchange (in the form of Annex A attached hereto) prior to 11:00 a.m. New York time on such date and delivery of this Note to the Trustee, to exchange each $1,000 principal amount of this Note for an amount in U.S. Dollars equal to Parity (as defined below) on the Nikkei Determination Date (as defined below) with respect to such Exchange Date, as determined by the Calculation Agent. Such payment shall be made five Business Days after such Nikkei Determination Date, subject to delivery of this Note to the Trustee on the Exchange Date. Promptly at the opening of business New York time on the second Business Day following the Nikkei Determination Date with respect to the applicable Exchange Date, the Issuer shall cause the Calculation Agent to provide written notice to the Trustee at its New York office and to The Depository Trust Company, or any successor depositary ("DTC"), on which notice the Trustee and DTC may conclusively rely, (i) of its receipt of any such "Official Notice of Exchange" and (ii) of the amount of cash to be paid for each $1,000 principal amount of this Note. The Issuer shall, or shall cause the Calculation Agent to, deliver cash to the Trustee for delivery to the holder of this Note. Par Step-up Adjustment:........ On each Exchange Date, subject to the prior exercise of the Exchange Right with respect to this Note, the existing par amount with respect to each $1,000 principal amount of this Note ("Par") shall be adjusted so that Par shall be the greater of (i) the then current Par (in the case of the first Exchange Date, Initial Par) and (ii) Parity as determined by the Calculation Agent, on the Nikkei Determination Date with respect to such Exchange Date. In the event of any Par Step-Up Adjustment, interest with respect to each $1,000 principal amount of this Note shall accrue on the then current Par, as determined by the Calculation Agent, from and including the Interest Payment Date scheduled to coincide with the Exchange Date on which such adjustment shall have been made. If Parity as so determined exceeds the then current Par, notice of the adjustment to Par shall promptly be sent by the Calculation Agent by first-class mail to the Trustee at its New York office and to DTC. Parity:........................ Parity as of any Nikkei Determination Date with respect to each $1,000 principal amount of this Note shall be the product of (i) the Exchange Ratio and (ii) the Nikkei Dollar Value on such Nikkei Determination Date. All percentages resulting from any calculation with respect to this Note shall be rounded to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upwards (e.g., 9.876545% (or .09876545) would be rounded to 9.87655% (or .987655)), and all dollar amounts used in or resulting from such calculation shall be rounded to the nearest cent with one-half cent being rounded upwards. Exchange Ratio:................ [ ], subject to adjustment as described below under "Exchange Ratio Reset" and "Discontinuance of the Index." Exchange Ratio Reset:.......... If, on July 31, 1997, or if such day is not a Nikkei Determination Date, the immediately succeeding Nikkei Determination Date, Parity is equal to $900 or less, then the Exchange Ratio shall be increased by 10% of such existing Exchange Ratio to [ ], subject to any adjustments as described under "Discontinuance of the Index" herein. Notice of any such reset adjustment to the Exchange Ratio shall promptly be sent by the Calculation Agent by first-class mail to the Trustee at its New York office and to DTC. Exchange Dates:................ July 31, 1998, July 31, 2000 and July 31, 2002, or if any such day is not a Business Day the immediately succeeding Business Day. Nikkei Determination Date:..... A Trading Day on which a Market Disruption Event has not occurred. See "Market Disruption Event" below. The Nikkei Determination Date with respect to any Exchange Date shall be the Nikkei Determination Date next succeeding such Exchange Date. Trading Day:................... A Business Day which is also a day on which the Tokyo Stock Exchange ("TSE") and the Osaka Securities Exchange ("OSE") are each open for business. Business Day:.................. 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 or Tokyo. Nikkei Dollar Value:........... With respect to any Nikkei Determination Date, the quotient of (i) the applicable Nikkei Closing Value divided by (ii) FX Initial. Nikkei Closing Value:.......... The closing value (afternoon session) of the Nikkei Stock Average (the "Nikkei 225 Index"), published by Nihon Keizai Shimbun, Inc. ("NKS"), with respect to a Nikkei Determination Date. FX Initial:.................... [ ] Japanese Yen ("Yen ") per U.S. $1.00. Amount Payable at Maturity:.... At maturity, the holder of this Note shall receive for each $1,000 principal amount of this Note, subject to a prior exercise of the Exchange Right with respect to this Note, the greater of (i) Par and (ii) the Nikkei Final Value. Prior to 10:30 a.m. (New York time) on the Business Day immediately prior to the maturity of this Note, the Issuer shall cause the Calculation Agent to provide written notice to the Trustee at its New York office and to DTC, on which notice the Trustee and DTC may conclusively rely, of the amount of cash to be paid for each $1,000 principal amount of this Note. The Issuer shall, or shall cause the Calculation Agent to, deliver cash to the Trustee for delivery to the holder of this Note. If this Note is not surrendered for exchange at maturity, it shall be deemed to be no longer Outstanding under, and as defined in, the Senior Indenture (as defined below), except with respect to the holder's right to receive the cash due at maturity. Nikkei Final Value:............ The Nikkei Final Value shall be determined by the Calculation Agent and shall equal the arithmetic average of the products (each a "Product") of (i) the Nikkei Dollar Value and (ii) the Exchange Ratio, each as determined on the first 15 Nikkei Determination Dates during the Calculation Period (each a "Final Determination Date"). If, as of any Trading Day within the Calculation Period (the "Trigger Date"), the number of Trading Days within the Calculation Period does not exceed the amount by which 15 exceeds the number of previous Final Determination Dates, then the Calculation Agent shall weight the Product for each succeeding Final Determination Date during the Calculation Period to ratably distribute the intended weight of any Trading Date on or after the Trigger Date on which a Market Disruption Event occurs (a "Non-Determination Date") across the remaining Final Determination Dates. Accordingly, if a Market Disruption Event occurs on or after the Trigger Date, the weightings of the Products for the Final Determination Dates shall be calculated as follows: (A) each Final Determination Date on or after the Trigger Date preceding the first Non-Determination Date shall receive a weighting of 1/15 and (B) each Final Determination Date following a Non-Determination Date shall receive a weighting that equals a fraction (i) the numerator of which shall be the fraction that equals 1 minus the sum of the weights of all preceding Final Determination Dates and (ii) the denominator of which shall be the number of Trading Days from and including such Final Determination Date to and including the last Trading Day in the Calculation Period; provided that if, due to Market Disruption Events, there are no Nikkei Determination Dates following a Non-Determination Date and prior to the end of the Calculation Period, then the last Trading Day in the Calculation Period shall be deemed to be a Final Determination Date, notwithstanding the occurrence of a Market Disruption Event and the Nikkei Dollar Value for such deemed Final Determination Date shall be determined by the Calculation Agent. Calculation Period:............ The period from and including June 25, 2003 to and including the second scheduled Trading Day prior to the Maturity Date. Calculation Agent:............. Morgan Stanley & Co. Incorporated ("MS & Co."). 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. Market Disruption Event:....... "Market Disruption Event" means the occurrence or existence of both of the following events on a Trading Day that would otherwise be a Nikkei Determination Date, as determined by the Calculation Agent: (i) a suspension or absence of trading on the TSE of 20% or more of the Underlying Stocks which then comprise the Nikkei 225 Index (or a Successor Index, as defined below) for more than two hours of trading or during the one-half hour period preceding the close of trading on the TSE; or the suspension or material limitation on the Singapore International Monetary Exchange Ltd. (the "SIMEX"), the OSE and the other major securities markets for trading in futures or options contracts related to the Nikkei 225 Index or a Successor Index taken as a whole, during the one-half hour period preceding the close of trading on the applicable exchange, 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 Senior Fixed Rate Notes Due July 31, 2003 (Nikkei 225 Protection Step-up Exchangeable Notes). 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 option contract shall not constitute a Market Disruption Event, (3) a suspension of trading in a futures or options contract on the Nikkei 225 Index or a Successor Index by the TSE, the OSE or other major 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 Nikkei 225 Index or such Successor Index and (4) a "suspension, absence or material limitation of trading" on the SIMEX, OSE or a major securities market on which futures or options contracts related to the Nikkei 225 Index or a Successor Index are traded shall not include any time when the SIMEX, OSE or such securities market, as the case may be, itself is closed for trading under ordinary circumstances. The Calculation Agent shall promptly give notice to (x) DTC, by publication in The Wall Street Journal (or another newspaper of general circulation) and (y) to the Trustee at its New York Office, if a Market Disruption Event shall have occurred on any day that would otherwise have been a relevant Nikkei Determination Date. Adjustments to the Index:...... If at any time the method of calculating the Nikkei 225 Index, or the value thereof, is changed in a material respect, or if the Nikkei 225 Index is in any other way modified so that the Nikkei 225 Index does not, in the reasonable opinion of the Calculation Agent, fairly represent the value of the Nikkei 225 Index had such changes or modifications not been made (except for changes in the Underlying Stocks by NKS), then, from and after such time, the Calculation Agent shall, at the close of business in New York, New York, on each date that the closing value (afternoon session) of the Nikkei 225 Index is to be calculated to determine the Nikkei Closing Value, Nikkei Dollar Value and the Nikkei Final Value, as applicable, make such adjustments as, in the good faith judgment of the Calculation Agent, may be necessary in order to arrive at a calculation of a value of a stock index comparable to the Nikkei 225 Index as if such changes or modifications had not been made, and calculate such closing value with reference to the Nikkei 225 Index, as adjusted. Accordingly, if the method of calculating the Nikkei 225 Index is modified so that the value of the Nikkei 225 Index is a fraction or a multiple of what it would have been if it had not been modified (e.g., due to a split in the Nikkei 225 Index), then the Calculation Agent shall adjust the Nikkei 225 Index in order to arrive at a value of the Nikkei 225 Index as if it had not been modified (e.g., as if such split had not occurred). The Calculation Agent shall promptly give notice to the Trustee at its New York office and to DTC of such adjusted value. Discontinuance of the Index:... If the NKS discontinues publication of the Nikkei 225 Index and NKS or another entity publishes a successor or substitute index that the Calculation Agent determines, in its sole discretion, within two Nikkei Determination Dates of such discontinuance, to be comparable to the Nikkei 225 Index (any such index referred to hereinafter as a "Successor Index"), then, upon the Calculation Agent's notification of such determination to the Trustee at its New York office and the Issuer, the Calculation Agent shall substitute the Successor Index as calculated by the NKS or such other entity for the Nikkei 225 Index, as the case may be, and calculate the Nikkei Dollar Value and the Nikkei Final Value as described above under "Exchange Right," "Exchange Ratio Reset," "Par Step-up Adjustment" and "Nikkei Final Value." After such substitution, the Exchange Ratio shall be modified as follows: New Exchange Ratio = Original Exchange Ratio x Most Recent Nikkei 225 Value ---------------------------- Successor Index Value where "Most Recent Nikkei 225 Value" and "Successor Index Value" are the closing levels (afternoon session) of the respective indexes on the day of such substitution; provided that if the Successor Index is first published on the Trading Day immediately following the discontinuance of the Nikkei 225 Index, the Successor Index Value shall be the closing level (afternoon session) on such first publication day and the "Most Recent Nikkei 225 Value" shall be based on the final published value of the Nikkei 225 Index. Upon any selection by the Calculation Agent of a Successor Index, the Issuer shall cause notice thereof and of any adjustment to the Exchange Ratio to be given to the Trustee and to DTC. If NKS discontinues publication of the Nikkei 225 Index and a Successor Index is not selected, within two Nikkei Determination Dates of such discontinuance, by the Calculation Agent (or such Successor Index is no longer published on any of the Nikkei Determination Dates), the value to be substituted for the Nikkei 225 Index for any such Nikkei Determination Date used to calculate the Nikkei Dollar Value or the Nikkei Final Value, as applicable, with respect to all succeeding Nikkei Determination Dates, shall be the final published closing level (afternoon session) of the Nikkei 225 Index (or such Successor Index) prior to such discontinuance. Any determination by the Calculation Agent that there is no successor or substitute index comparable to the Nikkei 225 Index shall be final. If a Successor Index is selected, such Successor Index shall be substituted for the Nikkei 225 Index for all purposes, including for purposes of determining whether a Market Disruption Event exists. Morgan Stanley Group Inc., a Delaware corporation (together with its successors and assigns, the "Issuer"), for value received, hereby promises to pay to CEDE & CO., or registered assignees, the amount in cash, as determined in accordance with the provisions set forth under "Amount Payable at Maturity" above, due with respect to the principal sum of U.S $50,000,000 (United States Dollars Fifty Million), on the Original Maturity Date specified above or, if the maturity hereof is extended in accordance with the procedures set forth below to an Extended Maturity Date, as defined below, on such Extended Maturity Date (except to the extent previously redeemed or repaid) and to pay interest thereon at the Interest Rate per annum specified above or, if the interest rate hereon is reset or re-established in connection with an extension of maturity in accordance with the procedures specified on the reverse hereof, at the interest rate per annum determined pursuant to such procedures, from and including the Interest Accrual Date specified above until the principal hereof is paid or duly made available for payment (except as provided below), monthly, quarterly, semiannually or annually in arrears as specified above as the Interest Payment Period on each Interest Payment Date (as specified above) commencing on the Interest Payment Date next succeeding the Interest Accrual Date specified above, and at maturity (or on any redemption or repayment date); provided, however, that if the Interest Accrual Date occurs between a Record Date, as defined below, and the next succeeding Interest Payment Date, interest payments will commence on the second Interest Payment Date succeeding the Interest Accrual Date to the registered holder of this Note on the Record Date with respect to such second Interest Payment Date; and provided, further, that if this Note is subject to "Annual Interest Payments," interest payments shall be made annually in arrears and the term "Interest Payment Date" shall be deemed to mean the first day of March in each year. Interest on this Note will accrue from and including the most recent Interest Payment Date to which interest has been paid or duly provided for, or, if no interest has been paid or duly provided for, from and including the Interest Accrual Date, until, but excluding the date the principal hereof has been paid or duly made available for payment (except as provided below). The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, subject to certain exceptions described herein, be paid to the person in whose name this Note (or one or more predecessor Notes) is registered at the close of business on the date 15 calendar days prior to such Interest Payment Date (whether or not a Business Day) (each such date a "Record Date"); provided, however, that interest payable at maturity (or on any redemption or repayment date) will be payable to the person to whom the principal hereof shall be payable. As used herein, "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 and (i) with respect to Notes denominated in a Specified Currency other than U.S. dollars, Australian dollars or European Currency Units ("ECUs"), in the principal financial center of the country of the Specified Currency, (ii) with respect to Notes denominated in Australian dollars, in Sydney and (iii) with respect to Notes denominated in ECUs, that is not a non-ECU clearing day, as determined by the ECU Banking Association in Paris. Payment of the principal of this Note, any premium and the interest due at maturity (or on any redemption or repayment date), unless this Note is denominated in a Specified Currency other than U.S. dollars and is to be paid in whole or in part in such Specified Currency, will be made in immediately available funds upon surrender of this Note at the office or agency of the Paying Agent, as defined on the reverse hereof, maintained for that purpose in the Borough of Manhattan, The City of New York, or at such other paying agency as the Issuer may determine, in U.S. dollars. U.S. dollar payments of interest, other than interest due at maturity or on any date of redemption or repayment, will be made by U.S. dollar check mailed to the address of the person entitled thereto as such address shall appear in the Note register. A holder of U.S. $10,000,000 or more in aggregate principal amount of Notes having the same Interest Payment Date, the interest on which is payable in U.S. dollars, shall be entitled to receive payments of interest, other than interest due at maturity or on any date of redemption or repayment, by wire transfer of immediately available funds if appropriate wire transfer instructions have been received by the Paying Agent in writing not less than 15 calendar days prior to the applicable Interest Payment Date. If this Note is denominated in a Specified Currency other than U.S. dollars, and the holder does not elect (in whole or in part) to receive payment in U.S. dollars pursuant to the next succeeding paragraph, payments of interest, principal or any premium with regard to this Note will be made by wire transfer of immediately available funds to an account maintained by the holder hereof with a bank located outside the United States if appropriate wire transfer instructions have been received by the Paying Agent in writing not less than 15 calendar days prior to the applicable payment date, provided that, if such wire transfer instructions are not received, such payments will be made by check payable in such Specified Currency mailed to the address of the person entitled thereto as such address shall appear in the Note register, and provided, further, that payment of the principal of this Note, any premium and the interest due at maturity (or on any redemption or repayment date) will be made upon surrender of this Note at the office or agency referred to in the preceding paragraph. Unless otherwise indicated herein, the holder of this Note, if denominated in a Specified Currency other than U.S. dollars, may elect to receive all or a portion of payments on this Note in U.S. dollars by transmitting a written request to the Paying Agent, on or prior to the Record Date or at least ten Business Days prior to the Maturity Date or any redemption or repayment date, as the case may be. Such election shall remain in effect unless such request is revoked by written notice to the Paying Agent as to all or a portion of payments on this Note at least five Business Days prior to such Record Date or at least ten days prior to the Maturity Date or any redemption or repayment date, as the case may be. If the holder elects to receive all or a portion of payments of principal of and any premium and interest on this Note, if denominated in a Specified Currency other than U.S. dollars, in U.S. dollars, the Exchange Rate Agent will convert such payments into U.S. dollars. In the event of such an election, payment in respect of this Note will be based upon the exchange rate as determined by the Exchange Rate Agent based on the highest bid quotation in The City of New York received by such Exchange Rate Agent at approximately 11:00 A.M., New York City time, on the second Business Day preceding the applicable payment date from three recognized foreign exchange dealers (one of which may be the Exchange Rate Agent unless such Exchange Rate Agent is Morgan Stanley & Co. Incorporated), for the purchase by the quoting dealer of U.S. dollars for the Specified Currency for settlement on such payment date in the amount of the Specified Currency payable in the absence of such election to such holder and at which the applicable dealer commits to execute a contract. If such bid quotations are not available, such payment will be made in the Specified Currency. All currency exchange costs will be borne by the holder of this Note by deductions from such payments. 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: , 1996 MORGAN STANLEY GROUP INC. By__________________________ Name: Eileen K. Murray Title: Treasurer TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Notes referred to in the within-mentioned Senior Indenture. THE CHASE MANHATTAN BANK, as Trustee By__________________________________ Authorized Officer REVERSE OF SECURITY This Note is one of a duly authorized issue of Senior Global Medium-Term Notes, Series C, having maturities more than nine months from the date of issue (the "Notes") of the Issuer. The Notes are 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 The Chase Manhattan Bank (formerly known as 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 The Chase Manhattan Bank (formerly known as 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. The terms of individual Notes may vary with respect to interest rates, interest rate formulas, issue dates, maturity dates, or otherwise, all as provided in the Senior Indenture. To the extent not inconsistent herewith, the terms of the Senior Indenture are hereby incorporated by reference herein. Unless otherwise provided on the face of this Note, this Note will not be subject to any sinking fund and, unless otherwise provided on the face hereof in accordance with the provisions of the following two paragraphs, will not be redeemable or subject to repayment at the option of the holder prior to maturity. If so indicated on the face of this Note, this Note may be redeemed in whole or in part at the option of the Issuer on or after the Initial Redemption Date specified on the face hereof on the terms set forth on the face hereof, together with interest accrued and unpaid hereon to the date of redemption (except as provided below). If this Note is subject to "Annual Redemption Percentage Reduction," the Initial Redemption Percentage indicated on the face hereof will be reduced on each anniversary of the Initial Redemption Date by the Annual Redemption Percentage Reduction specified on the face hereof until the redemption price of this Note is 100% of the principal amount hereof, together with interest accrued and unpaid hereon to the date of redemption (except as provided below). Notice of redemption shall be mailed to the registered holders of the Notes designated for redemption at their addresses as the same shall appear on the Note register not less than 30 nor more than 60 days prior to the date fixed for redemption, subject to all the conditions and provisions of the Senior Indenture. In the event of redemption of this Note in part only, a new Note or Notes for the amount of the unredeemed portion hereof shall be issued in the name of the holder hereof upon the cancellation hereof. Notwithstanding the foregoing, this Note may be redeemed in accordance with the terms of any Extension Notice, as defined below, sent to the holder hereof as described below. If so indicated on the face of this Note, this Note will be subject to repayment at the option of the holder on the Optional Repayment Date or Dates specified on the face hereof on the terms set forth herein. On any Optional Repayment Date, this Note will be repayable in whole or in part in increments of $1,000 or, if this Note is denominated in a Specified Currency other than U.S. dollars, in increments of 1,000 units of such Specified Currency (provided that any remaining principal amount hereof shall not be less than the minimum authorized denomination hereof) at the option of the holder hereof at a price equal to 100% of the principal amount to be repaid, together with interest accrued and unpaid hereon to the date of repayment (except as provided below). For this Note to be repaid at the option of the holder hereof, the Paying Agent must receive at its corporate trust office in the Borough of Manhattan, The City of New York, at least 15 but not more than 30 days prior to the date of repayment, (i) this Note with the form entitled "Option to Elect Repayment" below duly completed or (ii) a telegram, telex, facsimile transmission or a letter from a member of a national securities exchange or the National Association of Securities Dealers, Inc. or a commercial bank or a trust company in the United States setting forth the name of the holder of this Note, the principal amount hereof, the certificate number of this Note or a description of this Note's tenor and terms, the principal amount hereof to be repaid, a statement that the option to elect repayment is being exercised thereby and a guarantee that this Note, together with the form entitled "Option to Elect Repayment" duly completed, will be received by the Paying Agent not later than the fifth Business Day after the date of such telegram, telex, facsimile transmission or letter; provided, that such telegram, telex, facsimile transmission or letter shall only be effective if this Note and form duly completed are received by the Paying Agent by such fifth Business Day. Exercise of such repayment option by the holder hereof shall be irrevocable. In the event of repayment of this Note in part only, a new Note or Notes for the amount of the unpaid portion hereof shall be issued in the name of the holder hereof upon the cancellation hereof. If so indicated on the face of this Note, the Issuer has the option to extend the Original Maturity Date hereof for one or more periods of one or more whole years (each an "Extension Period") up to but not beyond the Final Maturity Date specified on the face hereof and in connection therewith to establish a new interest rate and new redemption provisions for the Extension Period. The Issuer may exercise such option by notifying the Paying Agent of such exercise at least 45 but not more than 60 days prior to the Original Maturity Date or, if the maturity hereof has already been extended, prior to the maturity date then in effect (an "Extended Maturity Date"), such notice to be accompanied by the form of the Extension Notice referred to below. No later than 38 days prior to the Original Maturity Date or an Extended Maturity Date, as the case may be (each, a "Maturity Date"), the Paying Agent will mail to the holder hereof a notice (the "Extension Notice") relating to such Extension Period, first class mail, postage prepaid, setting forth (a) the election of the Issuer to extend the maturity of this Note; (b) the new Extended Maturity Date; (c) the interest rate applicable to the Extension Period; and (d) the provisions, if any, for redemption during the Extension Period, including the date or dates on which, the period or periods during which and the price or prices at which such redemption may occur during the Extension Period. Upon the mailing by the Paying Agent of an Extension Notice to the holder of this Note, the maturity hereof shall be extended automatically, and, except as modified by the Extension Notice and as described in the next paragraph, this Note will have the same terms it had prior to the mailing of such Extension Notice. Notwithstanding the foregoing, not later than 10:00 A.M., New York City time, on the twentieth calendar day prior to the Maturity Date in effect immediately preceding the mailing of the applicable Extension Notice (or if such day is not a Business Day, not later than 10:00 A.M., New York City time, on the immediately succeeding Business Day), the Issuer may, at its option, revoke the interest rate provided for in such Extension Notice and establish a higher interest rate for the Extension Period by causing the Paying Agent to send notice of such higher interest rate to the holder of this Note by first class mail, postage prepaid, or by such other means as shall be agreed between the Issuer and the Paying Agent. Such notice shall be irrevocable. All Notes with respect to which the Maturity Date is extended in accordance with an Extension Notice will bear such higher interest rate for the Extension Period, whether or not tendered for repayment. If the Issuer elects to extend the maturity hereof, the holder of this Note will have the option to require the Issuer to repay this Note on the Maturity Date in effect immediately preceding the mailing of the applicable Extension Notice at a price equal to the principal amount hereof plus any accrued and unpaid interest to such date. In order for this Note to be so repaid on such Maturity Date, the holder hereof must follow the procedures set forth above for optional repayment, except that the period for delivery of this Note or notification to the Paying Agent shall be at least 25 but not more than 35 days prior to the Maturity Date in effect immediately preceding the mailing of the applicable Extension Notice and except that if the holder hereof has tendered this Note for repayment pursuant to this paragraph he may, by written notice to the Paying Agent, revoke any such tender for repayment until 3:00 P.M., New York City time, on the twentieth calendar day prior to the Maturity Date then in effect (or, if such day is not a Business Day, until 3:00 P.M., New York City time, on the immediately succeeding Business Day). Interest payments on this Note will include interest accrued to but excluding the Interest Payment Dates or the Maturity Date (or any earlier redemption or repayment date), as the case may be. Unless otherwise provided on the face hereof, interest payments for this Note will be computed and paid on the basis of a 360-day year of twelve 30-day months. In the case where the Interest Payment Date or the Maturity Date (or any redemption or repayment date) does not fall on a Business Day, payment of interest, premium, if any, or 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 Interest Payment Date or on the Maturity Date (or any redemption or repayment date), and no interest on such payment shall accrue for the period from and after the Interest Payment Date or the Maturity Date (or any redemption or repayment date) to such next succeeding Business Day. 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, if denominated in U.S. dollars, is issuable only in denominations of U.S. $1,000 and any integral multiple of U.S. $1,000 in excess thereof. If this Note is denominated in a Specified Currency other than U.S. dollars, then, unless a higher minimum denomination is required by applicable law, it is issuable only in denominations of the equivalent of U.S. $1,000 (rounded to an integral multiple of 1,000 units of such Specified Currency), or any amount in excess thereof which is an integral multiple of 1,000 units of such Specified Currency, as determined by reference to the noon dollar buying rate in New York City for cable transfers of such Specified Currency published by the Federal Reserve Bank of New York (the "Market Exchange Rate") on the Business Day immediately preceding the date of issuance; provided, however, in the case of ECUs, the Market Exchange Rate shall be the rate of exchange determined by the Commission of the European Communities (or any successor thereto) as published in the Official Journal of the European Communities, or any successor publication, on the Business Day immediately preceding the date of issuance. 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 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 a like aggregate principal amount in authorized denominations, subject to the terms and conditions set forth herein; provided, however, that the Trustee will not be required (i) to register the transfer of or exchange any Note that has been called for redemption in whole or in part, except the unredeemed portion of Notes being redeemed in part, (ii) to register the transfer of or exchange any Note if the holder thereof has exercised his right, if any, to require the Issuer to repurchase such Note in whole or in part, except the portion of such Note not required to be repurchased, or (iii) to register the transfer of or exchange Notes to the extent and during the period so provided in the Senior Indenture with respect to the redemption of Notes. Notes are exchangeable at said office for other Notes of other authorized denominations of equal aggregate principal amount having 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. The date of registration of any Note delivered upon any exchange or transfer of Notes shall be such that no gain or loss of interest results from such exchange or transfer. 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, including the series of Senior Medium-Term Notes of which this Note forms a part, 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 face hereof indicates that this Note is subject to "Modified Payment upon Acceleration," then (i) if the principal hereof is declared to be due and payable as described in the preceding paragraph, the amount of principal due and payable with respect to this Note shall be limited to the aggregate principal amount hereof multiplied by the sum of the Issue Price specified on the face hereof (expressed as a percentage of the aggregate principal amount) plus the original issue discount amortized from the Interest Accrual Date to the date of declaration, which amortization shall be calculated using the "interest method" (computed in accordance with generally accepted accounting principles in effect on the date of declaration), (ii) 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 clause (i) above, if this Note were declared to be due and payable on the date of any such vote and (iii) 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 of principal due and payable with respect to this Note, calculated as set forth in clause (i) 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. Except as set forth below, if the principal of, premium, if any, or interest on, this Note is payable in a Specified Currency other than U.S. dollars and such Specified Currency is not available to the Issuer for making payments hereon due to the imposition of exchange controls or other circumstances beyond the control of the Issuer or is no longer used by the government of the country issuing such currency or for the settlement of transactions by public institutions within the international banking community, then the Issuer will be entitled to satisfy its obligations to the holder of this Note by making such payments in U.S. dollars on the basis of the Market Exchange Rate on the date of such payment or, if the Market Exchange Rate is not available on such date, as of the most recent practicable date; provided, however, that if such Specified Currency is replaced by a single European currency (expected to be named the Euro), the payment of principal of, premium, if any, or interest on any Note denominated in such currency shall be effected in the new single European currency in conformity with legally applicable measures taken pursuant to, or by virtue of, the treaty establishing the European Community (the "EC"), as amended by the treaty on European Union (as so amended, the "Treaty"). Any payment made under such circumstances in U.S. dollars (or, if applicable, such new single European currency) where the required payment is in a Specified Currency other than U.S. dollars will not constitute an Event of Default. Subject to the provisions below, the value of the ECU, in which the Notes may be denominated or may be payable, is equal to the value of the ECU that is from time to time used as the unit of account of the EC. If the ECU becomes a currency in its own right in accordance with the Treaty, all references to ECU in the Notes shall be construed as references to such currency. With respect to each due date for the payment of principal of, or interest on, the Notes on or after the first business day in Brussels on which the ECU ceases to be used as the unit of account of the EC, and has not become a currency in its own right replacing all or some of the currencies of the member States of the EC, the Issuer shall choose a substitute currency (the "Chosen Currency"), which may be any currency which was, on the last day on which the ECU was used as the unit of account of the EC, a component currency of the ECU or U.S. dollars, in which all payments due on or after that date with respect to the Notes and coupons shall be made. Notice of the Chosen Currency so selected shall be provided by first class mail to each holder at the address of such holder which appears on the books maintained by the registrar and to the Paying Agent. The amount of each payment in such Chosen Currency shall be computed on the basis of the equivalent of the ECU in that currency, determined as described below, as of the fourth business day in Brussels prior to the date on which such payment is due. On the first business day in Brussels on which the ECU ceases to be used as the unit of account of the EC, and has not become a currency in its own right replacing all or some of the currencies of the member States of the EC, the Issuer shall select a Chosen Currency in which all payments with respect to Notes and coupons having a due date prior thereto but not yet presented for payment are to be made. The amount of each payment in such Chosen Currency shall be computed on the basis of the equivalent of the ECU in that currency, determined as described below, as of such first business day. The equivalent of the ECU in the relevant Chosen Currency as of any date (the "Day of Valuation") shall be determined by, or on behalf of, the Exchange Rate Agent on the following basis. The amounts and components composing the ECU for this purpose (the "Components") shall be the amounts and components that composed the ECU as of the last date on which the ECU was used as the unit of account of the EC. The equivalent of the ECU in the Chosen Currency shall be calculated by, first, aggregating the U.S. dollar equivalents of the Components; and then, in the case of a chosen Currency other than U.S. dollars, using the rate used for determining the U.S. dollar equivalent of the Components in the Chosen Currency as set forth below, calculating the equivalent in the Chosen Currency of such aggregate amount in U.S. dollars. The "Exchange Rate Agent" shall be Morgan Stanley & Co. Incorporated, unless otherwise indicated on the face hereof. The U.S. dollar equivalent of each of the Components shall be determined by, or on behalf of, the Exchange Rate Agent on the basis of the middle spot delivery quotations prevailing at 2:30 P.M., Brussels time, on the Day of Valuation, as obtained by, or on behalf of, the Exchange Rate Agent from one or more major banks, as selected by the Issuer, in the country of issue of the component currency in question. If for any reason no direct quotations are available for a Component as of a Day of Valuation from any of the banks selected for this purpose, in computing the U.S. dollar equivalent of such Component, the Exchange Rate Agent shall (except as provided below) use the most recent direct quotations for such Component obtained by it or on its behalf, provided that such quotations were prevailing in the country of issue not more than two Business Days before such Day of Valuation. If such most recent quotations were so prevailing in the country of issue more than two Business Days before such Day of Valuation, the Exchange Rate Agent shall determine the U.S. dollar equivalent of such Component on the basis of cross rates derived from the middle spot delivery quotations for such component currency and for the U.S. dollar prevailing at 2:30 P.M., Brussels time, on such Day of Valuation, as obtained by, or on behalf of, the Exchange Rate agent from one or more major banks, as selected by the Issuer, in a country other than the country of issue of such component currency. Notwithstanding the foregoing, the Exchange Rate Agent shall determine the U.S. dollar equivalent of such Component on the basis of such cross rates if the Issuer or such agent judges that the equivalent so calculated is more representative than the U.S. dollar equivalent calculated as provided in the first sentence of this paragraph. Unless otherwise specified by the Issuer, if there is more than one market for dealing in any component currency by reason of foreign exchange regulations or for any other reason, the market to be referred to in respect of such currency shall be that upon which a non-resident issuer of securities denominated in such currency would purchase such currency in order to make payments in respect of such securities. Payments in the Chosen Currency will be made at the specified office of a paying agent in the country of the Chosen Currency, or, if none, or at the option of the holder, at the specified office of any Paying Agent either by a check drawn on, or by transfer to an account maintained by the holder with, a bank in the principal financial center of the country of the Chosen Currency. All determinations referred to above made by, or on behalf of, the Issuer or by, or on behalf of, the Exchange Rate Agent shall be at such entity's sole discretion and shall, in the absence of manifest error, be conclusive for all purposes and binding on holders of Notes and coupons. 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 and premium, if any, and interest on 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, premium and interest 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 or interest or premium, if any, on any Notes that remain unclaimed at the end of two years after such principal, interest or premium shall have become due and payable (whether at maturity or upon call for redemption 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 or interest or premium, if any, on 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, premium, if any, and interest on this Note at the time, place, and rate, 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, premium, if any, or the interest on 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. This Note shall for all purposes be governed by, and construed in accordance with, the laws of the State of New York. 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. 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 such person 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. OPTION TO ELECT REPAYMENT The undersigned hereby irrevocably requests and instructs the Issuer to repay the within Note (or portion thereof specified below) pursuant to its terms at a price equal to the principal amount thereof, together with interest to the Optional Repayment Date, to the undersigned at _____________________________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________ (Please print or typewrite name and address of the undersigned) If less than the entire principal amount of the within Note is to be repaid, specify the portion thereof which the holder elects to have repaid: __________________; and specify the denomination or denominations (which shall not be less than the minimum authorized denomination) of the Notes to be issued to the holder for the portion of the within Note not being repaid (in the absence of any such specification, one such Note will be issued for the portion not being repaid): ________________________________. . Dated:________________ ____________________________________________ NOTICE: The signature on this Option to Elect Repayment must correspond with the name as written upon the face of the within instrument in every particular without alteration or enlargement. ANNEX A OFFICIAL NOTICE OF EXCHANGE Dated: [On any Exchange Date on or after July 31, 1998] 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: James Jurney) Fax: 212-761-0674 Dear Sirs: The undersigned holder of the Nikkei 225 Protection Step Up Exchangeable Notes Due July 31, 2003 of Morgan Stanley Group Inc. (the "Notes") hereby irrevocably elects to exercise with respect to the principal amount of Notes indicated below, as of the date hereof (provided that this letter is received before 11:00 a.m. New York time on any Exchange Date), the Exchange Right as described in the Pricing Supplement dated , 1996 (the "Pricing Supplement") to the Prospectus Supplement dated May 1, 1996 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 Pricing 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 Nikkei Determination Date with respect to such Exchange Date, an amount in dollars, as determined by the Calculation Agent and as described in the Pricing Supplement under "Exchange Right." Very truly yours, ____________________________ [Name of Holder] By: ________________________ [Title] ____________________________ [Fax No.] ____________________________ Principal Amount of Notes 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____________________________ -----END PRIVACY-ENHANCED MESSAGE-----