As filed with the Securities and Exchange Commission on March 1, 2002
Registration No. 333-
333-
333-
333-
333-
333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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MORGAN STANLEY DEAN WITTER & CO. DELAWARE 36-3145972
MORGAN STANLEY CAPITAL TRUST III DELAWARE 13-7303060
MORGAN STANLEY CAPITAL TRUST IV DELAWARE 13-7303058
MORGAN STANLEY CAPITAL TRUST V DELAWARE 13-7303059
MORGAN STANLEY CAPITAL TRUST VI DELAWARE 13-7308501
MORGAN STANLEY CAPITAL TRUST VII DELAWARE 13-7308503
(Exact name of each registrant (State or other jurisdiction (I.R.S. Employer
as specified in its charter) of incorporation or organization) Identification Number)
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1585 Broadway
New York, New York 10036
(212) 761-4000
(Address, including zip code, and telephone number, including area code,
of registrants' principal executive offices)
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Ronald T. Carman, Esq.
Assistant Secretary and Counsel
Morgan Stanley Dean Witter & Co.
1585 Broadway
New York, New York 10036
(212) 761-4000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copies To:
Joseph W. Armbrust, Esq. John M. Brandow, Esq.
Sidley Austin Brown & Wood LLP Davis Polk & Wardwell
875 Third Avenue 450 Lexington Avenue
New York, New York 10022 New York, New York 10017
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Approximate date of commencement of proposed sale to the public: As soon
as practicable after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, as amended (the "Securities Act"), other than securities offered only
in connection with dividend or interest reinvestment plans, check the following
box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
===================================================================================================================================
Proposed maximum
Title of each class of securities Amount to offering price per Proposed maximum Amount of
to be registered be registered security (1) aggregate offering price (1) registration fee
- -----------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co. Debt
Securities (2).........................
Morgan Stanley Dean Witter & Co.
Warrants (3)...........................
Morgan Stanley Dean Witter & Co.
Preferred Stock (4)....................
Morgan Stanley Dean Witter & Co.
Depositary Shares (5)..................
Morgan Stanley Dean Witter & Co.
Purchase Contracts (6).................
Morgan Stanley Dean Witter & Co.
Units (7)..............................
Morgan Stanley Capital Trust III
Capital Securities (8)................. $900,000,000 (9)(10) 100% $900,000,000 $82,800 (12)
Morgan Stanley Capital Trust IV
Capital Securities (8).................
Morgan Stanley Capital Trust V Capital
Securities (8).........................
Morgan Stanley Capital Trust VI Capital
Securities (8).........................
Morgan Stanley Capital Trust VII
Capital Securities (8).................
Guarantees of Morgan Stanley Dean
Witter & Co. with respect to Capital
Securities (11)........................
===================================================================================================================================
(1) Estimated solely for purposes of calculating the registration fee.
(2) There is being registered hereby such indeterminate principal amount of
Debt Securities as may be issued, from time to time, at indeterminate
prices.
(3) There are being registered hereby such indeterminate number of Warrants as
may be issued at indeterminate prices. Such Warrants may be issued
together with any Debt Securities or Purchase Contracts or both. Warrants
may be exercised to purchase Debt Securities registered hereby or to
purchase or sell (i) securities of an entity unaffiliated with Morgan
Stanley Dean Witter & Co., a basket of such securities, an index or
indices of such securities or any combination of the above, (ii)
currencies or (iii) commodities.
(4) There are being registered hereby such indeterminate number of shares of
Preferred Stock as may from time to time be issued at indeterminate
prices.
(5) There are being registered hereby such indeterminate number of Depositary
Shares as may be issued in the event that Morgan Stanley Dean Witter & Co.
elects to offer fractional or multiple interests in shares of the
Preferred Stock registered hereby.
(6) There are being registered hereby such indeterminate number of Purchase
Contracts as may be issued at indeterminate prices. Such Purchase
Contracts may be issued together with any Debt Securities or Warrants or
both. Purchase Contracts may require the holders thereof to purchase or
sell (i) securities of an entity unaffiliated with Morgan Stanley Dean
Witter & Co., a basket of such securities, an index or indices of such
securities or any combination of the above, (ii) currencies or (iii)
commodities.
(7) There are being registered hereby such indeterminate number of Units as
may be issued at indeterminate prices. Units may consist of one or more
Purchase Contracts, Warrants and Debt Securities or any combination of the
above.
(8) There is being registered hereby such indeterminate number of Capital
Securities of Morgan Stanley Capital Trust III, Morgan Stanley Capital
Trust IV, Morgan Stanley Capital Trust V, Morgan Stanley Capital Trust VI
and Morgan Stanley Capital Trust VII (collectively, the "Trusts") as may
from time to time be issued by the Trusts at indeterminate prices and such
indeterminate principal amount of Debt Securities as may be issued and
sold by Morgan Stanley Dean Witter & Co. to any of the Trusts in
connection with the issuances of the Capital Securities, in which event
such Debt Securities may later be distributed for no additional
consideration to the holders of the Capital Securities of such Trusts upon
a dissolution of such Trusts and the distribution of the assets thereof.
(9) This registration statement also relates to offers and sales of Debt
Securities, Warrants, Preferred Stock, Depositary Shares, Purchase
Contracts, Units and Capital Securities (collectively, "Securities") in
connection with market-making transactions by and through affiliates of
the Registrants (subject, with respect to Preferred Stock, Depositary
Shares and Capital Securities, to obtaining any necessary approval of the
New York Stock Exchange, Inc. in connection with market-making
transactions by and through Morgan Stanley & Co. Incorporated and Morgan
Stanley DW Inc.).
(10) Or, if any Debt Securities are issued at an original issue discount, such
greater amount as shall result in aggregate net proceeds not in excess of
$900,000,000 to the Registrants or, if any Securities are issued with an
offering price payable in a foreign currency, such amount as shall result
in an aggregate initial offering price equivalent to $900,000,000 at the
time of initial offering.
(11) No additional consideration will be received for the Morgan Stanley Dean
Witter & Co. Guarantees with respect to the Capital Securities.
(12) A filing fee of $85,550 was paid in connection with a Registration
Statement on Form S-3, File No. 333-46403, filed by Morgan Stanley Dean
Witter & Co., MSDW Capital Trust I, MSDW Capital Trust II, MSDW Capital
Trust III, MSDW Capital Trust IV and MSDW Capital Trust V on February 13,
1998 and declared effective on February 25, 1998, relating to the
registration of $290,000,000 of securities that remain unsold under that
Registration Statement as of the date hereof. Pursuant to Rule 457 of the
General Rules and Regulations under the Securities Act, $82,800 of this
filing fee is offset against the filing fee currently due in connection
with this Registration Statement. The Registration Statement on Form S-3,
File 333-46403, is terminated but remains in effect solely for purposes of
market-making transactions with respect to securities registered and issued
under such Registration Statement.
The Registrants hereby amend this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act or until the registration statement shall become effective
on such date as the Securities and Exchange Commission (the "Commission"),
acting pursuant to Section 8(a), may determine.
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EXPLANATORY NOTE
This registration statement contains:
o a prospectus to be used by Morgan Stanley Dean Witter & Co. in
connection with offerings of its debt securities, units, warrants,
purchase contracts and preferred stock; and
o a prospectus to be used in connection with offerings of:
o the capital securities of Morgan Stanley Capital Trust III,
Morgan Stanley Capital Trust IV, Morgan Stanley Capital Trust V,
Morgan Stanley Capital Trust VI and Morgan Stanley Capital Trust
VII (the "Capital Securities");
o the junior subordinated debentures of Morgan Stanley Dean Witter
& Co.; and
o the guarantees of Morgan Stanley Dean Witter & Co. of the
Capital Securities.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING OFFERS TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
PROSPECTUS (Subject to Completion, Issued March 1, 2002)
$900,000,000
Morgan Stanley Dean Witter & Co.
DEBT SECURITIES
UNITS
WARRANTS
PURCHASE CONTRACTS
PREFERRED STOCK
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We, Morgan Stanley Dean Witter & Co., may offer from time to time debt
securities, units, warrants, purchase contracts and preferred stock. This
prospectus describes the general terms of these securities and the general
manner in which we will offer the securities. The specific terms of any
securities we offer will be included in a supplement to this prospectus. The
prospectus supplement will also describe the specific manner in which we will
offer the securities.
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The Securities and Exchange Commission and state securities regulators
have not approved or disapproved these securities, or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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MORGAN STANLEY
, 2002
You should rely only on the information we incorporate by reference or provide
in this prospectus or the relevant prospectus supplement. This prospectus
together with the relevant prospectus supplement, our Annual Report on Form
10-K for the fiscal year ended November 30, 2001, pages 2 (beginning at the
heading "Item 1--Election of Directors") through 6 and pages 9 (beginning at
the heading "Beneficial ownership of Company common stock") through 16
(excluding the material included under the heading "Compensation Committee
report on executive compensation") and pages 20 through 21 (under the heading
"Certain transactions") from the Proxy Statement for our 2002 Annual Meeting of
Shareholders and our Current Report on Form 8-K dated December 19, 2001
(excluding any information incorporated by reference in these materials)
constitute the Listing Particulars for the purposes of the UK Listing
Authority. We have not authorized anyone else to provide you with different or
additional information. We are not making an offer of these securities in any
state where the offer is not permitted. Except as we indicate under the
headings "Consolidated Ratios of Earnings to Fixed Charges and Earnings to
Fixed Charges and Preferred Stock Dividends," "Morgan Stanley" and "Use of
Proceeds," the terms "Morgan Stanley," "we," "us" and "our" refer to Morgan
Stanley Dean Witter & Co.
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SUMMARY
We, Morgan Stanley Dean Witter & Co., may offer any of the following
securities: debt securities, units, warrants, purchase contracts and preferred
stock. The following summary describes these securities in general terms only.
You should read the summary together with the more detailed information
contained in the rest of this prospectus and the applicable prospectus
supplement.
Debt Securities............... Our debt securities may be senior or
subordinated in priority of payment. We will
provide a prospectus supplement that describes
the ranking, whether senior or subordinated,
the specific designation, the aggregate
principal amount, the purchase price, the
maturity, the redemption terms, the interest
rate or manner of calculating the interest
rate, the time of payment of interest, if any,
the terms for any conversion or exchange,
including the terms relating to the adjustment
of any conversion or exchange mechanism, the
listing, if any, on a securities exchange and
any other specific terms of the debt
securities.
The senior and subordinated debt securities
will be issued under separate indentures
between us and a U.S. banking institution as
trustee. Neither of the indentures that govern
our debt securities limits the amount of
additional indebtedness that we or any of our
subsidiaries may incur. We have summarized the
general features of the indentures under the
heading "Description of Debt Securities." We
encourage you to read the indentures, which are
exhibits to our registration statement No.
333- .
Units......................... We may sell any combination of our debt
securities, warrants and purchase contracts
together as units. In a prospectus supplement,
we will describe the particular combination of
purchase contracts, warrants and debt
securities constituting any units and any other
specific terms of the units.
Warrants...................... We may sell two types of warrants:
o warrants to purchase our debt securities, or
o universal warrants to purchase or sell (1)
securities of an entity not affiliated with
us, a basket of those securities, an index or
indices of those securities or any combination
of the above, (2) currencies or (3)
commodities.
In a prospectus supplement, we will specify the
type of warrant and inform you of the exercise
price and other specific terms of the warrants,
including whether our or your obligations, if
any, under any universal warrants may be
satisfied by delivering or purchasing the
underlying securities, currencies or
commodities, or their cash value.
3
Purchase Contracts............ We may sell purchase contracts requiring the
holders to purchase or sell (1) securities of
an entity not affiliated with us, a basket of
those securities, an index or indices of those
securities or any combination of the above, (2)
currencies or (3) commodities. In a prospectus
supplement, we will describe the specific terms
of the purchase contracts, including whether we
will satisfy our obligations, if any, or you
will satisfy your obligations, if any, under
any purchase contracts by delivering the
underlying securities, currencies or
commodities or their cash value.
Form.......................... We may issue debt securities, units, warrants
and purchase contracts in fully registered form
or in bearer form and, in either case, in
definitive form or global form.
Preferred Stock............... We may sell our preferred stock, par value
$0.01 per share, in one or more series. In a
prospectus supplement, we will describe the
specific designation, the aggregate number of
shares offered, the dividend rate or manner of
calculating the dividend rate, the dividend
periods or manner of calculating the dividend
periods, the stated value of the shares of the
series, the voting rights of the shares of the
series, whether or not and on what terms the
shares of the series will be convertible or
exchangeable, whether and on what terms we can
redeem the shares of the series, whether we
will offer depositary shares representing
shares of the series and if so, the fraction or
multiple of a share of preferred stock
represented by each depositary share, whether
we will list the preferred stock or depositary
shares on a securities exchange and any other
specific terms of the series of preferred
stock.
Terms Specified in
Prospectus Supplements........ When we decide to sell particular securities,
we will prepare a prospectus supplement
describing the securities offering and the
specific terms of the securities. You should
carefully read this prospectus and the
applicable prospectus supplement.
We will offer our debt securities, warrants,
purchase contracts, units and preferred stock
to investors on terms determined by market and
other conditions. Our securities may be sold
for U.S. dollars or foreign currency. Principal
of, and any premium or interest on, debt
securities and cash amounts payable under
warrants or purchase contracts may be payable
in U.S. dollars or foreign currency, as we
specifically designate in the related
prospectus supplement.
In any prospectus supplement we prepare, we
will provide the name of and compensation to
each dealer, underwriter or agent, if any,
involved in the sale of the securities being
offered and the managing underwriters for any
securities sold to or through underwriters. Any
underwriters, including managing underwriters,
dealers or agents in the United
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States will include Morgan Stanley & Co.
Incorporated and/or Morgan Stanley DW Inc. and
any outside the United States will include
Morgan Stanley & Co. International Limited
and/or Bank Morgan Stanley AG or other
affiliates of ours.
Structural Subordination; Our
Receipt of Cash from Our
Subsidiaries May Be
Restricted.................... The securities are unsecured senior or
subordinated obligations of ours, but our
assets consist primarily of equity in our
subsidiaries. As a result, our ability to make
payments on our debt securities and/or pay
dividends on our preferred stock depends upon
our receipt of dividends, loan payments and
other funds from our subsidiaries. In addition,
if any of our subsidiaries becomes insolvent,
the direct creditors of that subsidiary will
have a prior claim on its assets, and our
rights and the rights of our creditors,
including your rights as an owner of our debt
securities, units, warrants, purchase contracts
or preferred stock, will be subject to that
prior claim, unless we are also a direct
creditor of that subsidiary. This subordination
of creditors of a parent company to prior
claims of creditors of its subsidiaries is
commonly referred to as structural
subordination.
In addition, various statutes and regulations
restrict some of our subsidiaries from paying
dividends or making loans or advances to us.
These restrictions could prevent those
subsidiaries from paying the cash to us that we
need in order to pay you. These restrictions
include:
o the net capital requirements under the
Securities Exchange Act of 1934, and the rules
of some exchanges and other regulatory bodies,
which apply to some of our principal
subsidiaries, such as Morgan Stanley & Co.
Incorporated, Morgan Stanley & Co.
International Limited and Morgan Stanley DW
Inc., and
o banking regulations, which apply to Discover
Bank, a Delaware chartered bank, and other
bank subsidiaries of ours.
Market-making by Our
Affiliates.................... Following the initial distribution of an
offering of securities, Morgan Stanley & Co.
Incorporated, Morgan Stanley & Co.
International Limited, Morgan Stanley DW Inc.,
Bank Morgan Stanley AG and other affiliates of
ours may offer and sell those securities in the
course of their businesses as broker-dealers,
subject, in the case of preferred stock and
depositary shares, to obtaining any necessary
approval of the New York Stock Exchange, Inc.
for any of these offers and sales our United
States affiliates may make. Morgan Stanley &
Co. Incorporated, Morgan Stanley & Co.
International Limited, Morgan Stanley DW Inc.,
Bank
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Morgan Stanley AG and other affiliates of ours
may act as a principal or agent in these
transactions. This prospectus and the
applicable prospectus supplement will also be
used in connection with those transactions.
Sales in any of those transactions will be made
at varying prices related to prevailing market
prices and other circumstances at the time of
sale.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual reports, proxy statements and other information with the
SEC. You may read and copy any document we file at the SEC's public reference
room at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. Please call
the SEC at 1-800-SEC-0330 for further information on the public reference room.
In addition, the SEC maintains a website that contains reports, proxy
statements and other information that we electronically file. The address of
the SEC's website is http://www.sec.gov.
This prospectus is part of a registration statement we filed with the SEC.
This prospectus omits some information contained in the registration statement
in accordance with SEC rules and regulations. You should review the information
and exhibits in the registration statement for further information on us and
our consolidated subsidiaries and the securities we are offering. Statements in
this prospectus concerning any document we filed as an exhibit to the
registration statement or that we otherwise filed with the SEC are not intended
to be comprehensive and are qualified by reference to these filings. You should
review the complete document to evaluate these statements.
Our common stock, par value $0.01 per share, is listed on the New York
Stock Exchange, Inc. and the Pacific Exchange, Inc. under the symbol "MWD." You
may inspect reports, proxy statements and other information concerning us and
our consolidated subsidiaries at the offices of the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005, and the Pacific Exchange,
Inc., 115 Sansome Street, San Francisco, California 94104.
The SEC allows us to incorporate by reference much of the information we
file with them, which means that we can disclose important information to you
by referring you to those publicly available documents. The information that we
incorporate by reference in this prospectus is considered to be part of this
prospectus. Because we are incorporating by reference future filings with the
SEC, this prospectus is continually updated and those future filings may modify
or supersede some of the information included or incorporated by reference in
this prospectus. This means that you must look at all of the SEC filings that
we incorporate by reference to determine if any of the statements in this
prospectus or in any document previously incorporated by reference have been
modified or superseded. This prospectus incorporates by reference the documents
listed below and any future filings we make with the SEC under Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until we complete our
offering of the securities to be issued under the registration statement or, if
later, the date on which any of our affiliates cease offering and selling these
securities:
(a) Annual Report on Form 10-K for the fiscal year ended November 30,
2001; and
(b) Current Report on Form 8-K dated December 19, 2001.
You can request a copy of these documents, excluding exhibits, at no cost,
by writing or telephoning us at the following address:
Morgan Stanley Dean Witter & Co.
1585 Broadway
New York, New York 10036
Attention: Investor Relations
(212) 762-8131
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CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
AND EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth our consolidated ratios of earnings to
fixed charges and earnings to fixed charges and preferred stock dividends for
the periods indicated.
Fiscal Year
--------------------------------
2001 2002 1999 1998 1997
---- ---- ---- ---- ----
Ratio of earnings to
fixed charges........... 1.3 1.5 1.6 1.4 1.4
Ratio of earnings to
fixed charges and
preferred stock
dividends............... 1.3 1.5 1.6 1.4 1.4
For purposes of calculating the ratio of earnings to fixed charges and the
ratio of earnings to fixed charges and preferred stock dividends, earnings are
the sum of:
o pre-tax income;
o fixed charges; and
o amortization of capitalized interest;
less:
o capitalized interest.
For purposes of calculating both ratios, fixed charges are the sum of:
o interest expensed and capitalized;
o amortized premiums, discounts and capitalized expenses related to
indebtedness; and
o our estimate of the interest component of rental expenses.
Additionally, for purposes of calculating the ratio of earnings to fixed
charges and preferred stock dividends, preferred stock dividends are included
in the denominator of the ratio on a pre-tax basis. Distributions on capital
securities issued by MSDW Capital Trust I and Morgan Stanley Capital Trust II,
which are Delaware business trusts all of the common securities of which are
owned by us, are included in fixed charges as interest expense, not as
preferred stock dividends.
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MORGAN STANLEY
Morgan Stanley is a global financial services firm that maintains leading
market positions in each of its three business segments -- Securities,
Investment Management and Credit Services.
Morgan Stanley's Securities business segment includes:
o investment banking, including securities underwriting and
distribution, financial advisory services, including advice on
mergers and acquisitions, restructurings, real estate and project
finance, and financing and investing;
o sales, trading, financing and market-making activities to facilitate
client orders and on a proprietary basis, in such products as equity
securities and related products, and fixed income securities and
related products, including foreign exchange and commodities;
o principal investing, including private equity activities;
o securities services to meet individual investor needs, including
full-service brokerage services for investors seeking financial
advice, online execution capabilities for self-directed investors
desiring to invest with limited professional assistance and financial
advisory services for high net worth clients; and
o other businesses, including aircraft financing activities.
Morgan Stanley's Investment Management business segment includes global
asset management products and services for individual and institutional
investors through three principal distribution channels: Morgan Stanley's
financial advisors and investment representatives; a non-proprietary channel
consisting of third-party broker-dealers, banks, financial planners and other
intermediaries; and Morgan Stanley's institutional channel.
Morgan Stanley's Credit Services business segment includes Discover
Financial Services, which offers the Discover(R) Classic Card, the Discover
Gold Card, the Discover Platinum Card, the Morgan Stanley Card(SM) and other
proprietary general purpose credit cards as well as related consumer finance
products and services; and Discover Business Services, a proprietary network of
merchant and cash access locations in the United States.
Morgan Stanley provides its products and services to a large and
diversified group of clients and customers, including corporations,
governments, financial institutions and individuals. Morgan Stanley conducts
its business from its headquarters in New York City, its regional offices and
branches throughout the United States, and its principal offices in London,
Tokyo, Hong Kong and other world financial centers.
Morgan Stanley's principal executive offices are at 1585 Broadway, New
York, New York 10036, and its telephone number is (212) 761-4000. Under this
heading, "Consolidated Ratios of Earnings to Fixed Charges and Earnings to
Fixed Charges and Preferred Stock Dividends" and "Use of Proceeds," the term
"Morgan Stanley" includes Morgan Stanley Dean Witter & Co. and its consolidated
subsidiaries.
USE OF PROCEEDS
Unless otherwise set forth in the applicable prospectus supplement, we
intend to use the net proceeds from the sale of the securities we offer by this
prospectus for general corporate purposes, which may include, among other
things:
o additions to working capital;
o the redemption of outstanding preferred stock;
o the repurchase of outstanding common stock; and
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o the repayment of indebtedness.
We anticipate that we will raise additional funds from time to time
through equity or debt financing, including borrowings under revolving credit
agreements, to finance our businesses worldwide.
DESCRIPTION OF DEBT SECURITIES
Debt May Be Senior or Subordinated
We may issue senior or subordinated debt securities. The senior debt
securities and, in the case of debt securities in bearer form, any coupons to
these securities, will constitute part of our senior debt, will be issued under
our Senior Debt Indenture, as defined below, and will rank on a parity with all
of our other unsecured and unsubordinated debt. The subordinated debt
securities and any coupons will constitute part of our subordinated debt, will
be issued under our Subordinated Debt Indenture, as defined below, and will be
subordinate and junior in right of payment, as set forth in the Subordinated
Debt Indenture, to all of our "senior indebtedness," which is defined in our
Subordinated Debt Indenture. If this prospectus is being delivered in
connection with a series of subordinated debt securities, the accompanying
prospectus supplement or the information we incorporate in this prospectus by
reference will indicate the approximate amount of senior indebtedness
outstanding as of the end of the most recent fiscal quarter. We refer to our
Senior Debt Indenture and our Subordinated Debt Indenture individually as an
"indenture" and collectively as the "indentures."
We have summarized below the material provisions of the indentures and the
debt securities, or indicated which material provisions will be described in
the related prospectus supplement. These descriptions are only summaries, and
each investor should refer to the applicable indenture, which describes
completely the terms and definitions summarized below and contains additional
information regarding the debt securities. Where appropriate, we use
parentheses to refer you to the particular sections of the applicable
indenture. Any reference to particular sections or defined terms of the
applicable indenture in any statement under this heading qualifies the entire
statement and incorporates by reference the applicable section or definition
into that statement. The indentures are substantially identical, except for the
provisions relating to Morgan Stanley's negative pledge, which is included in
the Senior Debt Indenture only, and to subordination.
Payments
We may issue debt securities from time to time in one or more series. The
provisions of each indenture allow us to "reopen" a previous issue of a series
of debt securities and issue additional debt securities of that issue. The debt
securities may be denominated and payable in U.S. dollars or foreign
currencies. We may also issue debt securities, from time to time, with the
principal amount or interest payable on any relevant payment date to be
determined by reference to one or more currency exchange rates, securities or
baskets of securities, commodity prices or indices. Holders of these types of
debt securities will receive payments of principal or interest that depend upon
the value of the applicable currency, security or basket of securities,
commodity or index on the relevant payment dates.
Debt securities may bear interest at a fixed rate, which may be zero, or a
floating rate, or at a rate that varies during the lifetime of the debt
security. Debt securities bearing no interest or interest at a rate that at the
time of issuance is below the prevailing market rate may be sold at a discount
below their stated principal amount.
Terms Specified in Prospectus Supplement
The prospectus supplement will contain, where applicable, the following
terms of and other information relating to any offered debt securities:
o classification as senior or subordinated debt securities and the
specific designation;
o aggregate principal amount, purchase price and denomination;
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o currency in which the debt securities are denominated and/or in which
principal, and premium, if any, and/or interest, if any, is payable;
o date of maturity;
o the interest rate or rates or the method by which the calculation
agent will determine the interest rate or rates, if any;
o the interest payment dates, if any;
o the place or places for payment of the principal of and any premium
and/or interest on the debt securities;
o any repayment, redemption, prepayment or sinking fund provisions,
including any redemption notice provisions;
o whether we will issue the debt securities in registered form or
bearer form or both and, if we are offering debt securities in bearer
form, any restrictions applicable to the exchange of one form for
another and to the offer, sale and delivery of those debt securities
in bearer form;
o whether we will issue the debt securities in definitive form and
under what terms and conditions;
o the terms on which holders of the debt securities may convert or
exchange these securities into or for other securities of ours
offered hereby or stock or other securities of an entity unaffiliated
with us or for the cash value of our stock or any of the above
securities, any specific terms relating to the adjustment of the
conversion or exchange feature and the period during which the
holders may make the conversion or exchange;
o information as to the methods for determining the amount of principal
or interest payable on any date and/or the currencies, securities or
baskets of securities, commodities or indices to which the amount
payable on that date is linked;
o any agents for the debt securities, including trustees, depositories,
authenticating or paying agents, transfer agents or registrars;
o any applicable United States federal income tax consequences,
including, but not limited to:
o whether and under what circumstances we will pay additional
amounts on debt securities held by a person who is not a U.S.
person for any tax, assessment or governmental charge withheld
or deducted and, if so, whether we will have the option to
redeem those debt securities rather than pay the additional
amounts;
o tax considerations applicable to any discounted debt securities
or to debt securities issued at par that are treated as having
been issued at a discount for United States federal income tax
purposes; and
o tax considerations applicable to any debt securities denominated
and payable in foreign currencies; and
o any other specific terms of the debt securities, including any
additional events of default or covenants, and any terms required by
or advisable under applicable laws or regulations.
Registration and Transfer of Debt Securities
Holders may present debt securities for exchange, and holders of
registered debt securities may present these securities for transfer, in the
manner, at the places and subject to the restrictions stated in the debt
securities and described in the applicable prospectus supplement. We will
provide these services without charge except for any tax
11
or other governmental charge payable in connection with these services and
subject to any limitations provided in the applicable indenture.
Holders may transfer debt securities in bearer form and the related
coupons, if any, by delivery to the transferee. If any of the securities are
held in global form, the procedures for transfer of interests in those
securities will depend upon the procedures of the depositary for those global
securities. See "Forms of Securities."
Indentures
Debt securities that will be senior debt will be issued under an Amended
and Restated Senior Indenture dated as of May 1, 1999 between Morgan Stanley
and JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), as
trustee. We call that indenture, as it may be supplemented from time to time,
the Senior Debt Indenture. Debt securities that will be subordinated debt will
be issued under an Amended and Restated Subordinated Indenture dated as of May
1, 1999 between Morgan Stanley and Bank One Trust Company, N.A., as successor
to The First National Bank of Chicago, as trustee. We call that indenture, as
it may be supplemented from time to time, the Subordinated Debt Indenture. We
refer to JPMorgan Chase Bank and Bank One Trust Company, N.A., individually as
a "trustee" and collectively as the "trustees."
Subordination Provisions
Holders of subordinated debt securities should recognize that contractual
provisions in the Subordinated Debt Indenture may prohibit us from making
payments on these securities. Subordinated debt securities are subordinate and
junior in right of payment, to the extent and in the manner stated in the
Subordinated Debt Indenture, to all of our senior indebtedness. The
Subordinated Debt Indenture defines senior indebtedness as obligations of, or
guaranteed or assumed by, Morgan Stanley for borrowed money or evidenced by
bonds, debentures, notes or other similar instruments, and amendments,
renewals, extensions, modifications and refundings of any of that indebtedness
or of those obligations. Nonrecourse obligations, the subordinated debt
securities and any other obligations specifically designated as being
subordinate in right of payment to senior indebtedness are not senior
indebtedness as defined under the Subordinated Debt Indenture. (Subordinated
Debt Indenture, Section 1.01).
The Subordinated Debt Indenture provides that, unless all principal of and
any premium or interest on the senior indebtedness has been paid in full, or
provision has been made to make these payments in full, no payment of principal
of, or any premium or interest on, any subordinated debt securities may be made
in the event:
o of any insolvency or bankruptcy proceedings, or any receivership,
liquidation, reorganization or other similar proceedings involving us
or a substantial part of our property;
o that (a) a default has occurred in the payment of principal, any
premium, interest or other monetary amounts due and payable on any
senior indebtedness or (b) there has occurred any other event of
default concerning senior indebtedness that permits the holder or
holders of the senior indebtedness to accelerate the maturity of the
senior indebtedness, with notice or passage of time, or both, and
that event of default has continued beyond the applicable grace
period, if any, and that default or event of default has not been
cured or waived or has not ceased to exist; or
o that the principal of and accrued interest on any subordinated debt
securities have been declared due and payable upon an event of
default as defined under the Subordinated Debt Indenture and that
declaration has not been rescinded and annulled as provided under the
Subordinated Debt Indenture. (Subordinated Debt Indenture, Section
13.01)
Covenants Restricting Pledges, Mergers and Other Significant Corporate Actions
Negative Pledge. Because we are a holding company, our assets consist
primarily of the securities of our subsidiaries. The negative pledge provisions
of the Senior Debt Indenture limit our ability to pledge some of these
securities. The Senior Debt Indenture provides that we will not, and will not
permit any subsidiary to, create, assume,
12
incur or guarantee any indebtedness for borrowed money that is secured by a
pledge, lien or other encumbrance except for liens specifically permitted by
the Senior Debt Indenture on:
(1) the voting securities of Morgan Stanley & Co. Incorporated,
Morgan Stanley & Co. International Limited, Morgan Stanley DW Inc.,
Discover Bank or any subsidiary succeeding to any substantial part of the
business now conducted by any of those corporations, which we refer to
collectively as the "principal subsidiaries," or
(2) the voting securities of a subsidiary that owns, directly or
indirectly, the voting securities of any of the principal subsidiaries,
other than directors' qualifying shares,
without making effective provisions so that the debt securities issued under
the Senior Debt Indenture will be secured equally and ratably with indebtedness
so secured.
For these purposes, "subsidiary" means any corporation, partnership or
other entity of which at the time of determination we own or control directly
or indirectly more than 50% of the shares of the voting stock or equivalent
interest, and "voting securities" means stock of any class or classes having
general voting power under ordinary circumstances to elect a majority of the
board of directors, managers or trustees of the relevant subsidiary, other than
stock that carries only the conditional right to vote upon the happening of an
event, whether or not that event has happened. (Senior Debt Indenture, Section
3.06)
The Subordinated Debt Indenture does not include negative pledge
provisions.
Merger, Consolidation, Sale, Lease or Conveyance. Each indenture provides
that we will not merge or consolidate with any other person and will not sell,
lease or convey all or substantially all of our assets to any other person,
unless:
o we will be the continuing corporation; or
o the successor corporation or person that acquires all or
substantially all of our assets:
o will be a corporation organized under the laws of the United
States, a state of the United States or the District of
Columbia; and
o will expressly assume all of our obligations under the indenture
and the debt securities issued under the indenture; and
o immediately after the merger, consolidation, sale, lease or
conveyance, we, that person or that successor corporation will not be
in default in the performance of the covenants and conditions of the
indenture applicable to us. (Indentures, Section 9.01)
Absence of Protections against All Potential Actions of Morgan Stanley.
There are no covenants or other provisions in the indentures that would afford
holders of debt securities additional protection in the event of a
recapitalization transaction, a change of control of Morgan Stanley or a highly
leveraged transaction. The merger covenant described above would only apply if
the recapitalization transaction, change of control or highly leveraged
transaction were structured to include a merger or consolidation of Morgan
Stanley or a sale, lease or conveyance of all or substantially all of our
assets. However, we may provide specific protections, such as a put right or
increased interest, for particular debt securities, which we would describe in
the applicable prospectus supplement.
Events of Default
The indentures provide holders of debt securities with remedies if we fail
to perform specific obligations, such as making payments on the debt securities
or other indebtedness, or if we become bankrupt. Holders should review these
provisions and understand which of our actions trigger an event of default and
which actions do not. Each indenture
13
permits the issuance of debt securities in one or more series, and, in many
cases, whether an event of default has occurred is determined on a series by
series basis.
An event of default is defined under each indenture, with respect to any
series of debt securities issued under that indenture, as being:
o default in payment of any principal of the debt securities of that
series, either at maturity or upon any redemption, by declaration or
otherwise;
o default for 30 days in payment of any interest on any debt securities
of that series;
o default for 60 days after written notice in the observance or
performance of any other covenant or agreement in the debt securities
of that series or the related indenture, other than a covenant or
warranty with respect to the debt securities of that series the
breach or nonperformance of which is otherwise included in the
definition of "event of default";
o events of bankruptcy, insolvency or reorganization;
o failure to make any payment at maturity, including any applicable
grace period, on other indebtedness in an amount in excess of
$10,000,000 and continuance of that failure for a period of 30 days
after written notice of the failure to us by the applicable trustee,
or to us and the applicable trustee by the holders of not less than
25% in principal amount of the outstanding debt securities, treated
as one class, issued under the indenture;
o default with respect to any other indebtedness, which default results
in the acceleration of indebtedness in an amount in excess of
$10,000,000 without the indebtedness having been discharged or the
acceleration having been cured, waived, rescinded or annulled for a
period of 30 days after written notice of the acceleration to us by
the applicable trustee, or to us and the applicable trustee by the
holders of not less than 25% in principal amount of the outstanding
debt securities, treated as one class, issued under the indenture; or
o any other event of default provided in the supplemental indenture
under which that series of debt securities is issued.
For purposes of the fifth and sixth clauses above, indebtedness means
obligations of, or guaranteed or assumed by, Morgan Stanley, other than the
debt securities of that series, for borrowed money or evidenced by bonds,
debentures, notes or other similar instruments, but does not include
non-recourse obligations. In addition, if a failure, default or acceleration
referred to in the fifth and sixth clauses above ceases or is cured, waived,
rescinded or annulled, then the event of default under the applicable indenture
caused by that failure, default or acceleration will also be considered cured.
(Indentures, Section 5.01)
Acceleration of Debt Securities upon an Event of Default. Each indenture
provides that:
o if an event of default due to the default in payment of principal of,
or any premium or interest on, any series of debt securities issued
under that indenture, or due to the default in the performance or
breach of any other covenant or warranty of Morgan Stanley applicable
to the debt securities of that series but not applicable to all
outstanding debt securities issued under that indenture occurs and is
continuing, either the trustee or the holders of not less than 25% in
aggregate principal amount of the outstanding debt securities of each
affected series, voting as one class, by notice in writing to Morgan
Stanley, may declare the principal of all debt securities of each
affected series and interest accrued thereon to be due and payable
immediately; and
o if an event of default due to a default in the performance of any
other covenants or agreements in that indenture applicable to all
outstanding debt securities issued under that indenture or due to
specified events of bankruptcy, insolvency or reorganization of
Morgan Stanley, occurs and is continuing, either the trustee or the
holders of not less than 25% in aggregate principal amount of all
outstanding debt securities issued under that indenture, voting as
one class, by notice in writing to Morgan Stanley may declare the
principal of
14
all those debt securities and interest accrued thereon to be due and
payable immediately. (Indentures, Section 5.01)
Annulment of Acceleration and Waiver of Defaults. In some circumstances,
if any and all events of default under the indenture, other than the
non-payment of the principal of the securities that has become due as a result
of an acceleration, have been cured, waived or otherwise remedied, then the
holders of a majority in aggregate principal amount of all series of
outstanding debt securities affected, voting as one class, may annul past
declarations of acceleration of or waive past defaults of the debt securities.
(Indentures, Sections 5.01 and 5.10)
Indemnification of Trustee for Actions Taken on Your Behalf. Each
indenture contains a provision entitling the trustee, subject to the duty of
the trustee during a default to act with the required standard of care, to be
indemnified by the holders of debt securities issued under that indenture
before proceeding to exercise any right or power at the request of holders.
(Indentures, Section 6.02) Subject to these provisions and some other
limitations, the holders of a majority in aggregate principal amount of each
series of outstanding debt securities of each affected series, voting as one
class, may direct the time, method and place of conducting any proceeding for
any remedy available to the trustee, or exercising any trust or power conferred
on the trustee. (Indentures, Section 5.09)
Limitation on Actions by You as an Individual Holder. Each indenture
provides that no individual holder of debt securities may institute any action
against us under that indenture, except actions for payment of overdue
principal and interest, unless the following actions have occurred:
o the holder must have previously given written notice to the trustee
of the continuing default;
o the holders of not less than 25% in aggregate principal amount of the
outstanding debt securities of each affected series, treated as one
class, must have (1) requested the trustee to institute that action
and (2) offered the trustee reasonable indemnity;
o the trustee must have failed to institute that action within 60 days
after receipt of the request referred to above; and
o the holders of a majority in principal amount of the outstanding debt
securities of each affected series, voting as one class, must not
have given directions to the trustee inconsistent with those of the
holders referred to above. (Indentures, Sections 5.06 and 5.09)
Annual Certification. Each indenture contains a covenant that we will file
annually with the trustee a certificate of no default or a certificate
specifying any default that exists. (Indentures, Section 3.05)
Discharge, Defeasance and Covenant Defeasance
We have the ability to eliminate most or all of our obligations on any
series of debt securities prior to maturity if we comply with the following
provisions. (Indentures, Section 10.01)
Discharge of Indenture. We may discharge all of our obligations, other
than as to transfers and exchanges, under the relevant indenture after we have:
o paid or caused to be paid the principal of and interest on all of the
outstanding debt securities in accordance with their terms;
o delivered to the applicable trustee for cancellation all of the
outstanding debt securities; or
o irrevocably deposited with the applicable trustee cash or, in the
case of a series of debt securities payable only in U.S. dollars,
U.S. government obligations in trust for the benefit of the holders
of any series of debt securities issued under the Indenture that have
either become due and payable, or are by their terms due and payable,
or are scheduled for redemption, within one year, in an amount
certified to be sufficient to pay on
15
each date that they become due and payable, the principal of and
interest on, and any mandatory sinking fund payments for, those debt
securities, except that the deposit of cash or U.S. government
obligations for the benefit of holders of a series of debt securities
that are due and payable, or are scheduled for redemption, within one
year will discharge obligations under the relevant indenture relating
only to that series of debt securities.
Defeasance of a Series of Securities at Any Time. We may also discharge
all of our obligations, other than as to transfers and exchanges, under any
series of debt securities at any time, which we refer to as "defeasance."
We may be released with respect to any outstanding series of debt
securities from the obligations imposed by Sections 3.06 (in the case of the
Senior Debt Indenture) and 9.01, which sections contain the covenants described
above limiting liens and consolidations, mergers, asset sales and leases, and
elect not to comply with those sections without creating an event of default.
Discharge under those procedures is called "covenant defeasance."
Defeasance or covenant defeasance may be effected only if, among other
things:
o We irrevocably deposit with the relevant trustee cash or, in the case
of debt securities payable only in U.S. dollars, U.S. government
obligations, as trust funds in an amount certified to be sufficient
to pay on each date that they become due and payable, the principal
of and interest on, and any mandatory sinking fund payments for, all
outstanding debt securities of the series being defeased.
o We deliver to the relevant trustee an opinion of counsel to the
effect that:
o the holders of the series of debt securities being defeased will
not recognize income, gain or loss for United States federal
income tax purposes as a result of the defeasance or covenant
defeasance; and
o the defeasance or covenant defeasance will not otherwise alter
those holders' United States federal income tax treatment of
principal and interest payments on the series of debt securities
being defeased.
In the case of a defeasance, this opinion must be based on a ruling
of the Internal Revenue Service or a change in United States federal
income tax law occurring after the date of this prospectus, since
that result would not occur under current tax law.
o In the case of the Subordinated Debt Indenture:
o no event or condition will exist that, under the provisions
described under "--Subordination Provisions" above, would
prevent us from making payments of principal or interest on the
subordinated debt securities at the date of the irrevocable
deposit referred to above or at any time during the period
ending on the 91st day after that deposit date; and
o we deliver to the trustee for the Subordinated Debt Indenture an
opinion of counsel to the effect that (i) the trust funds will
not be subject to any rights of holders of senior indebtedness
and (ii) after the 91st day following the deposit, the trust
funds will not be subject to any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors'
rights generally, except that if a court were to rule under any
of those laws in any case or proceeding that the trust funds
remained our property, then the relevant trustee and the holders
of the subordinated debt securities would be entitled to some
enumerated rights as secured creditors in the trust funds.
(Subordinated Debt Indenture, Section 10.01)
Modification of the Indentures
Modification Without Consent of Holders. We and the relevant trustee may
enter into supplemental indentures without the consent of the holders of debt
securities issued under a particular indenture to:
o secure any debt securities;
16
o evidence the assumption by a successor corporation of our obligations;
o add covenants for the protection of the holders of debt securities;
o cure any ambiguity or correct any inconsistency;
o establish the forms or terms of debt securities of any series; or
o evidence the acceptance of appointment by a successor trustee.
(Indentures, Section 8.01)
Modification with Consent of Holders. We and the applicable trustee, with
the consent of the holders of not less than a majority in aggregate principal
amount of each affected series of outstanding debt securities, voting as one
class, may add any provisions to, or change in any manner or eliminate any of
the provisions of, the applicable indenture or modify in any manner the rights
of the holders of those debt securities. However, we and the trustee may not
make any of the following changes to any outstanding debt security without the
consent of each holder that would be affected by such change:
o extend the final maturity of the principal;
o reduce the principal amount;
o reduce the rate or extend the time of payment of interest;
o reduce any amount payable on redemption;
o change the currency in which the principal, including any amount of
original issue discount, premium, or interest thereon is payable;
o modify or amend the provisions for conversion of any currency into
another currency;
o reduce the amount of any original issue discount security payable
upon acceleration or provable in bankruptcy;
o alter the terms on which holders of the debt securities may convert
or exchange debt securities for stock or other securities of Morgan
Stanley or of other entities or for other property or the cash value
of the property, other than in accordance with the antidilution
provisions or other similar adjustment provisions included in the
terms of the debt securities;
o alter certain provisions of the relevant indenture relating to debt
securities not denominated in U.S. dollars;
o impair the right of any holder to institute suit for the enforcement
of any payment on any debt security when due; or
o reduce the percentage of debt securities the consent of whose holders
is required for modification of the relevant indenture. (Indentures,
Section 8.02)
Modification of Subordination Provisions. We may not amend the
Subordinated Debt Indenture to alter the subordination of any outstanding
subordinated debt securities without the written consent of each potentially
adversely affected holder of senior indebtedness then outstanding.
(Subordinated Debt Indenture, Section 8.06)
Concerning Our Relationship with the Trustees
We and our subsidiaries maintain ordinary banking relationships and credit
facilities with JPMorgan Chase Bank and affiliates of Bank One Trust Company,
N.A.
17
Governing Law
The debt securities and the indentures will be governed by, and construed
in accordance with, the laws of the State of New York.
DESCRIPTION OF UNITS
Units will consist of one or more debt securities, universal warrants and
purchase contracts or any combination of them. The applicable prospectus
supplement will also describe:
o the designation and the terms of the units and of any combination of
debt securities, universal warrants and purchase contracts
constituting the units, including whether and under what
circumstances the debt securities, universal warrants or purchase
contracts may be traded separately;
o any additional terms of the governing Unit Agreement;
o any additional provisions for the issuance, payment, settlement,
transfer or exchange of the units or of the debt securities,
universal warrants or purchase contracts constituting the units; and
o any applicable United States federal income tax consequences.
The terms and conditions described under "Description of Debt Securities,"
"Description of Warrants" and "Description of Purchase Contracts" and those
described below under "--Significant Provisions of the Unit Agreement" and
"--Significant Provisions of the Unit Agreement Without Holders' Obligations"
will apply to each unit and to any debt security, universal warrant or purchase
contract included in each unit, respectively, unless otherwise specified in the
applicable prospectus supplement.
We will issue the units under one or more Unit Agreements, each referred
to as a Unit Agreement, to be entered into between us and a bank or trust
company, as unit agent. We may issue units in one or more series, which will be
described in the applicable prospectus supplement. Units that include purchase
contracts that are all pre-paid purchase contracts, as defined below under
"Description of Purchase Contracts," will be governed by one or more Unit
Agreements designed for units where the holders do not have any further
obligations under the purchase contracts, which we refer to as Unit Agreements
Without Holders' Obligations. We have filed the form of Unit Agreement and Unit
Agreement Without Holders' Obligations as exhibits to the registration
statement. Although we have described below the material provisions of the Unit
Agreement, the Unit Agreement Without Holders' Obligations and the units, these
descriptions are not complete, and you should review the detailed provisions of
the Unit Agreement and Unit Agreement Without Holders' Obligations for a full
description, including the definition of some of the terms used in this
prospectus and for other information regarding the units.
Significant Provisions of the Unit Agreement
Obligations of Unit Holder. Under the terms of the Unit Agreement, each
owner of a unit:
o consents to and agrees to be bound by the terms of the Unit
Agreement;
o appoints the unit agent as its authorized agent to execute, deliver
and perform any purchase contract included in the unit in which that
owner has an interest, except in the case of pre-paid purchase
contracts which require no further performance by the owner; and
o irrevocably agrees to be a party to and be bound by the terms of any
purchase contract, other than a pre-paid purchase contract, included
in the unit in which that owner has an interest.
18
Assumption of Obligations by Transferee. Upon the registration of transfer
of a unit, the transferee will assume the obligations, if any, of the
transferor under any purchase contract included in the unit and under any other
security constituting that unit, and the transferor will be released from those
obligations. Under the Unit Agreement, we consent to the transfer of these
obligations to the transferee, to the assumption of these obligations by the
transferee and to the release of the transferor, if the transfer is made in
accordance with the provisions of the Unit Agreement.
Remedies. Upon the acceleration of the debt securities constituting any
units, our obligations and those of the owners under any purchase contracts
constituting a part of the units may also be accelerated upon the request of
the owners of not less than 25% of the affected purchase contracts, on behalf
of all the owners.
Limitation on Actions by You as an Individual Holder. No owner of any unit
will have any right under the Unit Agreement to institute any action or
proceeding at law or in equity or in bankruptcy or otherwise regarding the Unit
Agreement, or for the appointment of a trustee, receiver, liquidator, custodian
or other similar official, unless the owner will have given written notice to
the unit agent and to us of the occurrence and continuance of a default
thereunder and:
o in the case of an event of default under the debt securities or the
relevant indenture, unless the procedures, including notice to us and
the trustee, described in the indenture have been complied with; and
o in the case of a failure by Morgan Stanley to observe or perform any
of its obligations under the Unit Agreement relating to any purchase
contracts, other than pre-paid purchase contracts, included in the
unit, unless:
o owners of not less than 25% of the affected purchase contracts
have (a) requested the unit agent to institute that action or
proceeding in its own name as unit agent under the Unit
Agreement and (b) offered the unit agent reasonable indemnity;
o the unit agent has failed to institute that action or proceeding
within 60 days of that request by the owners referred to above;
and
o the owners of a majority of the outstanding affected units have
not given directions to the unit agent inconsistent with those
of the owners referred to above.
If these conditions have been satisfied, any owner of an affected unit may
then, but only then, institute an action or proceeding. Notwithstanding the
above, the owner of any unit or purchase contract will have the unconditional
right to purchase or sell, as the case may be, purchase contract property under
the purchase contract and to institute suit for the enforcement of that right.
Purchase contract property is defined under "Description of Purchase Contracts"
below.
Negative Pledge. Because we are a holding company, our assets consist
primarily of the securities of our subsidiaries. The negative pledge provisions
of the Unit Agreement limit our ability to pledge some of these securities. The
Unit Agreement provides that we will not, and will not permit any subsidiary
to, create, assume, incur or guarantee any indebtedness for borrowed money that
is secured by a pledge, lien or other encumbrance except for liens specifically
permitted by the Unit Agreement on:
(1) the voting securities of Morgan Stanley & Co. Incorporated,
Morgan Stanley & Co. International Limited, Morgan Stanley DW Inc.,
Discover Bank or any subsidiary succeeding to any substantial part of the
business now conducted by any of those corporations, which we refer to
collectively as the "principal subsidiaries," or
(2) the voting securities of a subsidiary that owns, directly or
indirectly, the voting securities of any of the principal subsidiaries,
other than directors' qualifying shares,
without making effective provisions so that the units and the securities
constituting the units under the Unit Agreement will be secured equally and
ratably with indebtedness so secured.
19
For these purposes, "subsidiary" means any corporation, partnership or other
entity of which at the time of determination we own or control directly or
indirectly more than 50% of the shares of the voting stock or equivalent
interest, and "voting securities" means stock of any class or classes having
general voting power under ordinary circumstances to elect a majority of the
board of directors, managers or trustees of the relevant subsidiary, other than
stock that carries only the conditional right to vote upon the happening of an
event, whether or not that event has happened.
Absence of Protections Against All Potential Actions of Morgan Stanley.
There are no covenants or other provisions in the Unit Agreement providing for
a put right or increased interest or otherwise that would afford holders of
units additional protection in the event of a recapitalization transaction, a
change of control of Morgan Stanley or a highly leveraged transaction.
Modification Without Consent of Holders. We and the unit agent may amend
the Unit Agreement and the terms of the purchase contracts and the purchase
contract certificates without the consent of the holders to:
o cure any ambiguity;
o correct or supplement any defective or inconsistent provision; or
o amend the terms in any other manner which we may deem necessary or
desirable and which will not adversely affect the interests of the
affected holders in any material respect.
Modification with Consent of Holders. We and the unit agent, with the
consent of the holders of not less than a majority of all series of outstanding
units affected, voting as one class, may modify the rights of the holders of
the units of each series so affected or the terms of any purchase contracts
included in any of those series of units and the terms of the Unit Agreement
relating to the purchase contracts of each series so affected. However, we and
the unit agent may not make any of the following modifications without the
consent of the holder of each outstanding unit affected by the modification:
o impair the right to institute suit for the enforcement of any
purchase contract;
o materially adversely affect the holders' rights under any purchase
contract;
o reduce the percentage of purchase contracts constituting part of
outstanding units the consent of whose owners is required for the
modification of the provisions of the Unit Agreement relating to
those purchase contracts or for the waiver of any defaults under the
Unit Agreement relating to those purchase contracts;
o materially adversely affect the holders' units or the terms of the
Unit Agreement (other than terms related to the first three clauses
above); or
o reduce the percentage of outstanding units the consent of whose
owners is required for the modification of the provisions of the Unit
Agreement (other than terms related to the first three clauses
above).
Modifications of any debt securities or pre-paid purchase contracts
included in units may only be made in accordance with the applicable indenture,
as described under "Description of Debt Securities--Modification of the
Indentures." Modifications of any universal warrants included in units may only
be made in accordance with the terms of the universal warrant agreement as
described under "Description of Warrants--Significant Provisions of the Warrant
Agreement."
Merger, Consolidation, Sale, Lease or Conveyance. The Unit Agreement
provides that we will not merge or consolidate with any other person and will
not sell, lease or convey all or substantially all of our assets to any person
unless:
o we will be the continuing corporation; or
20
o the successor corporation or person that acquires all or
substantially all of our assets:
o will be a corporation organized under the laws of the United
States, a state of the United States or the District of
Columbia; and
o will expressly assume all of our obligations under the Unit
Agreement; and
o immediately after the merger, consolidation, sale, lease or
conveyance, we, that person or that successor corporation will not be
in default in the performance of the covenants and conditions of the
Unit Agreement applicable to us.
Replacement of Unit Certificates or Purchase Contract Certificates. We
will replace any mutilated certificate evidencing a definitive unit or purchase
contract at the expense of the holder upon surrender of that certificate to the
unit agent. We will replace certificates that have been destroyed, lost or
stolen at the expense of the holder upon delivery to us and the unit agent of
evidence satisfactory to us and the unit agent of the destruction, loss or
theft of the certificates. In the case of a destroyed, lost or stolen
certificate, an indemnity satisfactory to the unit agent and to us may be
required at the expense of the holder of the units or purchase contracts
evidenced by that certificate before a replacement will be issued.
The Unit Agreement provides that, notwithstanding the foregoing, no
replacement certificate need be delivered:
o during the period beginning 15 days before the day of mailing of a
notice of redemption or of any other exercise of any right held by
Morgan Stanley with respect to the unit or any security constituting
the unit evidenced by the mutilated, destroyed, lost or stolen
certificate and ending on the day of the giving of that notice;
o if the mutilated, destroyed, lost or stolen certificate evidences any
security selected or called for redemption or other exercise of a
right held by Morgan Stanley; or
o at any time on or after the date of settlement or redemption for any
purchase contract included in the unit, or at any time on or after
the last exercise date for any universal warrant included in the
unit, evidenced by the mutilated, destroyed, lost or stolen
certificate, except with respect to any units that remain or will
remain outstanding following the date of settlement or redemption or
the last exercise date.
Unit Agreement Not Qualified Under Trust Indenture Act. The Unit Agreement
will not be qualified as an indenture under, and the unit agent will not be
required to qualify as a trustee under, the Trust Indenture Act. Accordingly,
the holders of units and purchase contracts, other than pre-paid purchase
contracts, will not have the benefits of the protections of the Trust Indenture
Act. However, any debt securities or pre-paid purchase contracts issued as part
of a unit will be issued under an indenture qualified under the Trust Indenture
Act, and the trustee under that indenture will be qualified as a trustee under
the Trust Indenture Act.
Title. We, the unit agent, the trustee, the warrant agent and any of their
agents will treat the registered owner of any unit as its owner,
notwithstanding any notice to the contrary, for all purposes.
New York Law to Govern. The Unit Agreement, the units and the purchase
contracts constituting part of the units will be governed by, and construed in
accordance with, the laws of the State of New York.
Significant Provisions of the Unit Agreement Without Holders' Obligations
Remedies. The unit agent will act solely as our agent in connection with
the units governed by the Unit Agreement Without Holders' Obligations and will
not assume any obligation or relationship of agency or trust for or with any
holders of units or interests in those units. Any holder of units or interests
in those units may, without the consent of the unit agent or any other holder
or beneficial owner of units, enforce by appropriate legal action, on its own
behalf, its rights under the Unit Agreement Without Holders' Obligations.
However, the holders of units or interests in those
21
units may only enforce their rights under the purchase contracts and any debt
securities or under any universal warrants issued as parts of those units in
accordance with the terms of the applicable indenture and the warrant
agreement.
Modification. We and the unit agent may amend the Unit Agreement Without
Holders' Obligations without the consent of the holders to:
o cure any ambiguity;
o cure, correct or supplement any defective or inconsistent provision
in the agreement; or
o amend the terms in any other manner which we may deem necessary or
desirable and which will not adversely affect the interest of the
affected holders of units in any material respect.
We and the unit agent, with the consent of the holders of not less than a
majority of units at the time outstanding, may modify or amend the rights of
the affected holders of the affected units and the terms of the Unit Agreement
Without Holders' Obligations. However, we and the unit agent may not, without
the consent of each affected holder of units, make any modifications or
amendments that would:
o materially and adversely affect the exercise rights of the affected
holders, or
o reduce the percentage of outstanding units the consent of whose
owners is required to consent to a modification or amendment of the
Unit Agreement Without Holders' Obligations.
Pre-paid purchase contracts and any debt securities issued as part of
units governed by the Unit Agreement Without Holders' Obligations may be
modified only in accordance with the applicable indenture, as described above
under "Description of Debt Securities--Modification of the Indentures." Any
universal warrants issued as part of units may be modified only in accordance
with the terms of the warrant agreement as described in "Description of
Warrants--Significant Provisions of the Warrant Agreement."
Merger, Consolidation, Sale, Lease or Conveyance. The Unit Agreement
Without Holders' Obligations provides that we will not merge or consolidate
with any other person and will not sell, lease or convey all or substantially
all of our assets to any person unless:
o we will be the continuing corporation; or
o the successor corporation or person that acquires all or
substantially all of our assets:
o will be a corporation organized under the laws of the United
States, a state of the United States or the District of
Columbia; and
o will expressly assume all of our obligations under the Unit
Agreement Without Holders' Obligations; and
o immediately after the merger, consolidation, sale, lease or
conveyance, we, that person or that successor corporation will not be
in default in the performance of the covenants and conditions of the
Unit Agreement Without Holders' Obligations applicable to us.
Replacement of Unit Certificates. We will replace any mutilated
certificate evidencing a definitive unit at the expense of the holder upon
surrender of that certificate to the unit agent. We will replace certificates
that have been destroyed, lost or stolen at the expense of the holder upon
delivery to us and the unit agent of evidence satisfactory to us and the unit
agent of the destruction, loss or theft of the certificates. In the case of a
destroyed, lost or stolen certificate, an indemnity satisfactory to the unit
agent and to us may be required at the expense of the holder of the units or
prepaid purchase contracts evidenced by that certificate before a replacement
will be issued.
22
Title. We, the unit agent, the trustee, the warrant agent and any of their
agents will treat the registered owner of any unit as its owner,
notwithstanding any notice to the contrary, for all purposes.
New York Law to Govern. The Unit Agreement Without Holders' Obligations,
the units and the pre-paid purchase contracts constituting part of the units
will be governed by, and construed in accordance with, the laws of the State of
New York.
DESCRIPTION OF WARRANTS
Offered Warrants
We may issue warrants that are debt warrants or universal warrants. We may
offer warrants separately or together with one or more additional warrants,
purchase contracts or debt securities or any combination of those securities in
the form of units, as described in the applicable prospectus supplement. If we
issue warrants as part of a unit, the accompanying prospectus supplement will
specify whether those warrants may be separated from the other securities in
the unit prior to the warrants' expiration date. Universal warrants issued in
the United States may not be so separated prior to the 91st day after the
issuance of the unit, unless otherwise specified in the applicable prospectus
supplement.
Debt Warrants. We may issue, together with debt securities or separately,
warrants for the purchase of debt securities on terms to be determined at the
time of sale. We refer to this type of warrant as a debt warrant.
Universal Warrants. We may also issue warrants to purchase or sell, on
terms to be determined at the time of sale:
o securities of an entity not affiliated with us, a basket of those
securities, an index or indices of those securities or any
combination of the above;
o currencies; or
o commodities.
We refer to the property in the above clauses as "warrant property." We
refer to this type of warrant as a "universal warrant." We may satisfy our
obligations, if any, with respect to any universal warrants by delivering the
warrant property or, in the case of warrants to purchase or sell securities or
commodities, the cash value of the securities or commodities, as described in
the applicable prospectus supplement.
Further Information in Prospectus Supplement
General Terms of Warrants. The applicable prospectus supplement will
contain, where applicable, the following terms of, and other information
relating to, the warrants:
o the specific designation and aggregate number of, and the price at
which we will issue, the warrants;
o the currency with which the warrants may be purchased;
o the date on which the right to exercise the warrants will begin and
the date on which that right will expire or, if you may not
continuously exercise the warrants throughout that period, the
specific date or dates on which you may exercise the warrants;
o whether the warrants will be issued in fully registered form or
bearer form, in definitive or global form or in any combination of
these forms, although, in any case, the form of a warrant included in
a unit will correspond to the form of the unit and of any debt
security or purchase contract included in that unit;
o any applicable United States federal income tax consequences;
23
o the identity of the warrant agent for the warrants and of any other
depositaries, execution or paying agents, transfer agents,
registrars, determination, or other agents;
o the proposed listing, if any, of the warrants or any securities
purchasable upon exercise of the warrants on any securities exchange;
o whether the warrants are to be sold separately or with other
securities as part of units; and
o any other terms of the warrants.
Additional Terms of Debt Warrants. The prospectus supplement will contain,
where applicable, the following terms of and other information relating to any
debt warrants:
o the designation, aggregate principal amount, currency and terms of
the debt securities that may be purchased upon exercise of the debt
warrants;
o if applicable, the designation and terms of the debt securities with
which the debt warrants are issued and the number of the debt
warrants issued with each of the debt securities;
o if applicable, the date on and after which the debt warrants and the
related debt securities will be separately transferable; and
o the principal amount of debt securities purchasable upon exercise of
each debt warrant, the price at which and the currency in which the
debt securities may be purchased and the method of exercising the
debt warrants.
Additional Terms of Universal Warrants. The applicable prospectus
supplement will contain, where applicable, the following terms of and other
information relating to any universal warrants:
o whether the universal warrants are put warrants or call warrants and
whether you or we will have the right to exercise the warrants;
o the specific warrant property, and the amount or the method for
determining the amount of the warrant property, purchasable or
saleable upon exercise of each universal warrant;
o the price at which and the currency with which the underlying
securities, currencies or commodities may be purchased or sold upon
the exercise of each universal warrant, or the method of determining
that price;
o whether the exercise price may be paid in cash, by the exchange of
any other security offered with the universal warrants or both and
the method of exercising the universal warrants; and
o whether the exercise of the universal warrants is to be settled in
cash or by delivery of the underlying securities, commodities, or
both.
Significant Provisions of the Warrant Agreements
We will issue the warrants under one or more warrant agreements to be
entered into between us and a bank or trust company, as warrant agent, in one
or more series, which will be described in the prospectus supplement for the
warrants. The forms of warrant agreements are filed as exhibits to the
registration statement. The following summaries of significant provisions of
the warrant agreements and the warrants are not intended to be comprehensive
and holders of warrants should review the detailed provisions of the relevant
warrant agreement for a full description and for other information regarding
the warrants.
Modifications Without Consent of Warrantholders. We and the warrant agent
may amend the terms of the warrants and the warrant certificates without the
consent of the holders to:
24
o cure any ambiguity,
o cure, correct or supplement any defective or inconsistent provision,
or
o amend the terms in any other manner which we may deem necessary or
desirable and which will not adversely affect the interests of the
affected holders in any material respect.
Modifications with Consent of Warrantholders. We and the warrant agent,
with the consent of the holders of not less than a majority in number of the
then outstanding unexercised warrants affected, may modify or amend the warrant
agreement. However, we and the warrant agent may not make any of the following
modifications or amendments without the consent of each affected warrantholder:
o change the exercise price of the warrants;
o reduce the amount receivable upon exercise, cancellation or
expiration of the warrants other than in accordance with the
antidilution provisions or other similar adjustment provisions
included in the terms of the warrants;
o shorten the period of time during which the warrants may be
exercised;
o materially and adversely affect the rights of the owners of the
warrants; or
o reduce the percentage of outstanding warrants the consent of whose
owners is required for the modification of the applicable warrant
agreement.
Merger, Consolidation, Sale or Other Disposition. If at any time we merge
or consolidate with, or transfer substantially all of our assets to, another
entity, the successor corporation will succeed to and assume all of our
obligations under each warrant agreement and the warrant certificates. We will
then be relieved of any further obligation under each of those warrant
agreements and the warrants issued under those warrant agreements. See
"Description of Debt Securities--Covenants Restricting Pledges, Mergers and
other Significant Corporate Actions."
Enforceability of Rights of Warrantholders. The warrant agents will act
solely as our agents in connection with the warrant certificates and will not
assume any obligation or relationship of agency or trust for or with any
holders of warrant certificates or beneficial owners of warrants. Any holder of
warrant certificates and any beneficial owner of warrants may, without the
consent of any other person, enforce by appropriate legal action, on its own
behalf, its right to exercise the warrants evidenced by the warrant
certificates in the manner provided for in that series of warrants or pursuant
to the applicable warrant agreement. No holder of any warrant certificate or
beneficial owner of any warrants will be entitled to any of the rights of a
holder of the debt securities or any other warrant property purchasable upon
exercise of the warrants, including, without limitation, the right to receive
the payments on those debt securities or other warrant property or to enforce
any of the covenants or rights in the relevant indenture or any other similar
agreement.
Registration and Transfer of Warrants. Subject to the terms of the
applicable warrant agreement, warrants in registered, definitive form may be
presented for exchange and for registration of transfer, at the corporate trust
office of the warrant agent for that series of warrants, or at any other office
indicated in the prospectus supplement relating to that series of warrants,
without service charge. However, the holder will be required to pay any taxes
and other governmental charges as described in the warrant agreement. The
transfer or exchange will be effected only if the warrant agent for the series
of warrants is satisfied with the documents of title and identity of the person
making the request.
New York Law to Govern. The warrants and each warrant agreement will be
governed by, and construed in accordance with, the laws of the State of New
York.
25
DESCRIPTION OF PURCHASE CONTRACTS
We may issue purchase contracts, including purchase contracts issued as
part of a unit with one or more debt securities or universal warrants, for the
purchase or sale of:
o securities of an entity not affiliated with Morgan Stanley, a basket
of those securities, an index or indices of those securities or any
combination of the above;
o currencies; or
o commodities.
We refer to this property in the above clauses as "purchase contract property."
Each purchase contract will obligate the holder to purchase or sell, and
obligate Morgan Stanley to sell or purchase, on specified dates, the purchase
contract property at a specified price or prices, all as described in the
applicable prospectus supplement. The applicable prospectus supplement will
also specify the methods by which the holders may purchase or sell the purchase
contract property and any acceleration, cancellation or termination provisions
or other provisions relating to the settlement of a purchase contract.
Pre-paid Purchase Contracts
Purchase contracts may require holders to satisfy their obligations under
the purchase contracts at the time they are issued. We refer to these purchase
contracts as "pre-paid purchase contracts." Morgan Stanley's obligation to
settle pre-paid purchase contracts on the relevant settlement date will
constitute senior indebtedness or subordinated indebtedness of Morgan Stanley.
Accordingly, pre-paid purchase contracts will be issued under the Senior Debt
Indenture or the Subordinated Debt Indenture, as specified in the applicable
prospectus supplement.
Purchase Contracts Issued as Part of Units
Purchase contracts issued as part of a unit will be governed by the terms
and provisions of a Unit Agreement or, in the case of pre-paid purchase
contracts issued as part of a unit that contains no other purchase contracts, a
Unit Agreement Without Holders' Obligations. See "Description of
Units--Significant Provisions of the Unit Agreement" and "--Significant
Provisions of the Unit Agreement Without Holders' Obligations." The applicable
prospectus supplement will specify the following:
o whether the purchase contract obligates the holder to purchase or
sell the purchase contract property;
o whether a purchase contract issued as part of a unit may be separated
from the other securities constituting part of that unit prior to the
purchase contract's settlement date, except that purchase contracts
issued in the United States may not be so separated prior to the 91st
day after the issuance of a unit;
o the methods by which the holders may purchase or sell the purchase
contract property;
o any acceleration, cancellation or termination provisions or other
provisions relating to the settlement of a purchase contract; and
o whether the purchase contracts will be issued in fully registered or
bearer form, in definitive or global form or in any combination of
these forms, although, in any case, the form of a purchase contract
included in a unit will correspond to the form of the unit and of any
debt security or universal warrant included in that unit.
Settlement of Purchase Contracts. Where purchase contracts issued together
with debt securities as part of a unit require the holders to buy purchase
contract property, the unit agent may apply principal payments from the debt
26
securities in satisfaction of the holders' obligations under the related
purchase contract as specified in the prospectus supplement. The unit agent
will not so apply the principal payments if the holder has delivered cash to
meet its obligations under the purchase contract. To settle the purchase
contract and receive the purchase contract property, the holder must present
and surrender the unit certificates at the office of the unit agent. If a
holder settles its obligations under a purchase contract that is part of a unit
in cash rather than by delivering the debt security that is part of the unit,
that debt security will remain outstanding if the maturity extends beyond the
relevant settlement date and, as more fully described in the applicable
prospectus supplement, the holder will receive that debt security or an
interest in the relevant global debt security.
Pledge by Purchase Contract Holders to Secure Performance. To secure the
obligations of the purchase contract holders contained in the Unit Agreement
and in the purchase contracts, the holders, acting through the unit agent, as
their attorney-in-fact, will grant, sell, convey, assign, transfer and pledge
the items in the following sentence, which we refer to as the "pledge," to
JPMorgan Chase Bank, in its capacity as collateral agent, for our benefit. The
pledge is a security interest in, and a lien upon and right of set-off against,
all of the holders' right, title and interest in and to:
o any debt securities that are part of units that include the purchase
contracts, or other property as may be specified in the applicable
prospectus supplement, which we refer to as the "pledged items";
o all additions to and substitutions for the pledged items as may be
permissible, if so specified in the applicable prospectus supplement;
o all income, proceeds and collections received or to be received, or
derived or to be derived, at any time from or in connection with the
pledged items described in the two clauses above; and
o all powers and rights owned or thereafter acquired under or with
respect to the pledged items.
The pledge constitutes collateral security for the performance when due by
each holder of its obligations under the Unit Agreement and the applicable
purchase contract. The collateral agent will forward all payments from the
pledged items to us, unless the payments have been released from the pledge in
accordance with the Unit Agreement. We will use the payments received from the
pledged items to satisfy the obligations of the holder of the Unit under the
related purchase contract.
Property Held in Trust by Unit Agent. If a holder fails to settle in cash
its obligations under a purchase contract that is part of a unit and fails to
present and surrender its unit certificate to the unit agent when required,
that holder will not receive the purchase contract property. Instead, the unit
agent will hold that holder's purchase contract property, together with any
distributions, as the registered owner in trust for the benefit of the holder
until the holder presents and surrenders the certificate or provides
satisfactory evidence that the certificate has been destroyed, lost or stolen.
The unit agent or Morgan Stanley may require an indemnity from the holder for
liabilities related to any destroyed, lost or stolen certificate. If the holder
does not present the unit certificate, or provide the necessary evidence of
destruction or loss and indemnity, on or before the second anniversary of the
settlement date of the related purchase contract, the unit agent will pay to us
the amounts it received in trust for that holder. Thereafter, the holder may
recover those amounts only from us and not the unit agent. The unit agent will
have no obligation to invest or to pay interest on any amounts it holds in
trust pending distribution.
DESCRIPTION OF CAPITAL STOCK
As of the date of this prospectus, Morgan Stanley's authorized capital
stock consists of 3,500,000,000 shares of common stock, par value $0.01 per
share, and 30,000,000 shares of preferred stock, par value $0.01 per share.
The rights of holders of preferred stock offered by this prospectus will
be subject to, and may be adversely affected by, issuances of preferred stock
in the future. Under some circumstances, alone or in combination with certain
provisions of our certificate of incorporation and/or with the provisions of
our rights agreement, described below under "--Additional Provisions of Morgan
Stanley's Certificate of Incorporation and Bylaws" and "--The Rights Plan,"
27
respectively, our issuances of preferred stock may discourage or make more
difficult an acquisition of Morgan Stanley that the Board of Directors deems
undesirable.
The Board of Directors of Morgan Stanley has the power, without further
action by the stockholders, unless action is required by applicable laws or
regulations or by the terms of outstanding preferred stock, to issue preferred
stock in one or more series and to fix the voting rights, designations,
preferences and other terms applicable to the preferred stock to be issued. The
Board of Directors may issue preferred stock to obtain additional financing, in
connection with acquisitions, as compensation to officers, directors or
employees of Morgan Stanley and its subsidiaries in accordance with benefit
plans or otherwise and for other proper corporate purposes.
Outstanding Capital Stock
Outstanding Common Stock. As of January 28, 2002, there were approximately
1,101,617,649 shares of our common stock outstanding.
Outstanding Preferred Stock. On November 30, 2001, Morgan Stanley also had
outstanding the following series of preferred stock:
o 1,725,000 shares of Series A Fixed/Adjustable Rate Cumulative
Preferred Stock, with a stated value of $200.00 per share, which we
refer to as the Series A Fixed/Adjustable Rate Preferred Stock.
The Series A Fixed/Adjustable Rate Preferred Stock was redeemed on
December 3, 2001.
Cumulative Preferred Stock Issuable under the Capital Units. In addition,
we and our wholly-owned subsidiary Morgan Stanley Finance plc have outstanding
Capital Units. Each Capital Unit consists of a subordinated debenture issued by
Morgan Stanley Finance plc, which we guaranteed on a subordinated basis, and a
related purchase contract we issued that requires the holder to purchase one
depositary share representing ownership of a fraction of a share or multiple
shares of our preferred stock. The Capital Units outstanding on November 30,
2001 may result in the issuance at any time of up to 329,050 shares of our
8.03% Cumulative Preferred Stock, par value $0.01 per share, with a stated
value of $200.00 per share, which we refer to as the Capital Units Cumulative
Preferred Stock.
Series A Junior Participating Preferred Stock Issuable under Rights Plan.
In addition, we have authorized for issuance up to 450,000 shares of Series A
Junior Participating Preferred Stock, which may be issued upon the exercise of
rights issued to the holders of our common stock under our Rights Plan. See
"--The Rights Plan."
The preceding summary and the following summary of the terms of the
offered preferred stock do not purport to be complete and are qualified by our
certificate of incorporation and by the Certificates of Designation of
Preferences and Rights for the Capital Units Cumulative Preferred Stock and the
Series A Junior Participating Preferred Stock.
Offered Preferred Stock
Our Board of Directors has authorized the issuance of one or more series
of additional shares of preferred stock and has authorized a committee of the
Board of Directors to establish and designate series and to fix the number of
shares and the relative rights, preferences and limitations of the respective
series of the preferred stock offered by this prospectus and the applicable
prospectus supplement. The shares of offered preferred stock, when issued and
sold, will be fully paid and nonassessable.
Terms Specified in Prospectus Supplement. The following description sets
forth some general terms and provisions of the offered preferred stock. The
number of shares and all of the relative rights, preferences and limitations of
the respective series of offered preferred stock that the Board of Directors or
the committee establishes will be described in the applicable prospectus
supplement. The terms of particular series of offered preferred stock may
differ, among other things, in:
o designation;
28
o number of shares that constitute the series;
o dividend rate, or the method of calculating the dividend rate;
o dividend periods, or the method of calculating the dividend periods;
o redemption provisions, including whether or not, on what terms and at
what prices the shares will be subject to redemption at our option;
o voting rights;
o preferences and rights upon liquidation or winding-up;
o whether or not and on what terms the shares will be convertible into
or exchangeable for shares of any other class, series or security of
Morgan Stanley or any other corporation or any other property;
o whether depositary shares representing the offered preferred stock
will be offered and, if so, the fraction or multiple of a share that
each depositary share will represent; and
o the other rights and privileges and any qualifications, limitations
or restrictions of those rights or privileges.
We have summarized below the material provisions of a certificate of
designation authorizing the issuance of a series of offered preferred stock.
These summaries are not complete and each investor should refer to the form of
certificate of designation which has been filed as an exhibit to the
registration statement and to our certificate of incorporation for a complete
description of the terms and definitions. The Board of Directors or a duly
authorized committee of the Board of Directors will adopt the resolutions to be
included in the certificate of designation prior to the issuance of a series of
offered preferred stock, and the certificate of designation will be filed with
the Secretary of State of the State of Delaware as soon thereafter as
reasonably practicable.
Rank. Each series of offered preferred stock will rank, with respect to
voting powers, preferences or relative, participating, optional and other
special rights, including with respect to the payment of dividends and the
distribution of assets, whether upon liquidation or otherwise:
o junior to any series of capital stock of Morgan Stanley expressly
stated to be senior to that series of offered preferred stock;
o senior to the common stock of Morgan Stanley and any class of capital
stock of Morgan Stanley expressly stated to be junior to that series
of offered preferred stock; and
o on a parity with each other series of offered preferred stock and all
other classes of capital stock of Morgan Stanley.
The offered preferred stock will rank, as to payment of dividends and amounts
payable on liquidation, on a parity with the Capital Units Cumulative Preferred
Stock, if issued.
Dividends. If described in the applicable prospectus supplement, we will
pay cumulative cash dividends to the holders of offered preferred stock, when
and as declared by the Board of Directors or the committee, out of funds
legally available for payment. The prospectus supplement will detail the annual
rate of dividends or the method or formula for determining or calculating them,
and the payment dates and payment periods for dividends. The Board of Directors
or the committee will fix a record date for the payment of dividends not more
than 60 or less than 10 days preceding the dividend payment date. We will pay
dividends on the offered preferred stock to the holders of record on that
record date. Dividends will be cumulative from the date of original issue of
the series. A series of offered preferred stock will be junior as to payment of
dividends to any series of preferred stock that may be issued in the future
that is expressly stated to be senior as to payment of dividends to that series
of offered preferred stock. If at any time we have failed to
29
pay accrued dividends on any of those senior shares when payable, we may not
pay any dividend on that series of offered preferred stock or redeem or
otherwise repurchase any shares of that series until we have paid or set aside
for payment the full amount of the accumulated but unpaid dividends on the
senior shares.
We will not declare, pay or set aside for payment any dividends on any
preferred stock ranking on a parity as to payment of dividends with the offered
preferred stock unless we declare, pay or set aside for payment dividends on
all the outstanding shares of offered preferred stock for all dividend payment
periods ending on or before the dividend payment date for that parity stock. We
must declare, pay or set aside for payment any amounts on the offered preferred
stock ratably in proportion to the respective amounts of dividends (1)
accumulated and unpaid or payable on that parity stock, on the one hand, and
(2) accumulated and unpaid or payable through the dividend payment period or
periods of the offered preferred stock preceding the dividend payment date for
that parity stock, on the other hand.
Except as described above, unless we have paid the full cumulative
dividends on the outstanding shares of offered preferred stock, we may not take
any of the following actions with respect to our common stock or any other
preferred stock of Morgan Stanley ranking junior or on parity with the offered
preferred stock as to dividend payments:
o declare, pay or set aside for payment any dividends, other than
dividends payable in our common stock,
o make other distributions,
o redeem, purchase or otherwise acquire our common stock or junior
preferred stock for any consideration, or
o make any payment to or available for a sinking fund for the
redemption of our common stock or junior preferred stock.
Preferred stock on a parity with offered preferred stock currently would
include the Capital Units Cumulative Preferred Stock, if issued.
The provisions of the immediately preceding paragraph will not prevent us
from applying any monies previously deposited in any sinking fund with respect
to any preferred stock in compliance with the provisions of the sinking fund to
the purchase or redemption of that preferred stock in accordance with the terms
of the sinking fund, regardless of whether at the time of application we have
paid or declared and set aside for payment full cumulative dividends upon
shares of the offered preferred stock outstanding on the last dividend payment
date for any series of offered preferred stock. The provisions of the
immediately preceding paragraph also do not restrict the ability of a holder of
any junior or parity preferred stock or common stock to convert those
securities into or exchange those securities for Morgan Stanley capital stock
ranking junior to the offered preferred stock as to dividend payments.
We will compute the amount of dividends payable for the initial dividend
period or any period shorter than a full dividend period on the basis of a
360-day year of twelve 30-day months, unless otherwise indicated in the
prospectus supplement. Accrued but unpaid dividends will not bear interest.
Redemption. The prospectus supplement will indicate whether, and on what
terms, shares of any series of offered preferred stock will be subject to
mandatory redemption or sinking fund provision. The prospectus supplement will
also indicate whether, and on what terms, including the date on or after which
redemption may occur, we may redeem shares of a series of the offered preferred
stock. We will effect any optional redemption upon not less than 30 days'
notice at a redemption price of not less than the stated value per share of the
applicable series of offered preferred stock plus accrued and accumulated but
unpaid dividends to but excluding the date fixed for redemption. If we have not
paid full cumulative dividends on all outstanding shares of offered preferred
stock, we may not redeem the offered preferred stock in part and we may not
purchase or acquire any shares of offered preferred stock, otherwise than by a
purchase or exchange offer made on the same terms to all holders of the offered
preferred stock. If fewer than all the outstanding shares of a series of
offered preferred stock are to be redeemed, we will select those to be redeemed
by lot or a substantially equivalent method.
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Liquidation Rights. In the event of any liquidation, dissolution or
winding up of Morgan Stanley, the holders of shares of offered preferred stock
will be entitled to receive, out of the assets of Morgan Stanley available for
distribution to stockholders, liquidating distributions in an amount equal to
the stated value per share of offered preferred stock, as described in the
applicable prospectus supplement, plus accrued and accumulated but unpaid
dividends to the date of final distribution, before any distribution is made to
holders of:
o any shares of preferred stock ranking junior to the offered preferred
stock as to rights upon liquidation, dissolution or winding up, or
o our common stock.
However, holders of the shares of offered preferred stock will not be entitled
to receive the liquidation price of their shares until we have paid or set
aside an amount sufficient to pay in full the liquidation preference of any
shares of Morgan Stanley's capital stock ranking senior as to rights upon
liquidation, dissolution or winding up. Neither a consolidation or merger of
Morgan Stanley with or into another corporation nor a merger of another
corporation with or into Morgan Stanley nor a sale or transfer of all or part
of Morgan Stanley's assets for cash or securities will be considered a
liquidation, dissolution or winding up of Morgan Stanley.
If, upon any liquidation, dissolution or winding up of Morgan Stanley,
assets of Morgan Stanley then distributable are insufficient to pay in full the
amounts payable with respect to the offered preferred stock and any other
preferred stock ranking on parity with the offered preferred stock as to rights
upon liquidation, dissolution or winding up, the holders of the offered
preferred stock and of that other preferred stock will share ratably in any
distribution in proportion to the full respective preferential amounts to which
they are entitled. After we have paid the full amount of the liquidating
distribution to which they are entitled, the holders of the offered preferred
stock will not be entitled to any further participation in any distribution of
assets by Morgan Stanley.
Voting Rights. Unless otherwise determined by our Board of Directors and
indicated in the prospectus supplement, holders of the offered preferred stock
will not have any voting rights except as described below or as otherwise from
time to time required by law. Whenever dividends on the shares of offered
preferred stock or any other stock ranking on a parity with the offered
preferred stock with respect to the payment of dividends and having similar
voting rights are in arrears for dividend periods, whether or not consecutive,
containing in the aggregate a number of days equivalent to six calendar
quarters, the holders of shares of offered preferred stock, voting separately
as a class with holders of one or more other classes or series of preferred
stock, including any issued Capital Units Cumulative Preferred Stock, having
similar voting rights that are exercisable, will be entitled to vote for the
election of two of the authorized number of directors of Morgan Stanley at the
next annual meeting of stockholders and at each subsequent meeting until we
have paid or set apart for payment all dividends accumulated on the offered
preferred stock or the other class or series of stock having similar voting
rights, as applicable. The term of office of all directors elected by the
holders of preferred stock will terminate immediately upon the termination of
the right of the holders of preferred stock to vote for directors. Each holder
of shares of the offered preferred stock will have one vote for each share of
offered preferred stock held.
So long as any shares of the offered preferred stock remain outstanding,
we will not, without the consent of the holders of at least two-thirds of the
shares of offered preferred stock outstanding at the time:
o issue or increase the authorized amount of any class or series of
stock ranking prior to the outstanding offered preferred stock as to
dividends or upon liquidation, or
o amend, alter or repeal the provisions of our certificate of
incorporation or of the resolutions contained in the certificate of
designation, whether by merger, consolidation or otherwise, so as to
materially and adversely affect any power, preference or special
right of the outstanding offered preferred stock or its holders.
Holders of the offered preferred stock will vote separately as a class with all
other series of preferred stock, including any issued Capital Units Cumulative
Preferred Stock, having similar voting rights that have been conferred and are
exercisable. For purposes of the preceding sentences, any increase in the
amount of the authorized common stock or authorized preferred stock or the
creation and issuance of other series of common stock or preferred stock
ranking on
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a parity with or junior to the offered preferred stock as to dividends and upon
liquidation will not be considered to materially and adversely affect those
powers, preferences or special rights.
Agents and Registrar for Offered Preferred Stock. The transfer agent,
dividend disbursing agent and registrar for each series of offered preferred
stock will be The Bank of New York.
Depositary Shares
We may, at our option, elect to offer fractional shares or some multiple
of shares of offered preferred stock, rather than individual shares of offered
preferred stock. If we choose to do so, we will issue depositary receipts for
depositary shares, each of which will represent a fraction or a multiple of a
share of a particular series of offered preferred stock as described below.
The following statements concerning depositary shares, depositary
receipts, and the deposit agreement are not intended to be comprehensive and
are qualified in their entirety by reference to the forms of these documents,
which we have filed as exhibits to the registration statement. Each investor
should refer to the detailed provisions of those documents, as we have
explained under the heading "Where You Can Find More Information" in the
Summary.
The shares of any series of offered preferred stock represented by
depositary shares will be deposited under a deposit agreement among Morgan
Stanley, The Bank of New York, as depositary, which we refer to as the
Preferred Stock Depositary, and the holders from time to time of depositary
receipts issued under the agreement. Subject to the terms of the deposit
agreement, each holder of a depositary share will be entitled, in proportion to
the fraction or multiple of a share of offered preferred stock represented by
that depositary share, to all the rights and preferences of the offered
preferred stock represented by that depositary share, including dividend,
voting and liquidation rights.
The depositary shares will be evidenced by depositary receipts issued
under the deposit agreement. Depositary receipts will be distributed to those
persons purchasing the fractional or multiple shares of the related series of
offered preferred stock. Immediately following the issuance of shares of a
series of offered preferred stock, we will deposit those shares with the
Preferred Stock Depositary, which will then issue and deliver the depositary
receipts to the purchasers. Depositary receipts will only be issued evidencing
whole depositary shares. A depositary receipt may evidence any number of whole
depositary shares.
Dividends and Other Distributions. The Preferred Stock Depositary will
distribute all cash dividends or other cash distributions received on the
related series of offered preferred stock to the record holders of depositary
receipts relating to those series in proportion to the number of the depositary
shares evidenced by depositary receipts those holders own.
If we make a distribution other than in cash, the Preferred Stock
Depositary will distribute the property it receives to the record holders of
depositary receipts in proportion to the number of depositary shares evidenced
by depositary receipts those holders own, unless the Preferred Stock Depositary
determines that the distribution cannot be made proportionately among those
holders or that it is not feasible to make the distribution. In that event, the
Preferred Stock Depositary may, with our approval, sell the property and
distribute the net proceeds to the holders in proportion to the number of
depositary shares evidenced by depositary receipts they own.
The amount distributed to holders of depositary shares will be reduced by
any amounts required to be withheld by Morgan Stanley or the Preferred Stock
Depositary on account of taxes or other governmental charges.
Withdrawal of Stock. Upon surrender of the depositary receipts at the
corporate trust office of the Preferred Stock Depositary and upon payment of
the taxes, charges and fees provided for in the deposit agreement and
compliance with any other requirement of the deposit agreement, the holder of
the depositary shares evidenced by those depositary receipts is entitled to
delivery of the number of whole shares of the related series of offered
preferred stock and all money or other property, if any, represented by those
shares. Holders of depositary receipts representing any number of whole shares
of offered preferred stock will be entitled to receive whole shares of the
related series of offered preferred stock, but those holders of whole shares of
offered preferred stock will not thereafter be entitled to deposit those shares
of offered preferred stock with the Preferred Stock Depositary or to receive
depositary shares therefor. If
32
the depositary receipts delivered by the holder evidence a number of depositary
shares in excess of the number representing whole shares of the related series
of offered preferred stock to be withdrawn, the Preferred Stock Depositary will
deliver to the holder at the same time a new depositary receipt evidencing the
excess number of depositary shares.
Voting the Offered Preferred Stock. Upon receiving notice of any meeting
at which the holders of any series of the offered preferred stock are entitled
to vote, the Preferred Stock Depositary will mail the information contained in
the notice of the meeting to the record holders of the depositary receipts
relating to that series of offered preferred stock. Each record holder of the
depositary receipts on the record date, which will be the same date as the
record date for the related series of offered preferred stock, may instruct the
Preferred Stock Depositary how to exercise his or her voting rights. The
Preferred Stock Depositary will endeavor, insofar as practicable, to vote or
cause to be voted the maximum number of whole shares of the offered preferred
stock represented by those depositary shares in accordance with those
instructions received sufficiently in advance of the meeting, and we will agree
to take all reasonable action that may be deemed necessary by the Preferred
Stock Depositary in order to enable the Preferred Stock Depositary to do so.
The Preferred Stock Depositary will abstain from voting shares of the offered
preferred stock for which it does not receive specific instructions from the
holder of the depositary shares representing them.
Redemption of Depositary Shares. Depositary shares will be redeemed from
any proceeds received by the Preferred Stock Depositary resulting from the
redemption, in whole or in part, of the series of the offered preferred stock
represented by those depositary shares. The redemption price per depositary
share will equal the applicable fraction or multiple of the redemption price
per share payable with respect to the series of the offered preferred stock. If
we redeem shares of a series of offered preferred stock held by the Preferred
Stock Depositary, the Preferred Stock Depositary will redeem as of the same
redemption date the number of depositary shares representing the shares of
offered preferred stock that we redeem. If less than all the depositary shares
will be redeemed, the depositary shares to be redeemed will be selected by lot
or substantially equivalent method determined by the Preferred Stock
Depositary.
After the date fixed for redemption, the depositary shares called for
redemption will no longer be deemed to be outstanding, and all rights of the
holders of the depositary shares will cease, except the right to receive the
monies payable and any other property to which the holders were entitled upon
the redemption upon surrender to the Preferred Stock Depositary of the
depositary receipts evidencing the depositary shares. Any funds deposited by us
with the Preferred Stock Depositary for any depositary shares that the holders
fail to redeem will be returned to us after a period of two years from the date
the funds are deposited.
Amendment and Termination of the Deposit Agreement. We may amend the form
of depositary receipt evidencing the depositary shares and any provision of the
deposit agreement at any time and from time to time by agreement with the
Preferred Stock Depositary. However, any amendment that materially and
adversely alters the rights of the holders of depositary receipts will not be
effective unless it has been approved by the holders of at least a majority of
the depositary shares then outstanding, and no amendment may impair the right
of any holder of any depositary receipts, described above under "--Withdrawal
of Stock," to receive shares of the related series of offered preferred stock
and any money or other property represented by those depositary shares, except
in order to comply with mandatory provisions of applicable law. We may
terminate the deposit agreement at any time with at least 60 days' prior
written notice to the Preferred Stock Depositary. Within 30 days of the date of
the notice, the Preferred Stock Depositary will deliver or make available for
delivery to holders of depositary receipts, upon surrender of the depositary
receipts evidencing the depositary shares, the number of whole shares of the
related series of offered preferred stock as are represented by the depositary
receipts. The deposit agreement will automatically terminate after there has
been a final distribution on the related series of offered preferred stock in
connection with any liquidation, dissolution or winding up of Morgan Stanley
and that distribution has been made to the holders of depositary shares.
Charges of Preferred Stock Depositary. We will pay all transfer and other
taxes and governmental charges arising solely from the existence of the
depositary arrangements. We will pay all charges of the Preferred Stock
Depositary in connection with the initial deposit of the related series of
offered preferred stock, the initial issuance of the depositary shares, all
withdrawals of shares of the related series of offered preferred stock by
holders of depositary shares and the registration of transfers of title to any
depositary shares. However, holders of depositary shares will pay other
transfer and other taxes and governmental charges and the other charges
expressly provided in the deposit agreement to be for their accounts.
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Limitation on Liability of Company and Preferred Stock Depositary. Neither
the Preferred Stock Depositary nor Morgan Stanley will be liable if it is
prevented or delayed by law, by any provision of our certificate of
incorporation or of the depositary shares or by any circumstance beyond its
control from performing its obligations under the deposit agreement. The
obligations of Morgan Stanley and the Preferred Stock Depositary under the
deposit agreement will be limited to performance with best judgment and in good
faith of their duties thereunder, except that they will be liable for
negligence or willful misconduct in the performance of their duties thereunder,
and they will not be obligated to appear in, prosecute or defend any legal
proceeding related to any depositary receipts, depositary shares or related
series of offered preferred stock unless satisfactory indemnity is furnished.
Corporate Trust Office of Preferred Stock Depositary. The Preferred Stock
Depositary's corporate trust office is currently located at 101 Barclay Street,
New York, New York 10286. The Preferred Stock Depositary will act as transfer
agent and registrar for depositary receipts, and, if shares of a series of
offered preferred stock are redeemable, the Preferred Stock Depositary will act
as redemption agent for the corresponding depositary receipts.
Resignation and Removal of Preferred Stock Depositary. The Preferred Stock
Depositary may resign at any time by delivering to us written notice of its
election to do so, and we may at any time remove the Preferred Stock
Depositary. Any resignation or removal will take effect upon the appointment of
a successor Preferred Stock Depositary. A successor must be appointed by us
within 60 days after delivery of the notice of resignation or removal and must
be a bank or trust company having its principal office in the United States and
a combined capital and surplus of at least $50,000,000.
Reports to Holders. We will deliver all required reports and
communications to holders of the offered preferred stock to the Preferred Stock
Depositary, and it will forward those reports and communications to the holders
of depositary shares.
Existing Common Stock
Each holder of our common stock has one vote per share on all matters
voted on generally by the stockholders, including the election of directors.
Except as otherwise required by law or as provided with respect to any series
of preferred stock, the holders of our common stock will possess all voting
power. The Board of Directors is divided into three classes of directors with
the term of one class expiring at each annual meeting of stockholders. Because
our certificate of incorporation does not provide for cumulative voting rights,
the holders of a plurality of the voting power of the then outstanding shares
of capital stock entitled to be voted generally in the election of directors,
which we refer to as the "voting stock," represented at a meeting will be able
to elect all the directors standing for election at the meeting.
The holders of our common stock are entitled to share equally in dividends
as may be declared by the Board of Directors out of funds legally available
therefor, but only after payment of dividends required to be paid on
outstanding shares of offered preferred stock and any other class or series of
stock having preference over the common stock as to dividends, including, if
issued, the Capital Units Cumulative Preferred Stock.
Upon voluntary or involuntary liquidation, dissolution or winding up of
Morgan Stanley, the holders of the common stock will share pro rata in the
assets remaining after payments to creditors and holders of any offered
preferred stock and any other class or series of stock having preference over
the common stock upon liquidation, dissolution or winding up that may be then
outstanding, including, if issued, the Capital Units Cumulative Preferred
Stock. There are no preemptive or other subscription rights, conversion rights
or redemption or sinking fund provisions with respect to shares of our common
stock.
All of the outstanding shares of our common stock are fully paid and
nonassessable.
The transfer agent and registrar for the common stock is Mellon Investor
Services L.L.C.
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Capital Units Cumulative Preferred Stock
Rank. The Capital Units Cumulative Preferred Stock, if issued, will rank
on a parity with the offered preferred stock, and rank prior to the common
stock as to payment of dividends and amounts payable on liquidation. The shares
of Capital Units Cumulative Preferred Stock are not convertible into common
stock of Morgan Stanley and have no preemptive rights.
Dividends. Holders of the Capital Units Cumulative Preferred Stock, if
issued, are entitled to receive, when and as declared by the Board of Directors
out of legally available funds, cumulative cash dividends payable quarterly at
the rate of 8.03% per year.
The Capital Units Cumulative Preferred Stock, if issued, will be junior as
to dividends to any preferred stock that may be issued in the future that is
expressly senior as to dividends to the Capital Units Cumulative Preferred
Stock. If at any time we have failed to pay accrued dividends on any of those
senior shares at the time they are payable, we may not pay any dividend on any
issued Capital Units Cumulative Preferred Stock or redeem or otherwise
repurchase any shares of Capital Units Cumulative Preferred Stock until we have
paid in full, or set aside dividends for payment, the accumulated but unpaid
dividends on those senior shares.
We will not declare or pay or set aside for payment dividends on any
preferred stock ranking on a parity as to payment of dividends with the Capital
Units Cumulative Preferred Stock unless we also declare or pay or set aside for
payment dividends on any outstanding shares of Capital Units Cumulative
Preferred Stock for all dividend payment periods ending on or before the
dividend payment date of any parity stock. We must declare, pay or set aside
for payment any amounts on any issued Capital Units Cumulative Preferred Stock
ratably in proportion to the respective amounts of dividends (1) accumulated
and unpaid or payable on any parity stock, on the one hand, and (2) accumulated
and unpaid or payable through the dividend payment period or periods of the
Capital Units Cumulative Preferred Stock next preceding the dividend payment
date, on the other hand.
Except as described above, unless we have paid the full cumulative
dividends on any outstanding shares of Capital Units Cumulative Preferred
Stock, we may not with respect to our common stock or any other preferred stock
of Morgan Stanley ranking junior to or on a parity with the Capital Units
Cumulative Preferred Stock as to dividend payments:
o declare, pay or set aside for payment any dividends, other than
dividends payable in our common stock,
o make other distributions,
o redeem, purchase or otherwise acquire our common stock or junior
preferred stock for any consideration, or
o make any payment to or available for a sinking fund for redemption of
our common stock or junior preferred stock.
The provisions of the immediately preceding paragraph do not apply to any
monies we deposit in any sinking fund with respect to any preferred stock in
compliance with the provisions of that sinking fund. We may apply monies so
deposited to the purchase or redemption of the preferred stock in accordance
with the terms of the sinking fund, regardless of whether at the time of
application we have paid or declared or set aside for payment full cumulative
dividends upon any issued shares of the Capital Units Cumulative Preferred
Stock. The provisions of the immediately preceding paragraph also do not
restrict the ability of the holder of any junior or parity preferred stock or
common stock to convert their securities into or exchange those securities for
Morgan Stanley capital stock ranking junior to the Capital Units Cumulative
Preferred Stock as to dividend payments.
Redemption. The Capital Units Cumulative Preferred Stock, if issued, will
not be subject to any mandatory redemption or sinking fund provision and will
not be redeemable prior to February 28, 2007, except that under some
circumstances it may be redeemed prior to that date at specified prices.
35
On or after February 28, 2007, the Capital Units Cumulative Preferred
Stock will be redeemable at our option, in whole or in part, upon not less than
30 days' notice, at specified prices during specified periods following the
indicated date, plus accrued and accumulated but unpaid dividends to but
excluding the date fixed for redemption.
Liquidation Rights. In the event of any liquidation, dissolution or
winding up of Morgan Stanley, the holders of shares of Capital Units Cumulative
Preferred Stock will be entitled to receive liquidating distributions in the
amount of $200.00 per share plus accrued and accumulated but unpaid dividends
to the date of final distribution before any distribution is made to holders of
o any other shares of preferred stock ranking junior to the Capital
Units Cumulative Preferred Stock, as to rights upon liquidation,
dissolution or winding up, and
o common stock.
However, the holders of the shares of Capital Units Cumulative Preferred Stock
will not be entitled to receive the liquidation price of these shares until the
liquidation preference of any other shares of Morgan Stanley's capital stock
ranking senior as to rights upon liquidation, dissolution or winding up will
have been paid in full or a sum set aside therefor sufficient to provide for
payment in full.
If upon any liquidation, dissolution or winding up of Morgan Stanley, the
amounts payable with respect to any issued Capital Units Cumulative Preferred
Stock and any other preferred stock ranking on parity as to rights upon
liquidation, dissolution or winding up are not paid in full, the holders of the
Capital Units Cumulative Preferred Stock and of that other preferred stock will
share ratably in any distribution in proportion to the full respective
preferential amounts to which they are entitled. After payment of the full
amount of the liquidating distribution to which they are entitled, the holders
of Capital Units Cumulative Preferred Stock will not be entitled to any further
participation in any distribution of assets by Morgan Stanley.
Voting Rights. Holders of Capital Units Cumulative Preferred Stock, if
issued, will not have any voting rights except as described below or as
otherwise from time to time required by law. Whenever dividends on the Capital
Units Cumulative Preferred Stock or any other class or series of stock ranking
on a parity with the Capital Units Cumulative Preferred Stock with respect to
the payment of dividends and having similar voting rights are in arrears for
dividend periods, whether or not consecutive, containing in the aggregate a
number of days equivalent to six calendar quarters, the holders of shares of
Capital Units Cumulative Preferred Stock, voting separately as a class with
holders of one or more other classes or series of preferred stock having
similar voting rights that are exercisable, will be entitled to vote for the
election of two of the authorized number of directors of Morgan Stanley at the
next annual meeting of stockholders and at each subsequent meeting until we
have paid or set apart for payment all dividends accumulated on the Capital
Units Cumulative Preferred Stock or the other class or series of stock having
similar voting rights, as applicable.
The term of office of all directors elected by the holders of preferred
stock will terminate immediately upon the termination of the right of the
holders of preferred stock to vote for directors. Each holder of shares of
Capital Units Cumulative Preferred Stock will have one vote for each share of
Capital Units Cumulative Preferred Stock held.
So long as any shares of Capital Units Cumulative Preferred Stock are
outstanding, we will not, without the consent of the holders of at least
two-thirds of the shares of Capital Units Cumulative Preferred Stock
outstanding at the time, voting separately as a class with all other series of
preferred stock having similar voting rights that have been conferred and are
exercisable:
o issue or increase the authorized amount of any class or series of
stock ranking prior to the Capital Units Cumulative Preferred Stock
as to dividends or upon liquidation, or
o amend, alter or repeal the provisions of our certificate of
incorporation or of the resolutions contained in the certificate of
designation relating to the Capital Units Cumulative Preferred Stock,
whether by merger,
36
consolidation or otherwise, so as to materially and adversely affect
any power, preference or special right of the Capital Units
Cumulative Preferred Stock or its holders.
For purposes of the preceding sentence any increase in the authorized amount of
common stock or preferred stock or the creation and issuance of other series of
common stock or preferred stock ranking on a parity with or junior to the
Capital Units Cumulative Preferred Stock as to dividends and upon liquidation
will not be deemed to materially and adversely affect those powers, preferences
or special rights.
Transfer Agent for Capital Units Cumulative Preferred Stock. The transfer
agent and registrar for the Capital Units Cumulative Preferred Stock is The
Bank of New York.
Additional Provisions of Morgan Stanley's Certificate of Incorporation and
Bylaws
Size of the Board of Directors, Removal of Directors and Filling Vacancies
on the Board of Directors. Our Board of Directors currently consists of 11
directors. The Board of Directors is divided into three classes. At each annual
meeting of stockholders, a class of directors is elected, for a term expiring
at the third succeeding annual meeting of stockholders after its election, to
succeed that class of directors whose term then expires. Under our amended and
restated bylaws, a majority vote of the Board of Directors may increase or
decrease the number of directors, except that a three-quarters vote of the
Board of Directors is required to change the number of directors from an even
number to an odd number. However, the bylaws provide that the Board shall
consist of not less than three nor more than fifteen members. Our certificate
of incorporation also provides that directors may be removed only for cause and
with the approval of the holders of at least 80% of the voting power of the
voting stock, voting together as a single class. Any vacancy on the Board of
Directors or newly created directorship will be filled by a majority vote of
the remaining directors then in office though less than a quorum, and those
newly elected directors will serve for a term expiring at the annual meeting of
stockholders at which the term of office of the class to which they have been
elected expires.
Limitations on Actions by Stockholders; Calling Special Meetings of
Stockholders. Our certificate of incorporation provides that, subject to the
rights of holders of any series of preferred stock or any other series of
capital stock set forth in the certificate of incorporation, any action
required or permitted to be taken by our stockholders must be effected at a
duly called annual or special meeting of stockholders and may not be effected
by any consent in writing in lieu of a meeting. Our bylaws provide that special
meetings of the stockholders may be called at any time only by the Secretary of
Morgan Stanley at the direction of and pursuant to a resolution of the Board of
Directors.
Amendment of Governing Documents. Our certificate of incorporation
provides that, generally, it can be amended in accordance with the provisions
of the laws of the State of Delaware. Under Section 242 of the Delaware General
Corporation Law, the Board of Directors may propose, and the stockholders may
adopt by a majority vote of the voting stock, an amendment to our certificate
of incorporation. However, our certificate of incorporation also provides that
the approval of 80% of the voting power of the voting stock, voting together as
a single class, is required in order to amend, repeal or adopt any provision
inconsistent with the provisions in the certificate of incorporation relating
to amendment of the bylaws, actions of stockholders and the Board of Directors
and to change the provisions establishing this 80% vote requirement.
Our certificate of incorporation provides that our bylaws may be altered,
amended or repealed or new provisions may be adopted by a majority of the Board
of Directors or with the approval of at least 80% of the voting power of the
voting stock of Morgan Stanley, voting together as a single class. Furthermore,
the bylaws provide that they may be altered, amended or repealed or new
provisions may be adopted by a majority of the Board of Directors or with the
approval of at least 80% of the voting power of the voting stock of Morgan
Stanley. However, a three-quarters vote of the Board of Directors is required
for the Board of Directors to amend, alter, repeal or adopt new bylaws in
conflict with the provisions of the bylaws relating to the removal of or any
modification of the roles, duties or authority of the Chairman of Morgan
Stanley as of May 31, 1997.
Limitation of Directors' Liability. Section 102 of the Delaware General
Corporation Law allows a corporation to eliminate the personal liability of
directors of a corporation to the corporation or to any of its stockholders for
monetary damages for a breach of fiduciary duty as a director, except in the
case where the director breached his duty of loyalty,
37
failed to act in good faith, engaged in intentional misconduct or knowingly
violated a law, authorized the payment of a dividend or approved a stock
repurchase or redemption in violation of the Delaware General Corporation Law
or obtained an improper personal benefit. Under our certificate of
incorporation, a director of Morgan Stanley will not be personally liable to
Morgan Stanley or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent the exemption from liability or
limitation of liability is not permitted under the Delaware General Corporation
Law as in effect or as that law may be amended.
The Rights Plan
Under a rights agreement, which we refer to as the Rights Plan, dated as
of April 25, 1995 and amended as of February 4, 1997 and June 15, 1999, with
JPMorgan Chase Bank, as rights agent, holders of shares of our common stock
have the right, each referred to as a Right, to purchase from us a unit
consisting of one one-thousandth of a share of Series A Junior Participating
Preferred Stock at a purchase price of $175 per unit subject to adjustment from
time to time to prevent dilution. At present, each share of common stock is
entitled to one-quarter of one Right. These rights are sometimes referred to as
a poison pill.
The Rights will become exercisable upon the earlier of:
o 10 days following a public announcement that a person or group of
affiliated or associated persons, each referred to as an "acquiring
person," has acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of the outstanding shares of our common
stock, which we refer to as the "stock acquisition date," and
o 10 business days following the commencement of a tender offer or
exchange offer that would result in a person or group beneficially
owning 15% or more of the outstanding shares of our common stock.
After the Rights become exercisable, the Rights, other than rights held by an
acquiring person, will entitle the holders to purchase, under certain
circumstances, either our common stock or common stock of the potential
acquirer at a substantially reduced price. We are generally entitled to redeem
all but not less than all the Rights at a price of $0.01 per Right at any time
until ten days following the stock acquisition date. The holder of a Right will
have no rights as a stockholder of Morgan Stanley, including, without
limitation, the right to vote or to receive dividends, until the Right is
exercised. Unless earlier redeemed, the Rights will expire at the close of
business on April 21, 2005.
The foregoing description of the Rights is qualified in its entirety by
reference to the description of the Rights Plan contained in Morgan Stanley's
Registration Statement on Form 8-A dated April 25, 1995, as amended by Forms
8-A/A dated May 4, 1995 and June 29, 1999, as further amended by Current
Reports on Form 8-K dated February 14, 1997 and June 29, 1999.
FORMS OF SECURITIES
Each debt security, warrant, purchase contract and unit will be
represented either by a certificate issued in definitive form to a particular
investor or by one or more global securities representing the entire issuance
of securities. Both certificated securities in definitive form and global
securities may be issued either (1) in registered form, where our obligation
runs to the holder of the security named on the face of the security or (2)
subject to the limitations explained below under "--Limitations on Issuance of
Bearer Securities and Bearer Debt Warrants," in bearer form, where our
obligation runs to the bearer of the security. Definitive securities name you
or your nominee as the owner of the security (other than definitive bearer
securities, which name the bearer as owner), and, in order to transfer or
exchange these securities or to receive payments other than interest or other
interim payments, you or your nominee must physically deliver the securities to
the trustee, registrar, paying agent or other agent, as applicable. Global
securities name a depositary or its nominee as the owner of the debt
securities, warrants, purchase contracts or units represented by these global
securities (other than global bearer securities, which name the bearer as
owner). The depositary maintains a computerized system that will reflect each
investor's beneficial ownership of the securities through an account maintained
by the investor with its broker/dealer, bank, trust company or other
representative, as we explain more fully below.
38
Global Securities
Registered Global Securities. We may issue the registered debt securities,
warrants, purchase contracts and units in the form of one or more fully
registered global securities that will be deposited with a depositary or its
nominee identified in the applicable prospectus supplement and registered in
the name of that depositary or its nominee. In those cases, one or more
registered global securities will be issued in a denomination or aggregate
denominations equal to the portion of the aggregate principal or face amount of
the securities to be represented by registered global securities. Unless and
until it is exchanged in whole for securities in definitive registered form, a
registered global security may not be transferred except as a whole by and
among the depositary for the registered global security, the nominees of the
depositary or any successors of the depositary or those nominees.
If not described below, any specific terms of the depositary arrangement
with respect to any securities to be represented by a registered global
security will be described in the prospectus supplement relating to those
securities. We anticipate that the following provisions will apply to all
depositary arrangements.
Ownership of beneficial interests in a registered global security will be
limited to persons, called participants, that have accounts with the depositary
or persons that may hold interests through participants. Upon the issuance of a
registered global security, the depositary will credit, on its book-entry
registration and transfer system, the participants' accounts with the
respective principal or face amounts of the securities beneficially owned by
the participants. Any dealers, underwriters or agents participating in the
distribution of the securities will designate the accounts to be credited.
Ownership of beneficial interests in a registered global security will be shown
on, and the transfer of ownership interests will be effected only through,
records maintained by the depositary, with respect to interests of
participants, and on the records of participants, with respect to interests of
persons holding through participants. The laws of some states may require that
some purchasers of securities take physical delivery of these securities in
definitive form. These laws may impair your ability to own, transfer or pledge
beneficial interests in registered global securities.
So long as the depositary, or its nominee, is the registered owner of a
registered global security, that depositary or its nominee, as the case may be,
will be considered the sole owner or holder of the securities represented by
the registered global security for all purposes under the applicable indenture,
warrant agreement, purchase contract or unit agreement. Except as described
below, owners of beneficial interests in a registered global security will not
be entitled to have the securities represented by the registered global
security registered in their names, will not receive or be entitled to receive
physical delivery of the securities in definitive form and will not be
considered the owners or holders of the securities under the applicable
indenture, warrant agreement, purchase contract or unit agreement. Accordingly,
each person owning a beneficial interest in a registered global security must
rely on the procedures of the depositary for that registered global security
and, if that person is not a participant, on the procedures of the participant
through which the person owns its interest, to exercise any rights of a holder
under the applicable indenture, warrant agreement, purchase contract or unit
agreement. We understand that under existing industry practices, if we request
any action of holders or if an owner of a beneficial interest in a registered
global security desires to give or take any action that a holder is entitled to
give or take under the applicable indenture, warrant agreement, purchase
contract or unit agreement, the depositary for the registered global security
would authorize the participants holding the relevant beneficial interests to
give or take that action, and the participants would authorize beneficial
owners owning through them to give or take that action or would otherwise act
upon the instructions of beneficial owners holding through them.
Payments of principal of, and premium, if any, and interest on, debt
securities, and any payments to holders with respect to warrants, purchase
contracts or units, represented by a registered global security registered in
the name of a depositary or its nominee will be made to the depositary or its
nominee, as the case may be, as the registered owner of the registered global
security. None of Morgan Stanley, the trustees, the warrant agents, the unit
agents or any other agent of Morgan Stanley, agent of the trustees or agent of
the warrant agents or unit agents will have any responsibility or liability for
any aspect of the records relating to payments made on account of beneficial
ownership interests in the registered global security or for maintaining,
supervising or reviewing any records relating to those beneficial ownership
interests.
We expect that the depositary for any of the securities represented by a
registered global security, upon receipt of any payment of principal, premium,
interest or other distribution of underlying securities or other property to
holders on that registered global security, will immediately credit
participants' accounts in amounts proportionate to their
39
respective beneficial interests in that registered global security as shown on
the records of the depositary. We also expect that payments by participants to
owners of beneficial interests in a registered global security held through
participants will be governed by standing customer instructions and customary
practices, as is now the case with the securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of those participants.
If the depositary for any of these securities represented by a registered
global security is at any time unwilling or unable to continue as depositary or
ceases to be a clearing agency registered under the Securities Exchange Act of
1934, and a successor depositary registered as a clearing agency under the
Securities Exchange Act of 1934 is not appointed by us within 90 days, we will
issue securities in definitive form in exchange for the registered global
security that had been held by the depositary. In addition, we may at any time
and in our sole discretion decide not to have any of the securities represented
by one or more registered global securities. If we make that decision, we will
issue securities in definitive form in exchange for all of the registered
global security or securities representing those securities. Any securities
issued in definitive form in exchange for a registered global security will be
registered in the name or names that the depositary gives to the relevant
trustee, warrant agent, unit agent or other relevant agent of ours or theirs.
It is expected that the depositary's instructions will be based upon directions
received by the depositary from participants with respect to ownership of
beneficial interests in the registered global security that had been held by
the depositary.
Bearer Global Securities. The securities may also be issued in the form of
one or more bearer global securities that will be deposited with a common
depositary for Euroclear Bank S.A./N.V., as operator of the Euroclear System,
and Clearstream Banking, societe anonyme, or with a nominee for the depositary
identified in the prospectus supplement relating to those securities. The
specific terms and procedures, including the specific terms of the depositary
arrangement, with respect to any securities to be represented by a bearer
global security will be described in the prospectus supplement relating to
those securities.
Limitations on Issuance of Bearer Securities and Bearer Debt Warrants
In compliance with United States federal income tax laws and regulations,
bearer securities, including bearer securities in global form, and bearer debt
warrants will not be offered, sold or delivered, directly or indirectly, in the
United States or its possessions or to United States persons, as defined below,
except as otherwise permitted by United States Treasury Regulations Section
1.163-5(c)(2)(i)(D). Any underwriters, agents or dealers participating in the
offerings of bearer securities or bearer debt warrants, directly or indirectly,
must agree that:
o they will not, in connection with the original issuance of any bearer
securities or during the restricted period with respect to such
bearer notes (as defined in United States Treasury Regulations
Section 1.163-5(c)(2)(i)(D)), which we refer to as the "restricted
period," offer, sell or deliver, directly or indirectly, any bearer
securities in the United States or its possessions or to United
States persons, other than as permitted by the applicable Treasury
Regulations described above, and
o they will not, at any time, offer, sell or deliver, directly or
indirectly, any bearer debt warrants in the United States or its
possessions or to United States persons, other than as permitted by
the applicable Treasury Regulations described above.
In addition, any underwriters, agents or dealers must have procedures
reasonably designed to ensure that their employees or agents who are directly
engaged in selling bearer securities or bearer debt warrants are aware of the
above restrictions on the offering, sale or delivery of bearer securities or
bearer debt warrants.
Bearer securities, other than temporary global debt securities and bearer
securities that satisfy the requirements of United States Treasury Regulations
Section 1.163-5(c)(2)(i)(D)(3)(iii) and any coupons or talons appertaining
thereto, will not be delivered in definitive form, and no interest will be paid
thereon, unless Morgan Stanley has received a signed certificate in writing, or
an electronic certificate described in United States Treasury Regulations
Section 1.163-5(c)(2)(i)(D)(3)(ii), stating that on the date of that
certificate the bearer security:
o is owned by a person that is not a United States person;
40
o is owned by a United States person that (a) is a foreign branch of a
United States financial institution, as defined in applicable United
States Treasury Regulations, which we refer to as a "financial
institution," purchasing for its own account or for resale, or (b) is
acquiring the bearer security through a foreign branch of a United
States financial institution and who holds the bearer security
through that financial institution through that date, and in either
case (a) or (b) above, each of those United States financial
institutions agrees, on its own behalf or through its agent, that
Morgan Stanley may be advised that it will comply with the
requirements of Section 165(j)(3)(A), (B) or (C) of the Internal
Revenue Code of 1986 and the regulations thereunder; or
o is owned by a United States or foreign financial institution for the
purposes of resale during the restricted period and, in addition, if
the owner of the bearer security is a United States or foreign
financial institution described in this clause, whether or not also
described in the first or second clause above, the financial
institution certifies that it has not acquired the bearer security
for purposes of resale directly or indirectly to a United States
person or to a person within the United States or its possessions.
We will not issue bearer debt warrants in definitive form.
We will make payments on bearer securities and bearer debt warrants only
outside the United States and its possessions except as permitted by the above
regulations.
Bearer securities, other than temporary global securities, and any coupons
issued with bearer securities will bear the following legend: "Any United
States person who holds this obligation will be subject to limitations under
the United States income tax laws, including the limitations provided in
sections 165(j) and 1287(a) of the Internal Revenue Code." The sections
referred to in this legend provide that, with exceptions, a United States
person will not be permitted to deduct any loss, and will not be eligible for
capital gain treatment with respect to any gain, realized on the sale, exchange
or redemption of that bearer security or coupon.
As used in the preceding three paragraphs, the term bearer securities
includes bearer securities that are part of units and the term bearer debt
warrants includes bearer debt warrants that are part of units. As used herein,
"United States person" means a citizen or resident of the United States for
United States federal income tax purposes, a corporation or partnership,
including an entity treated as a corporation or partnership for United States
federal income tax purposes, created or organized in or under the laws of the
United States, or any state of the United States or the District of Columbia,
an estate the income of which is subject to United States federal income
taxation regardless of its source, or a trust if a court within the United
States is able to exercise primary supervision of the administration of the
trust and one or more United States persons have the authority to control all
substantial decisions of the trust. In addition, some trusts treated as United
States persons before August 20, 1996 may elect to continue to be so treated to
the extent provided in the Treasury Regulations.
Form of Securities Included in Units
The form of the universal warrant or purchase contract included in a unit
will correspond to the form of the unit and of any other security included in
that unit.
PLAN OF DISTRIBUTION
We may sell the securities being offered by this prospectus in three ways:
(1) through agents, (2) through underwriters and (3) through dealers. The
agents, underwriters or dealers in the United States will include Morgan
Stanley & Co. Incorporated, which we refer to as MS & Co., and/or Morgan
Stanley DW Inc., which we refer to as MSDWI, or other affiliates of ours, and
the agents, underwriters, or dealers outside the United States will include
Morgan Stanley & Co. International Limited, which we refer to as MSIL, and/or
Bank Morgan Stanley AG or other affiliates of ours.
We may designate agents from time to time to solicit offers to purchase
these securities. We will name any such agent, who may be deemed to be an
underwriter as that term is defined in the Securities Act, and state any
commissions
41
we are to pay to that agent in the applicable prospectus supplement. That agent
will be acting on a reasonable efforts basis for the period of its appointment
or, if indicated in the applicable prospectus supplement, on a firm commitment
basis.
If we use any underwriters to offer and sell these securities, we will
enter into an underwriting agreement with those underwriters when we and they
determine the offering price of the securities, and we will include the names
of the underwriters and the terms of the transaction in the applicable
prospectus supplement.
If we use a dealer to offer and sell these securities, we will sell the
securities to the dealer, as principal, and will name the dealer in the
applicable prospectus supplement. The dealer may then resell the securities to
the public at varying prices to be determined by that dealer at the time of
resale.
Our net proceeds will be the purchase price in the case of sales to a
dealer, the public offering price less discount in the case of sales to an
underwriter or the purchase price less commission in the case of sales through
an agent -- in each case, less other expenses attributable to issuance and
distribution.
In order to facilitate the offering of these securities, the underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
price of these securities or any other securities the prices of which may be
used to determine payments on these securities. Specifically, the underwriters
may sell more securities than they are obligated to purchase in connection with
the offering, creating a short position for their own accounts. A short sale is
covered if the short position is no greater than the number or amount of
securities available for purchase by the underwriters under any overallotment
option. The underwriters can close out a covered short sale by exercising the
overallotment option or purchasing these securities in the open market. In
determining the source of securities to close out a covered short sale, the
underwriters will consider, among other things, the open market price of these
securities compared to the price available under the overallotment option. The
underwriters may also sell these securities or any other securities in excess
of the overallotment option, creating a naked short position. The underwriters
must close out any naked short position by purchasing securities in the open
market. A naked short position is more likely to be created if the underwriters
are concerned that there may be downward pressure on the price of these
securities in the open market after pricing that could adversely affect
investors who purchase in the offering. As an additional means of facilitating
the offering, the underwriters may bid for, and purchase, these securities or
any other securities in the open market to stabilize the price of these
securities or of any other securities. Finally, in any offering of the
securities through a syndicate of underwriters, the underwriting syndicate may
also reclaim selling concessions allowed to an underwriter or a dealer for
distributing these securities in the offering, if the syndicate repurchases
previously distributed securities to cover syndicate short positions or to
stabilize the price of these securities. Any of these activities may raise or
maintain the market price of these securities above independent market levels
or prevent or retard a decline in the market price of these securities. The
underwriters are not required to engage in these activities and may end any of
these activities at any time.
If so indicated in the applicable prospectus supplement, one or more
firms, including MS & Co., MSIL, MSDWI and Bank Morgan Stanley AG, which we
refer to as "remarketing firms," acting as principals for their own accounts or
as agents for us, may offer and sell these securities as part of a remarketing
upon their purchase, in accordance with their terms. We will identify any
remarketing firm, the terms of its agreement, if any, with us and its
compensation in the applicable prospectus supplement.
Remarketing firms, agents, underwriters and dealers may be entitled under
agreements with us to indemnification by us against some civil liabilities,
including liabilities under the Securities Act, and may be customers of, engage
in transactions with, or perform services for us in the ordinary course of
business.
If so indicated in the prospectus supplement, we will authorize agents,
underwriters or dealers to solicit offers by some purchasers to purchase debt
securities or warrants, purchase contracts or units, as the case may be, from
us at the public offering price stated in the prospectus supplement under
delayed delivery contracts providing for payment and delivery on a specified
date in the future. These contracts will be subject to only those conditions
described in the prospectus supplement, and the prospectus supplement will
state the commission payable for solicitation of these offers.
42
Any underwriter, agent or dealer utilized in the initial offering of
securities will not confirm sales to accounts over which it exercises
discretionary authority without the prior specific written approval of its
customer.
MS & Co., MSIL, MSDWI and Bank Morgan Stanley AG are wholly-owned
subsidiaries of Morgan Stanley. Each initial offering of securities will be
conducted in compliance with the requirements of Rule 2720 of the National
Association of Securities Dealers, Inc., which is commonly referred to as the
NASD, regarding a NASD member firm's distributing the securities of an
affiliate. Following the initial distribution of any of these securities, MS &
Co., MSIL, MSDWI, Bank Morgan Stanley AG and other affiliates of Morgan Stanley
may offer and sell these securities in the course of their business as
broker-dealers, subject, in the case of preferred stock and depositary shares,
to obtaining any necessary approval of the New York Stock Exchange, Inc. for
any of the offers and sales MS & Co. and MSDWI may make. MS & Co., MSIL, MSDWI,
Bank Morgan Stanley AG and other affiliates may act as principals or agents in
these transactions and may make any sales at varying prices related to
prevailing market prices at the time of sale or otherwise. MS & Co., MSIL,
MSDWI, Bank Morgan Stanley AG and other affiliates may use this prospectus in
connection with these transactions. None of MS & Co., MSIL, MSDWI, Bank Morgan
Stanley AG or any other affiliate is obligated to make a market in any of these
securities and may discontinue any market-making activities at any time without
notice.
In the event that MS & Co., MSDWI or any other NASD member participates in
a public offering of these securities: (a) the actual price and selling terms
will be disclosed in post-effective amendments or prospectus supplements; (b)
the maximum compensation to be received by MS & Co., MSDWI or any other NASD
member in this distribution will be disclosed and submitted for approval with
the NASD's Corporate Financing Department (the "Department"); and (c) prior to
the commencement of the distribution, underwriting documents proposed for use
will be submitted to the Department for review. Underwriting discounts and
commissions on securities sold in the initial distribution will not exceed 8%
of the offering proceeds.
LEGAL MATTERS
The validity of these securities will be passed upon for Morgan Stanley by
Sidley Austin Brown & Wood LLP, or other counsel who is satisfactory to MS &
Co., MSIL, MSDWI or Bank Morgan Stanley AG, as the case may be, and who may be
an officer of Morgan Stanley. Davis Polk & Wardwell will pass upon some legal
matters relating to these securities for the underwriters. Davis Polk &
Wardwell has in the past represented Morgan Stanley and continues to represent
Morgan Stanley on a regular basis and in a variety of matters, including in
connection with its private equity and leveraged capital activities.
EXPERTS
The consolidated financial statements and financial statement schedules of
Morgan Stanley and its subsidiaries, at November 30, 2001 and 2000 and for each
of the three fiscal years in the period ended November 30, 2001, included in
Morgan Stanley's Annual Report on Form 10-K for the fiscal year ended November
30, 2001, have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their reports thereon and incorporated herein by reference. These
consolidated financial statements have been incorporated by reference in
reliance upon the respective reports given upon the authority of Deloitte &
Touche LLP, as experts in accounting and auditing.
ERISA MATTERS FOR PENSION PLANS AND INSURANCE COMPANIES
Each fiduciary of a pension, profit-sharing or other employee benefit plan
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), which we refer to as a "plan," should consider the fiduciary
standards of ERISA in the context of the plan's particular circumstances before
authorizing an investment in these securities. Accordingly, among other
factors, the fiduciary should consider whether the investment would satisfy the
prudence and diversification requirements of ERISA and would be consistent with
the documents and instruments governing the plan.
43
In addition, we and certain of our subsidiaries and affiliates, including
MS & Co. and MSDWI, may be considered "parties in interest" within the meaning
of ERISA or "disqualified persons" within the meaning of the Code with respect
to many plans, as well as many individual retirement accounts and Keogh plans
(also "plans"). Prohibited transactions within the meaning of ERISA or the Code
would likely arise, for example, if these securities are acquired by or with
the assets of a plan with respect to which MS & Co., MSDWI or any of their
affiliates is a service provider, unless the securities are acquired pursuant
to an exemption from the "prohibited transaction" rules. A violation of these
"prohibited transaction" rules may result in an excise tax or other liabilities
under ERISA and/or Section 4975 of the Code for those persons, unless exemptive
relief is available under an applicable statutory or administrative exemption.
The U.S. Department of Labor has issued five prohibited transaction class
exemptions ("PTCEs") that may provide exemptive relief for direct or indirect
prohibited transactions resulting from the purchase or holding of these
securities. Those class exemptions are PTCE 96-23 (for certain transactions
determined by in-house asset managers), PTCE 95-60 (for certain transactions
involving insurance company general accounts), PTCE 91-38 (for certain
transactions involving bank collective investment funds), PTCE 90-1 (for
certain transactions involving insurance company separate accounts) and PTCE
84-14 (for certain transactions determined by independent qualified asset
managers).
Because we may be considered a party in interest with respect to many
plans, unless otherwise specified in the applicable prospectus supplement,
these securities may not be purchased or held by any plan, any entity whose
underlying assets include "plan assets" by reason of any plan's investment in
the entity (a "Plan Asset Entity") or any person investing "plan assets" of any
plan, unless such purchaser or holder is eligible for exemptive relief,
including relief available under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 or
such purchase and holding is otherwise not prohibited. Unless otherwise
specified in the applicable prospectus supplement, any purchaser, including any
fiduciary purchasing on behalf of a plan, or holder of these securities will be
deemed to have represented, in its corporate and fiduciary capacity, by its
purchase and holding thereof that it either (a) is not a plan or a Plan Asset
Entity and is not purchasing such securities on behalf of or with "plan assets"
of any plan or (b) is eligible for exemptive relief or such purchase or holding
is not prohibited by ERISA or Section 4975 of the Code.
Under ERISA, assets of a plan may include assets held in the general
account of an insurance company which has issued an insurance policy to such
plan or assets of an entity in which the plan has invested. Accordingly,
insurance company general accounts that include assets of a plan must ensure
that one of the foregoing exemptions is available. Due to the complexity of
these rules and the penalties that may be imposed upon persons involved in
non-exempt prohibited transactions, it is particularly important that
fiduciaries or other persons considering purchasing these securities on behalf
of or with "plan assets" of any plan consult with their counsel regarding the
availability of exemptive relief under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14.
Purchasers of these securities have exclusive responsibility for ensuring
that their purchase and holding of the securities do not violate the prohibited
transaction rules of ERISA or the Code.
44
MORGAN STANLEY DEAN WITTER & CO.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING OFFERS TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
PROSPECTUS (Subject to Completion, Issued March 1, 2002)
$900,000,000
Morgan Stanley Capital Trust III
Morgan Stanley Capital Trust IV
Morgan Stanley Capital Trust V
Morgan Stanley Capital Trust VI
Morgan Stanley Capital Trust VII
CAPITAL SECURITIES
guaranteed by
Morgan Stanley Dean Witter & Co.
--------------------
The Morgan Stanley Capital Trusts may offer from time to time capital
securities guaranteed by Morgan Stanley Dean Witter & Co. This prospectus
describes the general terms of these securities and the general manner in which
we will offer the securities. The specific terms of any securities we offer
will be included in a supplement to this prospectus. The prospectus supplement
will also describe the specific manner in which we will offer the securities.
This prospectus may not be used to sell securities unless accompanied by a
prospectus supplement.
As used in this prospectus, except as otherwise specified, the terms
"Morgan Stanley," "we," "us" and "our" refer to Morgan Stanley Dean Witter &
Co.
--------------------
The Securities and Exchange Commission and state securities regulators
have not approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
--------------------
MORGAN STANLEY
, 2002
WHERE YOU CAN FIND MORE INFORMATION
We file annual reports, proxy statements and other information with the
SEC. You may read and copy any document we file at the SEC's public reference
room at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. Please call
the SEC at 1-800-SEC-0330 for further information on the public reference room.
In addition, the SEC maintains a website that contains reports, proxy
statements and other information that we electronically file. The address of
the SEC's website is http://www.sec.gov.
This prospectus is part of a registration statement we filed with the SEC.
This prospectus omits some information contained in the registration statement
in accordance with SEC rules and regulations. You should review the information
and exhibits in the registration statement for further information on us and
our consolidated subsidiaries and the securities we are offering. Statements in
this prospectus concerning any document we filed as an exhibit to the
registration statement or that we otherwise filed with the SEC are not intended
to be comprehensive and are qualified by reference to these filings. You should
review the complete document to evaluate these statements.
Our common stock, par value $0.01 per share, is listed on the New York
Stock Exchange, Inc. and the Pacific Exchange, Inc. under the symbol "MWD." You
may inspect reports, proxy statements and other information concerning us and
our consolidated subsidiaries at the offices of the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005, and the Pacific Exchange,
Inc., 115 Sansome Street, San Francisco, California 94104.
The SEC allows us to incorporate by reference much of the information we
file with them, which means that we can disclose important information to you
by referring you to those publicly available documents. The information that we
incorporate by reference in this prospectus is considered to be part of this
prospectus. Because we are incorporating by reference future filings with the
SEC, this prospectus is continually updated and those future filings may modify
or supersede some of the information included or incorporated by reference in
this prospectus. This means that you must look at all of the SEC filings that
we incorporate by reference to determine if any of the statements in this
prospectus or in any document previously incorporated by reference have been
modified or superseded. This prospectus incorporates by reference the documents
listed below and any future filings we make with the SEC under Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until we complete our
offering of the securities to be issued under the registration statement or, if
later, the date on which any of our affiliates cease offering and selling these
securities:
(a) Annual Report on Form 10-K for the fiscal year ended November 30,
2001; and
(b) Current Report on Form 8-K dated December 19, 2001.
You can request a copy of these documents, excluding exhibits, at no cost,
by writing or telephoning us at the following address:
Morgan Stanley Dean Witter & Co.
1585 Broadway
New York, New York 10036
Attention: Investor Relations
(212) 762-8131
2
There are no separate financial statements of the Morgan Stanley Capital
Trusts in this prospectus. We do not believe these financial statements would
be helpful because:
o the Morgan Stanley Capital Trusts are wholly-owned subsidiaries of
Morgan Stanley, which files consolidated financial information under
the Securities Exchange Act of 1934;
o the Morgan Stanley Capital Trusts will not have any independent
operations other than issuing capital securities and common
securities, which are together referred to as "trust securities,"
holding junior subordinated debentures of Morgan Stanley as trust
assets and other necessary or incidental activities as described in
this prospectus; and
o Morgan Stanley guarantees the payments on the capital securities of
the Morgan Stanley Capital Trusts.
We do not expect any of the Morgan Stanley Capital Trusts will be subject
to the reporting requirements of the Securities Exchange Act of 1934.
3
MORGAN STANLEY
Morgan Stanley is a global financial services firm that maintains leading
market positions in each of its three business segments -- Securities,
Investment Management and Credit Services.
Morgan Stanley's Securities business segment includes:
o investment banking, including securities underwriting and
distribution, financial advisory services, including advice on
mergers and acquisitions, restructurings, real estate and project
finance, and financing and investing;
o sales, trading, financing and market-making activities to facilitate
client orders and on a proprietary basis, in such products as equity
securities and related products, and fixed income securities and
related products, including foreign exchange and commodities;
o principal investing, including private equity activities;
o securities services to meet individual investor needs, including
full-service brokerage services for investors seeking financial
advice, online execution capabilities for self-directed investors
desiring to invest with limited professional assistance and financial
advisory services for high net worth clients; and
o other businesses, including aircraft financing activities.
Morgan Stanley's Investment Management business segment includes global
asset management products and services for individual and institutional
investors through three principal distribution channels: Morgan Stanley's
financial advisors and investment representatives; a non-proprietary channel
consisting of third-party broker-dealers, banks, financial planners and other
intermediaries; and Morgan Stanley's institutional channel.
Morgan Stanley's Credit Services business segment includes Discover
Financial Services, which offers the Discover(R) Classic Card, the Discover
Gold Card, the Discover Platinum Card, the Morgan Stanley CardSM and other
proprietary general purpose credit cards as well as related consumer finance
products and services; and Discover Business Services, a proprietary network of
merchant and cash access locations in the United States.
Morgan Stanley provides its products and services to a large and
diversified group of clients and customers, including corporations,
governments, financial institutions and individuals. Morgan Stanley conducts
its business from its headquarters in New York City, its regional offices and
branches throughout the United States and its principal offices in London,
Tokyo, Hong Kong and other world financial centers.
Morgan Stanley's principal executive offices are at 1585 Broadway, New
York, New York 10036, and its telephone number is (212) 761-4000. Under this
heading, "Use of Proceeds" and "Consolidated Ratios of Earnings to Fixed
Charges and Earnings to Fixed Charges and Preferred Stock Dividends," the term
"Morgan Stanley" includes Morgan Stanley Dean Witter & Co. and its consolidated
subsidiaries.
THE MORGAN STANLEY CAPITAL TRUSTS
We created the Morgan Stanley Capital Trusts, each of which is a Delaware
business trust, pursuant to trust agreements and the filing of certificates of
trust with the Delaware Secretary of State. We will execute amended and
restated trust agreements for the Morgan Stanley Capital Trusts, referred to in
this prospectus as the "trust agreements," which will state the terms and
conditions for the Morgan Stanley Capital Trusts to issue and sell their trust
securities. We have filed a form of trust agreement as an exhibit to the
registration statement of which this prospectus forms a part. We, as holder of
the common securities, intend to select two of our employees, officers or
affiliates to serve as administrators of the Morgan Stanley Capital Trusts.
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Each Morgan Stanley Capital Trust exists solely to
o issue and sell its trust securities;
o use the proceeds from the sale of its trust securities to purchase
Morgan Stanley's junior subordinated debentures; and
o engage in other activities that are necessary, convenient or
incidental to the above purposes (such as registering the transfer of
trust securities).
Accordingly, our junior subordinated debentures will be the sole assets of
each Morgan Stanley Capital Trust, and payments under the junior subordinated
debentures owned by each Morgan Stanley Capital Trust will be its sole source
of revenues.
We will hold directly or indirectly all of the common securities of each
of the Morgan Stanley Capital Trusts. Unless otherwise specified in the
applicable prospectus supplement, the common securities will represent an
aggregate liquidation amount equal to at least 3% of each Morgan Stanley
Capital Trust's total capitalization. The capital securities will represent the
remaining percentage of each Morgan Stanley Capital Trust's total
capitalization. The common securities will have terms substantially identical
to, and will rank equal in priority of payment with, the capital securities.
However, if Morgan Stanley defaults in payments due under the junior
subordinated debentures owned by a Morgan Stanley Capital Trust, then
distributions, redemption payments and liquidation payments must be paid to the
holders of the capital securities of that trust before any payments are paid to
the holders of the common securities of that trust. Unless otherwise specified
in the applicable prospectus supplement, each Morgan Stanley Capital Trust will
have a term of approximately 40 years from the initial issue date of its
capital securities, but may dissolve earlier as provided in the applicable
trust agreement and described in the applicable prospectus supplement. Unless
otherwise specified in the applicable prospectus supplement, the name and
address of the Delaware trustee for each Morgan Stanley Capital Trust will be
The Bank of New York (Delaware), White Clay Center, Route 273, Newark, Delaware
19711, and the name and address of the property trustee, the guarantee trustee
and the indenture trustee for each Morgan Stanley Capital Trust will be The
Bank of New York, 101 Barclay Street, Floor 21 West, New York, New York 10286.
The capital securities will be guaranteed by us as described in this
prospectus and the applicable prospectus supplement.
Only we, as direct or indirect owner of the common securities, can remove
or replace the administrators. In addition, we can increase or decrease the
number of administrators. Also, we, as direct or indirect holder of the common
securities, will generally have the sole right to remove or replace the
property trustee and Delaware trustee. However, if Morgan Stanley defaults on
the junior subordinated debentures owned by a Morgan Stanley Capital Trust or
an event of default under the trust agreement occurs, then, so long as that
default is continuing, the holders of a majority in liquidation amount of the
outstanding capital securities of that trust may remove and replace the
property trustee and Delaware trustee for that trust.
We will pay all fees and expenses related to the organization of the
Morgan Stanley Capital Trusts and the offering of the capital securities. We
will also pay all ongoing costs and expenses of the Morgan Stanley Capital
Trusts, except each trust's obligations under the trust securities.
USE OF PROCEEDS
The Morgan Stanley Capital Trusts will use all proceeds from the sale of
trust securities to purchase junior subordinated debentures from us. Unless
otherwise set forth in the applicable prospectus supplement, we intend to use
the net proceeds from the sale of our junior subordinated debentures for
general corporate purposes, which may include, among other things:
o additions to working capital;
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o the redemption of outstanding preferred stock;
o the repurchase of outstanding common stock; and
o the repayment of indebtedness.
We anticipate that we will raise additional funds from time to time
through equity or debt financing, including borrowings under revolving credit
agreements, to finance our businesses worldwide.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES AND
EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth Morgan Stanley's consolidated ratios of
earnings to fixed charges and earnings to fixed charges and preferred stock
dividends for the periods indicated.
Fiscal Year
--------------------------------
2001 2000 1999 1998 1997
---- ---- ---- ---- ----
Ratio of earnings to
fixed charges............... 1.3 1.5 1.6 1.4 1.4
Ratio of earnings to
fixed charges and
preferred stock dividends... 1.3 1.5 1.6 1.4 1.4
For purposes of calculating the ratio of earnings to fixed charges and the
ratio of earnings to fixed charges and preferred stock dividends, earnings are
the sum of:
o pre-tax income;
o fixed charges; and
o amortization of capitalized interest;
less:
o capitalized interest.
For purposes of calculating both ratios, fixed charges are the sum of:
o interest expensed and capitalized;
o amortized premiums, discounts and capitalized expenses related to
indebtedness; and
o our estimate of the interest component of rental expenses.
Additionally, for purposes of calculating the ratio of earnings to fixed
charges and preferred stock dividends, preferred stock dividends are included
in the denominator of the ratio on a pre-tax basis. Distributions on capital
securities issued by MSDW Capital Trust I and Morgan Stanley Capital Trust II,
which are Delaware business trusts all of the common securities of which are
owned by us, are included in fixed charges as interest expense, not as
preferred stock dividends.
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DESCRIPTION OF CAPITAL SECURITIES
Each Morgan Stanley Capital Trust will issue only one series of capital
securities and one series of common securities. The trust agreement for each
Morgan Stanley Capital Trust will be qualified as an indenture under the Trust
Indenture Act of 1939. The capital securities will have terms and will be
subject to conditions as set forth in the trust agreement or made a part of the
trust agreement by the Trust Indenture Act. This summary of certain provisions
of the capital securities and each trust agreement does not purport to be
complete and is subject to, and qualified in its entirety by reference to, all
the provisions of each trust agreement, including the definitions of certain
terms, and those provisions made part of each trust agreement by the Trust
Indenture Act. A form of the trust agreement to be used in connection with the
issuance of the capital securities and a form of the capital securities are
filed as exhibits to the registration statement that includes this prospectus.
Wherever particular defined terms of a trust agreement are referred to in this
prospectus, those defined terms are incorporated in this prospectus by
reference. A copy of the form of the trust agreement is available upon request
from the property trustee of the relevant trust.
General
The capital securities will represent preferred undivided beneficial
interests in the assets of the applicable Morgan Stanley Capital Trust. The
only assets of a Morgan Stanley Capital Trust, and its only source of revenues,
will be the junior subordinated debentures purchased by the Morgan Stanley
Capital Trust with the proceeds from the sale of its trust securities.
Accordingly, distribution and other payment dates for the trust securities will
correspond with the interest and other payment dates for the junior
subordinated debentures. If we do not make payments on the junior subordinated
debentures in accordance with their terms, the Morgan Stanley Capital Trust
will not have funds available to pay distributions or other amounts payable on
the trust securities issued by that Morgan Stanley Capital Trust in accordance
with their terms. The capital securities issued by a Morgan Stanley Capital
Trust will rank equally, and payments will be made proportionately, with the
common securities issued by that Morgan Stanley Capital Trust except as
described below under "--Subordination of Common Securities" and in the
applicable prospectus supplement. Payments on the capital securities will be
fully and unconditionally guaranteed by us to the extent described under
"Description of Guarantees" and in the applicable prospectus supplement.
Each Morgan Stanley Capital Trust will describe the specific terms of the
capital securities it is offering in the applicable prospectus supplement,
including:
o the specific designation, liquidation amount, number to be issued by
the Morgan Stanley Capital Trust and purchase price;
o the currency or units based on or relating to currencies in which
distributions and other payments will or may be payable;
o the distribution rates (or the method by which the rates will be
determined), if any;
o the dates on which any distributions will be payable;
o any provisions relating to deferral of distribution payments;
o the places where distributions and other amounts payable on the
capital securities will be payable;
o any repayment, redemption, prepayment or sinking fund provisions;
o any conversion or exchange provisions;
o the voting rights, if any, of holders of the capital securities;
7
o the terms and conditions, if any, upon which the assets of the Morgan
Stanley Capital Trust may be distributed to holders of the capital
securities;
o any applicable United States federal income tax consequences; and
o any other specific terms of the capital securities.
If indicated in the applicable prospectus supplement, the terms of the
trust agreement for, and capital securities offered by, a Morgan Stanley
Capital Trust may differ from the terms summarized in this prospectus.
Distributions
Distributions on the capital securities will be cumulative. Distributions
will accumulate from the date of original issuance and will be payable on the
dates specified in the applicable prospectus supplement. The amount of
distributions payable for any period less than a full distribution period will
be computed on the basis of a 360-day year of twelve 30-day months and the
actual days elapsed in a partial month in that period, unless otherwise
specified in the applicable prospectus supplement. Distributions payable for
each full distribution period will be computed by dividing the annual rate by
four, unless otherwise specified in the applicable prospectus supplement.
Subordination of Common Securities
Payment of distributions on, and other amounts payable under, the capital
securities and the common securities issued by a Morgan Stanley Capital Trust
will be made proportionately based on the liquidation amount of the capital
securities and the common securities. However, unless otherwise provided in the
applicable prospectus supplement, if on any distribution date or other payment
date, an event of default with respect to the junior subordinated debentures,
which we refer to as a "debenture event of default," owned by the Morgan
Stanley Capital Trust has occurred and is continuing as a result of any failure
by us to pay any amounts in respect of the junior subordinated debentures when
due, no payment of any distribution on, or other amounts payable under, the
common securities will be made unless cash payment in full of all accumulated
amounts then due and payable with respect to all of the Morgan Stanley Capital
Trust's outstanding capital securities has been made or provided for, and all
funds immediately available to the property trustee will first be applied to
the cash payment in full of all distributions on, and all other amounts with
respect to, capital securities then due and payable.
In the case of any event of default under the applicable trust agreement
occurring as a result of a debenture event of default, the holders of the
applicable Morgan Stanley Capital Trust's common securities will have no right
to act with respect to the event of default under the applicable trust
agreement until the effects with respect to the capital securities of all
events of default resulting from a debenture event of default have been cured,
waived or otherwise eliminated. Until all of the events of default resulting
from a debenture event of default have been cured, waived or otherwise
eliminated, the property trustee will act solely on behalf of the holders of
the capital securities and not on behalf of the holders of the common
securities, and only the holders of the capital securities will have the right
to direct the property trustee to act on their behalf.
Liquidation Distribution upon Dissolution
The amount payable on capital securities in the event of any liquidation
of a Morgan Stanley Capital Trust will be the stated liquidation amount per
capital security or other amount as specified in the applicable prospectus
supplement plus accumulated and unpaid distributions, which, if specified in
the applicable prospectus supplement, may be in the form of a distribution of
the junior subordinated debentures owned by the Morgan Stanley Capital Trust.
The holders of all the outstanding common securities of a Morgan Stanley
Capital Trust will have the right at any time to dissolve the Morgan Stanley
Capital Trust and, after satisfaction of liabilities to creditors of the Morgan
Stanley Capital Trust as provided by applicable law, cause the junior
subordinated debentures owned by the Morgan Stanley Capital Trust to be
distributed to the holders of the capital securities and common securities in
liquidation of the Morgan Stanley Capital Trust as described in the applicable
prospectus supplement. Other terms
8
for the dissolution of a Morgan Stanley Capital Trust and the distribution or
liquidation of its assets to holders of trust securities will be set forth in
the applicable prospectus supplement.
Capital Securities Events of Default; Notice
Any one of the following events constitutes an event of default under a
trust agreement, which we refer to as a "capital securities event of default,"
regardless of the reason for the capital securities event of default and
whether it is voluntary or involuntary or effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body:
o the occurrence of an event of default with respect to the junior
subordinated debentures in which the proceeds from the sale of the
trust securities have been invested;
o default by the applicable Morgan Stanley Capital Trust or the
property trustee in the payment of any distribution on the capital
securities when it becomes due and payable, and continuation of the
default for a period of 30 days;
o default by the applicable Morgan Stanley Capital Trust or the
property trustee in the payment of any redemption price of any trust
security issued pursuant to its trust agreement when it becomes due
and payable;
o default in the performance, or breach, in any material respect, of
any covenant or warranty of the applicable property trustee and
Delaware trustee (other than a covenant or warranty described above
dealing with default in the payment of any distribution or redemption
price) and continuation of such default or breach for a period of 60
days after written notice has been given, by registered or certified
mail, to the applicable property trustee and Delaware trustee and us
by the holders of at least 25% in aggregate liquidation amount of the
capital securities outstanding, which notice must specify the default
or breach, demand it be remedied and state that it is a "Notice of
Default" under the applicable trust agreement; or
o the occurrence of certain events of bankruptcy or insolvency with
respect to the property trustee or all or substantially all of its
property if a successor property trustee has not been appointed
within 90 days of the event.
Within ten business days after the occurrence of any capital securities
event of default actually known to the property trustee, the property trustee
will transmit notice of the event of default to the holders of the applicable
trust securities and the administrators, unless the capital securities event of
default has been cured or waived. In addition, the property trustee will notify
each holder of the capital securities of any notice of default received by it
with respect to the junior subordinated debentures. We, as depositor, and the
administrators are required to file annually with the property trustee a
certificate as to whether or not the applicable Morgan Stanley Capital Trust is
in compliance with all the conditions and covenants under its trust agreement.
If a debenture event of default has occurred and is continuing as a result
of any failure by us to pay any amounts in respect of the junior subordinated
debentures owned by a Morgan Stanley Capital Trust when due, the capital
securities issued by that Morgan Stanley Capital Trust will have a preference
over the common securities issued by the Morgan Stanley Capital Trust with
respect to payments of any amounts in respect of the capital securities as
described above under "--Subordination of Common Securities."
Removal of Morgan Stanley Capital Trustees; Appointment of Successors
The holders of at least a majority in aggregate liquidation amount of the
outstanding capital securities may remove the property trustee or the Delaware
trustee for cause or, if a debenture event of default has occurred and is
continuing, with or without cause. If a property trustee or Delaware trustee is
removed by the holders of the outstanding capital securities, the successor may
be appointed by the holders of at least 25% in liquidation amount of the
outstanding capital securities. If a property trustee
9
or Delaware trustee resigns, the resigning property trustee or Delaware trustee
will appoint its successor. If a resigning property trustee or Delaware trustee
fails to appoint a successor, the holders of at least 25% in liquidation amount
of the outstanding capital securities may appoint a successor. If a successor
has not been appointed by the holders, any holder of capital securities or
common securities or the property trustee or the Delaware trustee may petition
a court of competent jurisdiction to appoint a successor. Any Delaware trustee
must meet the applicable requirements of Delaware law. Any property trustee
must be a national- or state-chartered bank and at the time of appointment have
capital and surplus of at least $50,000,000. No resignation or removal of a
property trustee or Delaware trustee and no appointment of a successor trustee
shall be effective until the acceptance of appointment by the successor trustee
in accordance with the provisions of the applicable trust agreement.
Merger or Consolidation of Morgan Stanley Capital Trustees
Any entity into which a property trustee or Delaware trustee is merged or
converted or with which it is consolidated, or any entity resulting from any
merger, conversion or consolidation to which the property trustee or the
Delaware trustee is a party, or any entity succeeding to all or substantially
all the corporate trust business of the property trustee or the Delaware
trustee, will be the successor of that property trustee or Delaware trustee
under each trust agreement, provided it is otherwise qualified and eligible.
Mergers, Consolidations, Amalgamations or Replacements of the Morgan Stanley
Capital Trusts
A Morgan Stanley Capital Trust may not merge with or into, consolidate or
amalgamate with, be replaced by, or convey, transfer or lease its properties
and assets substantially as an entirety to, any entity, except as described
below or as otherwise set forth in the applicable trust agreement. A Morgan
Stanley Capital Trust may, at the request of the holders of its common
securities and with the consent of the holders of at least a majority in
aggregate liquidation amount of its outstanding capital securities, merge with
or into, consolidate or amalgamate with, be replaced by, or convey, transfer or
lease its properties and assets substantially as an entirety to, a trust
organized as such under the laws of any state of the United States, so long as
o the successor entity either:
o expressly assumes all the obligations of the Morgan Stanley
Capital Trust with respect to the capital securities of that
Morgan Stanley Capital Trust, or
o substitutes for the capital securities of that Morgan Stanley
Capital Trust other securities having substantially the same
terms as those capital securities so long as the successor
securities have the same priority as the capital securities with
respect to distributions and payments upon liquidation,
redemption and otherwise;
o the successor entity has a trustee possessing the same powers and
duties as the property trustee;
o the merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not cause the capital securities of that
Morgan Stanley Capital Trust (including any successor securities) to
be downgraded by any nationally recognized statistical rating
organization;
o the merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not adversely affect the rights, preferences
and privileges of the holders of the capital securities (including
any successor securities) in any material respect;
o the successor entity has a purpose substantially identical to that of
the Morgan Stanley Capital Trust;
o prior to the merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, the property trustee and Delaware
trustee have received an opinion from independent counsel experienced
in these matters to the effect that:
10
o the merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the
rights, preferences and privileges of the holders of the capital
securities (including any successor securities) of that Morgan
Stanley Capital Trust in any material respect, and
o following the merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, neither the Morgan Stanley
Capital Trust nor the successor entity will be required to
register as an "investment company" under the Investment Company
Act of 1940; and
o Morgan Stanley or any permitted transferee to whom Morgan Stanley has
transferred the common securities owns, directly or indirectly, all
of the common securities of the successor entity and guarantees the
obligations of the successor entity with respect to the successor
securities at least to the extent provided by the related guarantee
with respect to the capital securities.
Notwithstanding the foregoing, a Morgan Stanley Capital Trust may not, except
with the consent of holders of 100% in aggregate liquidation amount of the
capital securities of that Morgan Stanley Capital Trust, merge with or into,
consolidate or amalgamate with, or be replaced by, or convey, transfer or lease
its properties and assets substantially as an entirety to, any other entity or
permit any other entity to merge with or into, consolidate or amalgamate with,
or replace it if such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease would cause the Morgan Stanley Capital Trust or
the successor entity to be taxable as a corporation for United States federal
income tax purposes.
Voting Rights; Amendment of Trust Agreements
Except as provided below and under "--Removal of Morgan Stanley Capital
Trustees; Appointment of Successors" and "Description of Guarantees--Amendments
and Assignment" and as otherwise required by law and the applicable trust
agreement, the holders of the capital securities will have no voting rights.
Each trust agreement may be amended from time to time by the holders of at
least a majority in aggregate liquidation amount of the common securities and
the property trustee, without the consent of the holders of the capital
securities, to:
o cure any ambiguity, correct or supplement any provisions in the trust
agreement that may be inconsistent with any other provision, or to
make any other provisions with respect to matters or questions
arising under the trust agreement, provided that the amendment will
not adversely affect in any material respect the interests of any
holder of trust securities; or
o modify, eliminate or add to any provisions of the trust agreement to
the extent necessary to ensure that the Morgan Stanley Capital Trust
will not be taxable as a corporation for United States federal income
tax purposes at any time that any trust securities are outstanding or
to ensure that the Morgan Stanley Capital Trust will not be required
to register as an "investment company" under the Investment Company
Act of 1940.
Any amendment of the trust agreement without the consent of the holders of
the capital securities will become effective when notice of the amendment is
given to the holders of trust securities.
Each trust agreement may be amended by the holders of at least a majority
in aggregate liquidation amount of the common securities and the property
trustee with:
o the consent of holders representing at least a majority in aggregate
liquidation amount of the outstanding capital securities; and
o receipt by the Delaware trustee and the property trustee of an
opinion of counsel to the effect that the amendment or the exercise
of any power granted to the Delaware trustee and the property trustee
in accordance with the amendment will not cause the Morgan Stanley
Capital Trust to be taxable as a
11
corporation for United States federal income tax purposes or affect
the Morgan Stanley Capital Trust's exemption from status as an
"investment company" under the Investment Company Act of 1940;
except that, without the consent of each holder of trust securities affected, a
trust agreement may not be amended to:
o change the amount or timing of any distribution on the trust
securities or otherwise adversely affect the amount of any
distribution required to be made in respect of the trust securities
as of a specified date, or
o restrict the right of a holder of trust securities to institute suit
for the enforcement of payment of any distribution on the trust
securities on or after such date.
So long as any junior subordinated debentures are held by a Morgan Stanley
Capital Trust, the property trustee will not:
o direct the time, method and place of conducting any proceeding for
any remedy available to the indenture trustee, or execute any trust
or power conferred on the property trustee with respect to the junior
subordinated debentures,
o waive any past default that may be waived under the indenture,
o exercise any right to rescind or annul a declaration of acceleration
of the maturity of the principal amount of the junior subordinated
debentures, or
o consent to any amendment, modification or termination of the
indenture or junior subordinated debentures, where the consent is
required,
without, in each case, obtaining the prior approval of the holders of at least
a majority in aggregate liquidation amount of the outstanding capital
securities, except that, if a consent under the indenture would require the
consent of each holder of the junior subordinated debentures affected, no
consent will be given by the property trustee without the prior consent of each
holder of the capital securities.
In addition to obtaining the foregoing approvals of the holders of the
capital securities, before taking any of the foregoing actions, the property
trustee will obtain an opinion of counsel experienced in these matters to the
effect that the Morgan Stanley Capital Trust will not be taxable as a
corporation for United States federal income tax purposes on account of the
action. The property trustee may not revoke any action previously authorized or
approved by a vote of the holders of the capital securities issued by the
Morgan Stanley Capital Trust except by subsequent vote of the holders of the
capital securities.
Any required approval of holders of capital securities may be given at a
meeting of holders of capital securities convened for that purpose or pursuant
to written consent. The property trustee will cause a notice of any meeting at
which holders of capital securities are entitled to vote, or of any matter upon
which action by written consent of the holders is to be taken, to be given to
each registered holder of capital securities in the manner set forth in each
trust agreement.
No vote or consent of the holders of capital securities will be required
to redeem and cancel the capital securities in accordance with the applicable
trust agreement.
Any capital securities that are owned by us, the Delaware trustee, the
property trustee, the administrators or any of our affiliates or affiliates of
any Delaware trustee or property trustee, will, for purposes of a vote or
consent under any of the circumstances described above, be treated as if they
were not outstanding.
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Expenses and Taxes
In the junior subordinated debentures owned by a Morgan Stanley Capital
Trust, we, as borrower, will agree to pay all debts and other obligations
(other than with respect to the capital securities issued by the Morgan Stanley
Capital Trust) and all costs and expenses of the Morgan Stanley Capital Trust
(including costs and expenses relating to the organization of the Morgan
Stanley Capital Trust, the fees and expenses of the Delaware trustee and
property trustee on behalf of the Morgan Stanley Capital Trust and the costs
and expenses relating to the operation of the Morgan Stanley Capital Trust) and
to pay any and all taxes and all costs and expenses with respect to those taxes
(other than United States withholding taxes) to which the Morgan Stanley
Capital Trust might become subject. The foregoing obligations under the junior
subordinated debentures owned by a Morgan Stanley Capital Trust are for the
benefit of, and shall be enforceable by, any person to whom any of those debts,
obligations, costs, expenses and taxes payable by the Morgan Stanley Capital
Trust are owed, whether or not that person has received notice of the debts,
obligations, costs, expenses or taxes. Any such person may enforce these
obligations directly against us, and we will irrevocably waive any right or
remedy to require that person to take any action against a Morgan Stanley
Capital Trust or any other person before proceeding against us. We will also
agree in the junior subordinated debentures owned by a Morgan Stanley Capital
Trust to execute additional agreements necessary or desirable to give full
effect to the foregoing.
Payment and Paying Agency
The applicable prospectus supplement will specify the manner in which
payments in respect of the capital securities will be made. The paying agent
for capital securities will initially be the property trustee and any co-paying
agent chosen by the property trustee and acceptable to the administrators. The
paying agent will be permitted to resign as paying agent upon 30 days' written
notice to the property trustee and the administrators. If the property trustee
is no longer the paying agent, the property trustee will appoint a successor
(which must be a bank or trust company) reasonably acceptable to the
administrators to act as paying agent.
Registrar and Transfer Agent
Unless otherwise specified in the applicable prospectus supplement, the
property trustee will act as registrar and transfer agent for the capital
securities.
Registration of transfers and exchanges of capital securities will be
effected without charge by or on behalf of each Morgan Stanley Capital Trust,
but the property trustee may require payment to cover any tax or other
governmental charges that may be imposed in connection with any transfer or
exchange. The Morgan Stanley Capital Trusts will not be required to register or
cause to be registered the transfer of, or exchange or to cause to be
exchanged, any capital securities that have been called for redemption.
Information Concerning the Property Trustee
The property trustee, other than during the occurrence and continuance of
a capital securities event of default, undertakes to perform only those duties
specifically set forth in each trust agreement or provided by the Trust
Indenture Act and, after a capital securities event of default has occurred
that has not been cured or waived, must exercise the rights and powers vested
in it by the applicable trust agreement for the benefit of the holders of trust
securities using the same degree of care and skill as a prudent person would
exercise in the conduct of his or her own affairs. Subject to this provision,
the property trustee is under no obligation to exercise any of the rights or
powers vested in it by the applicable trust agreement, other than those vested
in it upon the occurrence of a capital securities event of default, at the
request of any holder of trust securities unless it is offered reasonable
indemnity against the costs, expenses and liabilities that might be incurred in
complying with the request or direction.
For information concerning the relationships between The Bank of New York,
which will initially be the property trustee, and us, see "Description of
Junior Subordinated Debentures--Information Concerning the Indenture Trustee."
13
Miscellaneous
The administrators and the property trustee of each Morgan Stanley Capital
Trust are authorized and directed to conduct the affairs of, and to operate,
the applicable Morgan Stanley Capital Trust in such a way that the Morgan
Stanley Capital Trust will not be deemed to be an "investment company" required
to be registered under the Investment Company Act or taxed as a corporation for
United States federal income tax purposes and so that the junior subordinated
debentures owned by the Morgan Stanley Capital Trust will be treated as
indebtedness of Morgan Stanley for United States federal income tax purposes.
In this regard, the property trustee and the holders of common securities are
authorized to take any action, not inconsistent with applicable law or the
certificate of trust or the trust agreement of the applicable Morgan Stanley
Capital Trust, that the property trustee and the holders of common securities
determine in their discretion to be necessary or desirable for those purposes,
as long as the action does not materially adversely affect the interests of the
holders of the capital securities of the applicable Morgan Stanley Capital
Trust.
Holders of the trust securities have no preemptive or similar rights.
The Morgan Stanley Capital Trusts may not borrow money, issue debt or
mortgage or pledge any of their assets.
Governing Law
Each trust agreement will be governed by, and construed in accordance
with, the laws of the State of Delaware.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The junior subordinated debentures will constitute junior subordinated
debt of Morgan Stanley and will be issued under a junior subordinated
indenture, dated March 1, 1998, entered into between us and The Bank of New
York, as indenture trustee. The indenture contains, and the junior subordinated
debentures, when issued, will contain, additional important terms and
provisions. The indenture and the form of the junior subordinated debentures
are filed as exhibits to the registration statement that includes this
prospectus. The following summaries of certain provisions of the indenture and
the junior subordinated debentures do not purport to be complete and are
subject to the detailed provisions of the indenture and junior subordinated
debentures. Where appropriate, we use parentheses to refer you to the
particular sections of the indenture. Any reference to particular sections or
defined terms of the indenture in any statement under this heading qualifies
the entire statement and incorporates by reference the applicable section or
definition into that statement.
This summary of the indenture and the junior subordinated debentures
relates to terms and conditions applicable to the junior subordinated
debentures generally. The particular terms of any series of junior subordinated
debentures will be summarized in the applicable prospectus supplement. If
indicated in the prospectus supplement, the terms of any series may differ from
the terms summarized below.
General
Each series of junior subordinated debentures issued under the indenture
will rank equally with all other series of junior subordinated debentures
issued under the indenture and will be unsecured and subordinate and junior in
right of payment to the extent and in the manner set forth in the indenture to
all senior indebtedness of Morgan Stanley. See "--Subordination." Most of our
assets are owned by our subsidiaries. Therefore, our rights and the rights of
our creditors, including holders of junior subordinated debentures, to
participate in the assets of any subsidiary upon the subsidiary's liquidation
or recapitalization will be subject to the prior claims of the subsidiary's
creditors, except to the extent that we ourselves may be a creditor with
recognized claims against the subsidiary. In addition, dividends, loans and
advances to us from certain subsidiaries are restricted by legal requirements,
including (in the case of Morgan Stanley & Co. Incorporated and Morgan Stanley
DW Inc.) net capital requirements under the Securities Exchange Act of 1934 and
under rules of certain exchanges and other regulatory bodies, and (in the case
of Discover Bank, a Delaware-chartered bank and our wholly-owned indirect
subsidiary, and other bank
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subsidiaries) by banking regulations. Except as otherwise provided in the
applicable prospectus supplement, the indenture does not limit the incurrence
or issuance of other secured or unsecured debt of Morgan Stanley, including
senior indebtedness, whether under the indenture, any other existing indenture
or any other indenture that Morgan Stanley may enter into in the future, or
otherwise afford holders of junior subordinated debentures protection in the
event of a highly leveraged or similar transaction that may adversely affect
the holders of the junior subordinated debentures. See "--Subordination" and
the applicable prospectus supplement relating to any offering of capital
securities or junior subordinated debentures.
We may issue junior subordinated debentures from time to time in one or
more series pursuant to a supplemental indenture or a resolution of our board
of directors or a committee of our board of directors.
The applicable prospectus supplement will contain, where applicable, the
following terms of and other information relating to any offered junior
subordinated debentures:
o the title of the junior subordinated debentures;
o any limit upon the aggregate principal amount of the junior
subordinated debentures;
o the date or dates on which the principal of the junior subordinated
debentures is payable or the method of determination thereof,
including the right, if any, of Morgan Stanley to shorten or extend
the stated maturity date in certain circumstances;
o the rate or rates, if any, at which the junior subordinated
debentures will bear interest, the dates on which that interest will
be payable, the right, if any, of Morgan Stanley to defer or extend
an interest payment date and the record dates for any interest
payable on any interest payment date or the method by which any of
the foregoing will be determined;
o the place or places where the principal of and premium, if any, and
interest on the junior subordinated debentures will be payable and
where, subject to the terms of the indenture as described below under
"--Registration and Transfer of Junior Subordinated Debentures," the
junior subordinated debentures may be presented for registration of
transfer or exchange and the place or places where notices and
demands to or upon Morgan Stanley in respect of the junior
subordinated debentures and the indenture may be made;
o any period or periods within which, or date or dates on which, the
price or prices at which and the terms and conditions upon which
junior subordinated debentures may be redeemed, in whole or in part,
at the option of Morgan Stanley or a holder of junior subordinated
debentures;
o the obligation, if any, of Morgan Stanley to redeem, purchase or
repay the junior subordinated debentures and the period or periods
within which, the price or prices at which, and the other terms and
conditions upon which the junior subordinated debentures will be
redeemed, repaid or purchased, in whole or in part, pursuant to that
obligation;
o the denominations in which any junior subordinated debentures will be
issuable if other than denominations of $25 and any integral multiple
of $25;
o if other than in U.S. dollars, the currency or currencies (including
currency unit or units) in which the principal of (and premium, if
any) and interest, if any, on the junior subordinated debentures will
be payable, or in which the junior subordinated debentures will be
denominated;
o any additions, modifications or deletions in the events of default
under the indenture or covenants of Morgan Stanley specified in the
indenture with respect to the junior subordinated debentures;
o if other than the principal amount, the portion of the principal
amount of junior subordinated debentures that will be payable upon
declaration of acceleration of maturity;
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o any index or indices used to determine the amount of payments of
principal of and premium, if any, and interest on the junior
subordinated debentures and the manner in which those amounts will be
determined;
o whether the junior subordinated debentures will be issuable in
registered form or bearer form or both and, if bearer securities are
issuable, any restrictions applicable to the exchange of one form for
another and to the offer, sale and delivery of the bearer securities;
o any additions or changes to the indenture with respect to a series of
junior subordinated debentures as will be necessary to permit or
facilitate the issuance of that series in bearer form, registrable or
not registrable as to principal, and with or without interest
coupons;
o the appointment of any trustees, depositaries, authenticating or
paying agents, transfer agents or registrars or other agents;
o whether the junior subordinated debentures will be convertible or
exchangeable for other securities or property and, if so, the terms
of any conversion or exchange and the terms of the other securities;
and
o any other terms of the junior subordinated debentures not
inconsistent with the provisions of the indenture.
Registration and Transfer of Junior Subordinated Debentures
Holders may present junior subordinated debentures for exchange, and
holders of registered junior subordinated debentures may present these
securities for transfer, in the manner, at the places and subject to the
restrictions stated in the junior subordinated debentures and described in the
applicable prospectus supplement. We will provide these services without charge
except for any tax or other governmental charge payable in connection with
these services and subject to any limitations provided in the indenture.
Holders may transfer junior subordinated debentures in bearer form and the
related coupons, if any, by delivery to the transferee. If any of the
securities are held in global form, the procedures for transfer of interests in
those securities will depend upon the procedures of the depositary for those
global securities.
Subordination
Holders of the junior subordinated debentures should recognize that
contractual provisions in the indenture may prohibit us from making payments on
these securities. The junior subordinated debentures are subordinate and junior
in right of payment, to the extent and in the manner stated in the indenture,
to all of our senior indebtedness. The indenture defines senior indebtedness as
obligations of, or guaranteed or assumed by, Morgan Stanley for borrowed money
or evidenced by bonds, debentures, notes or other similar instruments, and
amendments, renewals, extensions, modifications and refundings of any of that
indebtedness or of those obligations. Nonrecourse obligations, the junior
subordinated debentures and any other obligations specifically designated as
being subordinate in right of payment to senior indebtedness are not senior
indebtedness as defined under the indenture. (Section 1.01)
The indenture does not restrict our ability to issue senior indebtedness.
The indenture provides that, unless all principal of and any premium or
interest on the senior indebtedness has been paid in full, or provision has
been made to make these payments in full, no payment of principal of, or any
premium or interest on, any junior subordinated debentures may be made in the
event:
o of any insolvency or bankruptcy proceedings, or any receivership,
liquidation, reorganization or other similar proceedings involving us
or a substantial part of our property;
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o that (a) a default has occurred in the payment of principal, any
premium, interest or other monetary amounts due and payable on any
senior indebtedness or (b) there has occurred any other event of
default concerning senior indebtedness, that permits the holder or
holders of the senior indebtedness to accelerate the maturity of the
senior indebtedness, with notice or passage of time, or both, and
that event of default has continued beyond the applicable grace
period, if any, and that default or event of default has not been
cured or waived or has not ceased to exist; or
o that the principal of and accrued interest on any junior subordinated
debentures have been declared due and payable upon an event of
default as defined under the indenture and that declaration has not
been rescinded and annulled as provided under the indenture. (Section
13.01)
The applicable prospectus supplement or the information incorporated by
reference in this prospectus will set forth the approximate amount of senior
indebtedness outstanding as of the end of the most recent fiscal quarter.
Merger, Consolidation, Sale, Lease or Conveyance
The indenture provides that we will not merge or consolidate with any
other person and will not sell, lease or convey all or substantially all of our
assets to any other person, unless:
o we will be the continuing corporation; or
o the successor corporation or person that acquires all or
substantially all of our assets:
o will be a corporation organized under the laws of the United
States, a state of the United States or the District of
Columbia; and
o will expressly assume all of our obligations under the indenture
and the junior subordinated debentures issued under the
indenture; and
o immediately after the merger, consolidation, sale, lease or
conveyance, we, that person or that successor corporation will not be
in default in the performance of the covenants and conditions of the
indenture applicable to us. (Section 9.01)
There are no covenants or other provisions in the indenture that would
afford holders of junior subordinated debentures additional protection in the
event of a recapitalization transaction, a change of control of Morgan Stanley
or a highly leveraged transaction. The merger covenant described above would
only apply if the recapitalization transaction, change of control or highly
leveraged transaction were structured to include a merger or consolidation of
Morgan Stanley or a sale, lease or conveyance of all or substantially all of
our assets. However, we may provide specific protections, such as a put right
or increased interest, for particular junior subordinated debentures, which we
would describe in the applicable prospectus supplement.
Events of Default
The indenture provides holders of junior subordinated debentures with
remedies if we fail to perform specific obligations, such as making payments on
the junior subordinated debentures or other indebtedness, or if we become
bankrupt. Holders should review these provisions and understand which of our
actions trigger an event of default and which actions do not. The indenture
permits the issuance of junior subordinated debentures in one or more series,
and, in many cases, whether an event of default has occurred is determined on a
series by series basis.
An event of default is defined under the indenture, with respect to any
series of junior subordinated debentures issued under the indenture, as being:
o default in payment of any principal of the junior subordinated
debentures of that series, either at maturity or upon any redemption,
by declaration or otherwise;
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o default for 30 days in payment of any interest on any junior
subordinated debentures of that series, provided, however, that a
valid extension of an interest payment period by Morgan Stanley in
accordance with the terms of the junior subordinated debentures of
any series will not constitute a default in the payment of interest
for this purpose;
o default for 60 days after written notice in the observance or
performance of any other covenant or agreement in the junior
subordinated debentures of that series or the indenture, other than a
covenant or warranty with respect to the junior subordinated
debentures of that series the breach or nonperformance of which is
otherwise included in the definition of "event of default";
o events of bankruptcy, insolvency or reorganization;
o failure to make any payment at maturity, including any applicable
grace period, on indebtedness in an amount in excess of $10,000,000
and continuance of that failure for a period of 30 days after written
notice of the failure to us by the indenture trustee, or to us and
the indenture trustee by the holders of not less than 25% in
principal amount of the outstanding junior subordinated debentures,
treated as one class, issued under the indenture;
o default with respect to any indebtedness, which default results in
the acceleration of indebtedness in an amount in excess of
$10,000,000 without the indebtedness having been discharged or the
acceleration having been cured, waived, rescinded or annulled for a
period of 30 days after written notice of the acceleration to us by
the applicable trustee, or to us and the applicable trustee by the
holders of not less than 25% in principal amount of the outstanding
junior subordinated debentures, treated as one class, issued under
the indenture; or
o any other event of default provided in a supplemental indenture under
which the series of junior subordinated debentures is issued.
For purposes of the fifth and sixth clauses above, indebtedness means
obligations of, or guaranteed or assumed by, Morgan Stanley, other than the
junior subordinated debentures of that series, for borrowed money or evidenced
by bonds, debentures, notes or other similar instruments, but does not include
non-recourse obligations. In addition, if a failure, default or acceleration
referred to in the fifth and sixth clauses above ceases or is cured, waived,
rescinded or annulled, then the event of default under the indenture caused by
that failure, default or acceleration will also be considered cured. (Section
5.01)
Acceleration of Junior Subordinated Debentures upon an Event of Default
The indenture provides that:
o if an event of default due to the default in payment of principal of,
or any premium or interest on, any series of junior subordinated
debentures issued under the indenture, or due to the default in the
performance or breach of any other covenant or warranty of Morgan
Stanley applicable to the junior subordinated debentures of that
series but not applicable to all outstanding junior subordinated
debentures issued under the indenture, occurs and is continuing,
either the trustee or the holders of not less than 25% in aggregate
principal amount of the outstanding junior subordinated debentures of
each affected series, voting as one class, by notice in writing to
Morgan Stanley, may declare the principal of all junior subordinated
debentures of each affected series and interest accrued thereon to be
due and payable immediately; and
o if an event of default due to a default in the performance of any
other covenants or agreements in the indenture applicable to all
outstanding junior subordinated debentures issued under the indenture
or due to specified events of bankruptcy, insolvency or
reorganization of Morgan Stanley occurs and is continuing, either the
trustee or the holders of not less than 25% in aggregate principal
amount of all outstanding junior subordinated debentures issued under
that indenture, voting as one class, by notice
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in writing to Morgan Stanley may declare the principal of all those
junior subordinated debentures and interest accrued thereon to be due
and payable immediately. (Section 5.01)
Annulment of Acceleration and Waiver of Defaults
In some circumstances, if any and all events of default under the
indenture, other than the non-payment of the principal of the securities that
has become due as a result of an acceleration, have been cured, waived or
otherwise remedied, then the holders of a majority in aggregate principal
amount of all series of outstanding junior subordinated debentures affected,
voting as one class, may annul past declarations of acceleration of or waive
past defaults of the junior subordinated debentures. (Section 5.10)
Indemnification of Trustee for Actions Taken on Your Behalf
The indenture contains a provision entitling the indenture trustee,
subject to the duty of the indenture trustee during a default to act with the
required standard of care, to be indemnified by the holders of junior
subordinated debentures issued under that indenture before proceeding to
exercise any right or power at the request of holders. (Section 6.02) Subject
to these provisions and some other limitations, the holders of a majority in
aggregate principal amount of each series of outstanding junior subordinated
debentures of each affected series, voting as one class, may direct the time,
method and place of conducting any proceeding for any remedy available to the
trustee, or exercising any trust or power conferred on the indenture trustee.
(Section 5.09)
Limitation on Actions by You as an Individual Holder
The indenture provides that no individual holder of junior subordinated
debentures may institute any action against us under that indenture, except
actions for payment of overdue principal and interest, unless the following
actions have occurred:
o the holder must have previously given written notice to the trustee
of the continuing default;
o the holders of not less than 25% in aggregate principal amount of the
outstanding junior subordinated debentures of each affected series,
treated as one class, must have (1) requested the trustee to
institute that action and (2) offered the indenture trustee
reasonable indemnity;
o the indenture trustee must have failed to institute that action
within 60 days after receipt of the request referred to above; and
o the holders of a majority in principal amount of the outstanding
junior subordinated debentures of each affected series, voting as one
class, must not have given directions to the indenture trustee
inconsistent with those of the holders referred to above. (Sections
5.06 and 5.09)
Annual Certification
The indenture contains a covenant that we will file annually with the
indenture trustee a certificate of no default or a certificate specifying any
default that exists. (Section 3.05)
Discharge, Defeasance and Covenant Defeasance
We have the ability to eliminate most or all of our obligations on any
series of junior subordinated debentures prior to maturity if we comply with
the following provisions. (Section 10.01)
Discharge of Indenture
We may discharge all of our obligations, other than as to transfers and
exchanges, under the indenture after we have:
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o paid or caused to be paid the principal of and interest on all of the
outstanding junior subordinated debentures in accordance with their
terms;
o delivered to the indenture trustee for cancellation all of the
outstanding junior subordinated debentures; or
o irrevocably deposited with the indenture trustee cash or, in the case
of a series of junior subordinated debentures payable only in U.S.
dollars, U.S. government obligations in trust for the benefit of the
holders of any series of junior subordinated debentures issued under
the indenture that have either become due and payable, or are by
their terms due and payable, or are scheduled for redemption, within
one year, in an amount certified to be sufficient to pay on each date
that they become due and payable, the principal of and interest on,
and any mandatory sinking fund payments for, those junior
subordinated debentures, except that the deposit of cash or U.S.
government obligations for the benefit of holders of a series of
junior subordinated debentures that are due and payable, or are
scheduled for redemption, within one year will discharge obligations
under the indenture relating only to that series of junior
subordinated debentures.
Defeasance of a Series of Securities at Any Time
We may also discharge all of our obligations, other than as to transfers
and exchanges, under any series of junior subordinated debentures at any time,
which we refer to as "defeasance."
We may be released with respect to any outstanding series of junior
subordinated debentures from the covenants described above limiting
consolidations, mergers, asset sales and leases, and elect not to comply with
that section without creating an event of default. Discharge under these
procedures is called "covenant defeasance."
Defeasance or covenant defeasance may be effected only if, among other
things:
o we irrevocably deposit with the indenture trustee cash or, in the
case of junior subordinated debentures payable only in U.S. dollars,
U.S. government obligations, as trust funds in an amount certified to
be sufficient to pay on each date that they become due and payable,
the principal of and interest on, and any mandatory sinking fund
payments for, all outstanding junior subordinated debentures of the
series being defeased;
o we deliver to the indenture trustee an opinion of counsel to the
effect that:
o the holders of the series of junior subordinated debentures
being defeased will not recognize income, gain or loss for
United States federal income tax purposes as a result of the
defeasance or covenant defeasance; and
o the defeasance or covenant defeasance will not otherwise alter
those holders' United States federal income tax treatment of
principal and interest payments on the series of junior
subordinated debentures being defeased;
in the case of a defeasance, this opinion must be based on a ruling
of the Internal Revenue Service or a change in United States federal
income tax law occurring after the date of this prospectus, since
that result would not occur under current tax law;
o no event or condition will exist that, under the provisions
described under "--Subordination" above, would prevent us from
making payments of principal or interest on the junior
subordinated debentures at the date of the irrevocable deposit
referred to above or at any time during the period ending on the
91st day after that deposit date; and
o we deliver to the indenture trustee an opinion of counsel to the
effect that:
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o the trust funds will not be subject to any rights of holders of
senior indebtedness; and
o after the 91st day following the deposit, the trust funds will
not be subject to any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights
generally, except that if a court were to rule under any of
those laws in any case or proceeding that the trust funds
remained our property, then the indenture trustee and the
holders of the junior subordinated debentures would be entitled
to some enumerated rights as secured creditors in the trust
funds. (Section 10.01)
Modification of Indenture
Modification Without Consent of Holders
We and the indenture trustee may enter into supplemental indentures
without the consent of the holders of junior subordinated debentures to:
o secure any junior subordinated debentures;
o evidence the assumption of our obligations by a successor
corporation;
o add covenants for the protection of the holders of junior
subordinated debentures;
o cure any ambiguity or correct any inconsistency in the indenture;
o establish the forms or terms of junior subordinated debentures of any
series; and
o evidence the acceptance of appointment by a successor indenture
trustee. (Section 8.01)
Modification with Consent of Holders
We and the trustee, with the consent of the holders of not less than a
majority in aggregate principal amount of each affected series of outstanding
junior subordinated debentures, voting as one class, may add any provisions to,
or change in any manner or eliminate any of the provisions of, the indenture or
modify in any manner the rights of the holders of those junior subordinated
debentures. However, except as specified in the applicable prospectus
supplement, we and the trustee may not make any of the following changes to any
outstanding junior subordinated debenture without the consent of each holder
that would be affected by such change:
o extend the final maturity of the principal;
o reduce the principal amount;
o reduce the rate or extend the time of payment of interest;
o reduce any amount payable on redemption;
o change the currency in which the principal, including any amount of
original issue discount, premium, or interest thereon is payable;
o reduce the amount of any original issue discount security payable
upon acceleration or provable in bankruptcy;
o alter certain provisions of the indenture relating to the junior
subordinated debentures not denominated in U.S. dollars;
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o impair the right of any holder to institute suit for the enforcement
of any payment on any junior subordinated debenture when due; or
o reduce the percentage of junior subordinated debentures the consent
of whose holders is required for modification of the indenture.
If the junior subordinated debentures are owned by a Morgan Stanley
Capital Trust, none of the modifications described above may be made without
the prior written consent of all the holders of capital securities of the
Morgan Stanley Capital Trust. (Section 8.02)
Modification of Subordination Provisions
We may not amend the indenture to alter the subordination of any
outstanding junior subordinated debentures without the written consent of each
potentially adversely affected holder of senior indebtedness then outstanding.
(Section 8.06)
Information Concerning the Indenture Trustee
We and our subsidiaries maintain credit facilities and other ordinary
banking relationships with The Bank of New York.
Governing Law
The junior subordinated debentures and the indenture will be governed
by, and construed in accordance with, the laws of the State of New York.
DESCRIPTION OF GLOBAL SECURITIES
We may issue the registered junior subordinated debentures and capital
securities in the form of one or more fully registered global securities that
will be deposited with a depositary or its nominee identified in the applicable
prospectus supplement and registered in the name of that depositary or its
nominee. In those cases, one or more registered global securities will be
issued in a denomination or aggregate denominations equal to the portion of the
aggregate principal or face amount of the securities to be represented by
registered global securities. Unless and until it is exchanged in whole for
securities in definitive registered form, a registered global security may not
be transferred except as a whole by and among the depositary for the registered
global security, the nominees of the depositary or any successors of the
depositary or those nominees.
The specific terms of the depositary arrangement with respect to any
portion of a series of securities to be represented by a registered global
security will be described in the prospectus supplement relating to that
series. We anticipate that the following provisions will apply to all
depositary arrangements.
Ownership of beneficial interests in a registered global security will be
limited to persons, called participants, that have accounts with the depositary
or persons that may hold interests through participants. Upon the issuance of a
registered global security, the depositary will credit, on its book-entry
registration and transfer system, the participants' accounts with the
respective principal or face amounts of the securities beneficially owned by
the participants. Any dealers, underwriters or agents participating in the
distribution of the securities will designate the accounts to be credited.
Ownership of beneficial interests in a registered global security will be shown
on, and the transfer of ownership interests will be effected only through,
records maintained by the depositary, with respect to interests of
participants, and on the records of participants, with respect to interests of
persons holding through participants. The laws of some states may require that
some purchasers of securities take physical delivery of these securities in
definitive form. These laws may impair your ability to own, transfer or pledge
beneficial interests in registered global securities.
So long as the depositary, or its nominee, is the registered owner of a
registered global security, that depositary or its nominee, as the case may be,
will be considered the sole owner or holder of the securities
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represented by the registered global security for all purposes under the
indenture. Except as described below, owners of beneficial interests in a
registered global security will not be entitled to have the securities
represented by the registered global security registered in their names, will
not receive or be entitled to receive physical delivery of the securities in
definitive form and will not be considered the owners or holders of the
securities under the indenture. Accordingly, each person owning a beneficial
interest in a registered global security must rely on the procedures of the
depositary for that registered global security and, if that person is not a
participant, on the procedures of the participant through which the person owns
its interest, to exercise any rights of a holder under the indenture. We
understand that under existing industry practices, if we request any action of
holders or if an owner of a beneficial interest in a registered global security
desires to give or take any action that a holder is entitled to give or take
under the indenture, the depositary for the registered global security would
authorize the participants holding the relevant beneficial interests to give or
take that action, and the participants would authorize beneficial owners owning
through them to give or take that action or would otherwise act upon the
instructions of beneficial owners holding through them.
Payments of principal of, and premium, if any, and interest on, junior
subordinated debentures, and any payments to holders with respect to capital
securities, represented by a registered global security registered in the name
of a depositary or its nominee will be made to the depositary or its nominee,
as the case may be, as the registered owner of the registered global security.
None of Morgan Stanley, the indenture trustee, the Delaware trustee, the
property trustee or any other agent of Morgan Stanley, agent of the applicable
Morgan Stanley Capital Trust or agent of any of the aforementioned trustees, as
the case may be, will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests in the registered global security or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
We and the Morgan Stanley Capital Trusts expect that the depositary for
any securities represented by a registered global security, upon receipt of any
payment of principal, premium, interest or other distribution with respect to
underlying securities to holders in respect of the registered global security,
will immediately credit participants' accounts in amounts proportionate to
their respective beneficial interests in the registered global security as
shown on the records of the depositary. We and the Morgan Stanley Capital
Trusts also expect that payments by participants to owners of beneficial
interests in the registered global security held through participants will be
governed by standing customer instructions and customary practices, as is now
the case with the securities held for the accounts of customers in bearer form
or registered in "street name," and will be the responsibility of those
participants.
If the depositary for any securities represented by a registered global
security is at any time unwilling or unable to continue as depositary or ceases
to be a clearing agency registered under the Securities Exchange Act of 1934,
and a successor depositary registered as a clearing agency under the Securities
Exchange Act of 1934 is not appointed by us or the applicable Morgan Stanley
Capital Trust, as the case may be, within 90 days, we or the applicable Morgan
Stanley Capital Trust, as the case may be, will issue the securities in
definitive form in exchange for the registered global security. In addition, we
or the applicable Morgan Stanley Capital Trust, as the case may be, may at any
time and in our sole discretion determine not to have any of the securities of
a series represented by one or more registered global securities and, in that
event, will issue securities of the series in definitive form in exchange for
all of the registered global security or securities representing those
securities. Any securities issued in definitive form in exchange for a
registered global security will be registered in the name or names as the
depositary instructs the relevant trustee or other relevant agent of Morgan
Stanley, the applicable Morgan Stanley Capital Trust or that trustee. It is
expected that those instructions will be based upon directions received by the
depositary from participants with respect to ownership of beneficial interests
in the registered global security.
The securities may also be issued in the form of one or more bearer global
securities that will be deposited with a common depositary for Euroclear Bank
S.A./N.V., as operator of the Euroclear System, and Clearstream Banking,
societe anonyme, or with a nominee for the depositary identified in the
prospectus supplement relating to those securities. The specific terms and
procedures, including the specific terms of the depositary arrangement, with
respect to any securities to be represented by a bearer global security will be
described in the prospectus supplement relating to those securities.
23
DESCRIPTION OF GUARANTEES
Morgan Stanley will execute and deliver a guarantee concurrently with the
issuance by each Morgan Stanley Capital Trust of its capital securities for the
benefit of the holders from time to time of those capital securities. The
guarantee trustee will hold the guarantee for the benefit of the holders of the
related Morgan Stanley Capital Trust's capital securities. Morgan Stanley will
qualify each of the guarantees as an indenture under the Trust Indenture Act.
The guarantees will be subject to, and governed by, the Trust Indenture Act.
This summary of certain provisions of the guarantees does not purport to be
complete and is subject to, and qualified in its entirety by reference to, all
the provisions of each guarantee, including the definitions of terms, and those
provisions made part of each guarantee by the Trust Indenture Act. A form of
guarantee is filed as an exhibit to the registration statement that includes
this prospectus. A copy of the form of the guarantee is available upon request
from the guarantee trustee. If indicated in the applicable prospectus
supplement, the terms of a particular guarantee may differ from the terms
discussed below.
General
Morgan Stanley will irrevocably and unconditionally agree to pay in full,
to the extent set forth in the guarantee, the guarantee payments to the holders
of the capital securities covered by the guarantee, as and when due, regardless
of any defense, right of set-off or counterclaim that the Morgan Stanley
Capital Trust that issued the capital securities may have or assert other than
the defense of payment. The following payments constitute guarantee payments
with respect to capital securities that, to the extent not paid by or on behalf
of the Morgan Stanley Capital Trust, will be subject to the applicable
guarantee:
o any accumulated and unpaid distributions required to be paid on the
applicable capital securities, to the extent that the applicable
Morgan Stanley Capital Trust has funds on hand available for that
purpose at that time;
o the applicable redemption price with respect to any capital
securities called for redemption, which will include all accumulated
and unpaid distributions to the date of redemption, to the extent
that the applicable Morgan Stanley Capital Trust has funds on hand
available for that purpose at that time; and
o upon a voluntary or involuntary dissolution, winding-up or
liquidation of the applicable Morgan Stanley Capital Trust (unless
the junior subordinated debentures owned by the Morgan Stanley
Capital Trust are distributed to holders of the capital securities in
accordance with the terms of the applicable trust agreement), the
lesser of:
o the aggregate of the liquidation amount and all accumulated and
unpaid distributions to the date of payment, and
o the amount of assets of the applicable Morgan Stanley Capital
Trust remaining available for distribution to holders of capital
securities on liquidation of the Morgan Stanley Capital Trust.
Our obligation to make a guarantee payment may be satisfied by direct
payment of the required amounts by us to the holders of the capital securities
or by causing the applicable Morgan Stanley Capital Trust to pay those amounts
to the holders.
Each guarantee will be an irrevocable guarantee of the related Morgan
Stanley Capital Trust's payment obligations described above under the capital
securities covered by the guarantee, but will apply only to the extent that the
Morgan Stanley Capital Trust has funds sufficient to make such payments, and is
not a guarantee of collection.
If we do not make payments on the junior subordinated debentures owned by
a Morgan Stanley Capital Trust, the Morgan Stanley Capital Trust will not be
able to pay any amounts payable in respect of its capital securities and will
not have funds legally available for that purpose. In that event, holders of
the capital securities
24
would not be able to rely upon the guarantee for payment of those amounts. Each
guarantee will have the same ranking as the junior subordinated debentures
owned by the Morgan Stanley Capital Trust that issues the capital securities
covered by the guarantee. See "--Status of the Guarantees." No guarantee will
limit the incurrence or issuance of other secured or unsecured debt of Morgan
Stanley.
Status of the Guarantees
Each guarantee will constitute an unsecured obligation of Morgan Stanley
and will rank equal to the junior subordinated debentures owned by the Morgan
Stanley Capital Trust that issues the capital securities covered by the
guarantee.
Each guarantee will constitute a guarantee of payment and not of
collection. Any holder of capital securities covered by the guarantee may
institute a legal proceeding directly against us to enforce its rights under
the guarantee without first instituting a legal proceeding against any other
person or entity. Each guarantee will be held by the guarantee trustee for the
benefit of the holders of the related capital securities. Each guarantee will
not be discharged except by payment of the guarantee payments in full to the
extent not paid by or on behalf of the Morgan Stanley Capital Trust or, if
applicable, distribution to the holders of the capital securities of the junior
subordinated debentures owned by the Morgan Stanley Capital Trust.
Amendments and Assignment
Except with respect to any changes that do not materially adversely affect
the rights of holders of the capital securities issued by the Morgan Stanley
Capital Trust, in which case no approval will be required, the guarantee that
covers the capital securities may not be amended without the prior approval of
the holders of at least a majority of the aggregate liquidation amount of the
outstanding capital securities covered by the guarantee. The manner of
obtaining any such approval will be as set forth under "Description of Capital
Securities--Voting Rights; Amendment of Trust Agreements" and in the applicable
prospectus supplement. All guarantees and agreements contained in each
guarantee will bind the successors, assigns, receivers, trustees and
representatives of Morgan Stanley and will inure to the benefit of the holders
of the then outstanding capital securities covered by the guarantee.
Events of Default
An event of default under a guarantee will occur upon the failure of
Morgan Stanley to perform any of its payment obligations under that guarantee,
or to perform any non-payment obligation if the non-payment default remains
unremedied for 30 days. If an event of default under a guarantee occurred and
is continuing, the guarantee trustee will enforce the guarantee for the benefit
of the holders of capital securities covered by the guarantee. The holders of a
majority in aggregate liquidation amount of the outstanding capital securities
covered by the guarantee have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the guarantee trustee in
respect of the guarantee or to direct the exercise of any right or power
conferred upon the guarantee trustee under the guarantee.
Any holder of capital securities covered by the guarantee may institute a
legal proceeding directly against Morgan Stanley to enforce its rights under
the guarantee without first instituting a legal proceeding against the
applicable Morgan Stanley Capital Trust, the guarantee trustee or any other
person or entity.
We, as guarantor, are required to file annually with the guarantee trustee
a certificate as to whether or not we are in compliance with all the conditions
and covenants under the guarantee.
Information Concerning the Guarantee Trustee
The guarantee trustee, other than during the occurrence and continuance of
an event of default under the guarantee, undertakes to perform only those
duties as are specifically set forth in the guarantee and, after the occurrence
of an event of default with respect to the guarantee that has not been cured or
waived, must exercise the rights and powers vested in it by the guarantee using
the same degree of care and skill as a prudent person would
25
exercise or use in the conduct of his or her own affairs. Subject to this
provision, the guarantee trustee is under no obligation to exercise any of the
rights or powers vested in it by the guarantee at the request of any holder of
the capital securities covered by the guarantee unless it is offered reasonable
indemnity, including reasonable advances requested by it, against the costs,
expenses and liabilities that might be incurred in complying with the request
or direction.
For information concerning the relationship between The Bank of New York,
which will initially be the guarantee trustee, and Morgan Stanley, see
"Description of Junior Subordinated Debentures--Information Concerning the
Indenture Trustee."
Termination of the Guarantee
Each guarantee will terminate upon full payment of the redemption price of
all of the capital securities covered by the guarantee, upon full payment of
the amounts payable with respect to the capital securities upon liquidation of
the related Morgan Stanley Capital Trust or upon distribution of the junior
subordinated debentures owned by the Morgan Stanley Capital Trust to the
holders of all the capital securities covered by the guarantee. Each guarantee
will continue to be effective or will be reinstated, as the case may be, if at
any time any holder of the capital securities covered by the guarantee must
repay any sums with respect to the capital securities or the guarantee.
Governing Law
Each guarantee will be governed by, and construed in accordance with, the
laws of the State of New York.
PLAN OF DISTRIBUTION
We may sell junior subordinated debentures and a Morgan Stanley Capital
Trust may sell capital securities in three ways: (1) through agents, (2)
through underwriters and (3) through dealers. The agents, underwriters or
dealers in the United States will include Morgan Stanley & Co. Incorporated,
which we refer to as MS & Co., and/or Morgan Stanley DW Inc., which we refer to
as MSDWI, or other affiliates of ours, and the agents, underwriters or dealers
outside the United States will include Morgan Stanley & Co. International
Limited, which we refer to as MSIL, or other affiliates of ours.
We and/or the applicable Morgan Stanley Capital Trust may designate agents
from time to time to solicit offers to purchase these securities. We will name
any such agent, who may be deemed to be an underwriter as that term is defined
in the Securities Act of 1933, and state any commissions we are to pay to that
agent in the applicable prospectus supplement. That agent will be acting on a
reasonable efforts basis for the period of its appointment or, if indicated in
the applicable prospectus supplement, on a firm commitment basis.
If any underwriters are utilized in the sale of these securities, we
and/or the applicable Morgan Stanley Capital Trust, as the case may be, will
enter into an underwriting agreement with the underwriters at the time of sale
to them and the names of the underwriters and the terms of the transaction will
be set forth in the applicable prospectus supplement, which will be used by the
underwriters to make resales of the securities in respect of which this
prospectus is delivered to the public.
If a dealer is utilized in the sale of these securities, we and/or the
applicable Morgan Stanley Capital Trust, as the case may be, will sell the
securities to the dealer, as principal. The dealer may then resell the
securities to the public at varying prices to be determined by such dealer at
the time of resale.
In order to facilitate the offering of these securities, the underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
price of these securities or any other securities the prices of which may be
used to determine payments on these securities. Specifically, the underwriters
may sell more securities than they are obligated to purchase in connection with
the offering, creating a short position for their own accounts. A short sale is
covered if the short position is no greater than the number or amount of
securities available for purchase by the underwriters under any overallotment
option. The underwriters can close out a covered short sale by exercising the
26
overallotment option or purchasing these securities in the open market. In
determining the source of securities to close out a covered short sale, the
underwriters will consider, among other things, the open market price of these
securities compared to the price available under the overallotment option. The
underwriters may also sell these securities or any other securities in excess
of the overallotment option, creating a naked short position. The underwriters
must close out any naked short position by purchasing securities in the open
market. A naked short position is more likely to be created if the underwriters
are concerned that there may be downward pressure on the price of these
securities in the open market after pricing that could adversely affect
investors who purchase in the offering. As an additional means of facilitating
the offering, the underwriters may bid for, and purchase, these securities or
any other securities in the open market to stabilize the price of these
securities or of any other securities. Finally, in any offering of the
securities through a syndicate of underwriters, the underwriting syndicate may
also reclaim selling concessions allowed to an underwriter or a dealer for
distributing these securities in the offering, if the syndicate repurchases
previously distributed securities to cover syndicate short positions or to
stabilize the price of these securities. Any of these activities may raise or
maintain the market price of these securities above independent market levels
or prevent or retard a decline in the market price of these securities. The
underwriters are not required to engage in these activities and may end any of
these activities at any time.
If so indicated in the applicable prospectus supplement, one or more
firms, including MS & Co., MSDWI and MSIL, which we refer to as "remarketing
firms," acting as principals for their own accounts or as agents for us and/or
a Morgan Stanley Capital Trust, as the case may be, may offer and sell these
securities as part of a remarketing upon their purchase, in accordance with
their terms. We will identify any remarketing firm, the terms of its agreement,
if any, with us and/or a Morgan Stanley Capital Trust, as the case may be, and
its compensation in the applicable prospectus supplement.
Remarketing firms, agents, underwriters and dealers may be entitled under
agreements with us and/or a Morgan Stanley Capital Trust to indemnification by
us and/or a Morgan Stanley Capital Trust, against some civil liabilities,
including liabilities under the Securities Act, and may be customers of, engage
in transactions with, or perform services for, us and/or a Morgan Stanley
Capital Trust in the ordinary course of business.
If so indicated in the applicable prospectus supplement, we and/or a
Morgan Stanley Capital Trust will authorize agents, underwriters or dealers to
solicit offers by some purchasers to purchase these securities from us at the
public offering price stated in the prospectus supplement under delayed
delivery contracts providing for payment and delivery on a specified date in
the future. These contracts will be subject to only those conditions described
in the applicable prospectus supplement, and the prospectus supplement will
state the commission payable for solicitation of these offers.
Any underwriter, agent or dealer utilized in the initial offering of
securities will not confirm sales to accounts over which it exercises
discretionary authority without the prior specific written approval of its
customer.
MS & Co., MSDWI and MSIL are wholly-owned subsidiaries of Morgan Stanley.
Each initial offering of securities will be conducted in compliance with the
requirements of Rule 2720 of the National Association of Securities Dealers,
Inc., which is commonly referred to as the NASD, regarding a NASD member firm's
distributing the securities of an affiliate. Following the initial distribution
of any of these securities, MS & Co., MSDWI, MSIL and other affiliates of
Morgan Stanley may offer and sell these securities in the course of their
business as broker-dealers, subject to obtaining any necessary approval of the
New York Stock Exchange, Inc. for any of the offers and sales. MS & Co., MSDWI,
MSIL and other affiliates may act as principals or agents in these transactions
and may make any sales at varying prices related to prevailing market prices at
the time of sale or otherwise. MS & Co., MSDWI, MSIL and other affiliates may
use this prospectus in connection with these transactions. None of MS & Co.,
MSDWI, MSIL or any other affiliate is obligated to make a market in any of
these securities and may discontinue any market-making activities at any time
without notice.
In the event that MS & Co., MSDWI or any other NASD member participates in
a public offering of these securities: (a) the actual price and selling terms
will be disclosed in post-effective amendments or prospectus supplements; (b)
the maximum compensation to be received by MS & Co., MSDWI or any other NASD
member in this distribution will be disclosed and submitted for approval with
the NASD's Corporate Financing Department (the "Department"); and (c) prior to
the commencement of the distribution, underwriting documents proposed for use
27
will be submitted to the Department for review. Underwriting discounts and
commissions on securities sold in the initial distribution will not exceed 8%
of the offering proceeds.
LEGAL MATTERS
The validity of the capital securities will be passed upon for the Morgan
Stanley Capital Trusts by Richards, Layton & Finger, P.A., or other counsel who
is satisfactory to MS & Co. and/or MSDWI, as the case may be, and who may be an
officer of Morgan Stanley. The validity of the junior subordinated debentures
and the guarantees will be passed upon for Morgan Stanley by Sidley Austin
Brown & Wood LLP, or other counsel who is satisfactory to MS & Co. and/or
MSDWI, as the case may be, and who may be an officer of Morgan Stanley. Certain
legal matters relating to the securities will be passed upon for the
underwriters by Davis Polk & Wardwell. Davis Polk & Wardwell has in the past
represented Morgan Stanley and continues to represent Morgan Stanley and its
affiliates on a regular basis and in a variety of matters, including in
connection with its private equity and leveraged capital activities.
EXPERTS
The consolidated financial statements and financial statement schedules of
Morgan Stanley and its subsidiaries, at November 30, 2001 and 2000 and for each
of the three fiscal years in the period ended November 30, 2001, included in
Morgan Stanley's Annual Report on Form 10-K for the fiscal year ended November
30, 2001, have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their reports thereon and incorporated herein by reference. These
consolidated financial statements have been incorporated by reference in
reliance upon the respective reports given upon the authority of Deloitte &
Touche LLP, as experts in accounting and auditing.
28
MORGAN STANLEY DEAN WITTER & CO.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following are the expenses of the issuance and distribution of the
securities being registered, all of which will be paid by the registrants.
Other than the registration fee and the NASD filing fee, all of these expenses
are estimated.
Registration fee.................................................... $ 82,800
NASD filing fee..................................................... 30,500
Blue Sky fees and expenses.......................................... 25,000
Rating agency fees.................................................. 625,000
Printing and engraving expenses..................................... 1,100,000
Legal fees and expenses............................................. 1,500,000
Accounting fees and expenses........................................ 187,500
Unit Agents', Warrant Agents', Trustees' and Preferred Stock
Depositary's fees and expenses (including counsel fees)........ 500,000
Listing............................................................. 250,000
Total..................................................... $ 4,300,800
Item 15. Indemnification of Officers and Directors
Article VIII of the Amended and Restated Certificate of Incorporation of
Morgan Stanley ("Certificate of Incorporation") and Section 6.07 of the Amended
and Restated Bylaws of Morgan Stanley ("Bylaws"), each as amended to date,
provide for the indemnification of Morgan Stanley's directors and officers. The
Certificate of Incorporation provides that any person who is a director or
officer of Morgan Stanley shall be indemnified by Morgan Stanley to the fullest
extent permitted from time to time by applicable law. In addition, the Bylaws
provide that each person who was or is made a party or is threatened to be made
a party to or is involved in any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he or she or a person of whom he or she is the legal
representative is or was a director or officer of Morgan Stanley or a director
or elected officer of a corporation a majority of the capital stock (other than
directors' qualifying shares) of which is owned directly or indirectly by
Morgan Stanley (a "Subsidiary") shall be indemnified and held harmless by
Morgan Stanley to the fullest extent permitted by applicable law. The right to
indemnification under the Bylaws includes the right to be paid the expenses
incurred in defending a proceeding in advance of its final disposition upon
receipt (unless Morgan Stanley upon authorization of the Board of Directors
waives said requirement to the extent permitted by applicable law) of an
undertaking by or on behalf of such person to repay such amount if it shall
ultimately be determined that such person is not entitled to be indemnified by
Morgan Stanley.
Morgan Stanley's Bylaws also provide that Morgan Stanley may, to the
extent authorized from time to time by the Board of Directors, provide rights
to indemnification, and rights to be paid by Morgan Stanley the expenses
incurred in defending any proceeding in advance of its final disposition, to
any person who is or was an employee or agent (other than a director or
officer) of Morgan Stanley or a Subsidiary and to any person who is or was
serving at the request of Morgan Stanley or a Subsidiary as a director,
officer, partner, member, employee or agent of another corporation,
partnership, limited liability company, joint venture, trust or other
enterprise, including service with respect to employee benefit plans maintained
or sponsored by Morgan Stanley or a Subsidiary, to the fullest extent as the
Bylaws provide with respect to indemnification of, and advancement of expenses
for, directors and officers of Morgan Stanley.
Under the By-laws, Morgan Stanley has the power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, partner,
member, employee or agent of Morgan Stanley or of its subsidiary, or of another
corporation, partnership, limited liability company, joint venture, trust or
other enterprise, against any expense, liability or loss whether or not Morgan
Stanley or its subsidiary would have the power to indemnify that person against
that expense, liability or loss under the provisions of applicable law.
II-1
Morgan Stanley has in effect insurance policies in the amount of $125
million for general officers' and directors' liability insurance and $25
million for fiduciary liability insurance covering all of our directors and
officers in some of the instances where by law they may not be indemnified by
Morgan Stanley.
The forms of Underwriting Agreements and Distribution Agreements filed as
Exhibits 1-a, 1-b, 1-c, 1-d and 1-e hereto, and incorporated herein by
reference, contain some provisions relating to the indemnification of Morgan
Stanley's directors, officers and controlling persons.
Item 16. Exhibits
Exhibit
Number Description
------- -----------
1-a Form of Underwriting Agreements for Debt Securities, Warrants,
Purchase Contracts and Units.
1-b Form of Underwriting Agreement for Preferred Stock and Depositary
Shares.
1-c Form of Underwriting Agreement for Capital Securities.
1-d Form of U.S. Distribution Agreement.
1-e Form of Euro Distribution Agreement.
4-a Amended and Restated Certificate of Incorporation of Morgan
Stanley (previously filed as an exhibit to Morgan Stanley's
Annual Report on Form 10-K for the fiscal year ended November
30, 2001 and incorporated herein by reference).
4-b Form of Certificate of Designation of Offered Preferred Stock
(previously filed as an exhibit to Morgan Stanley's
Registration Statement on Form S-3, Registration No.
333-27919, and incorporated herein by reference).
4-c Form of Certificate of Offered Preferred Stock (previously
filed as an exhibit to Morgan Stanley's Registration Statement
on Form S-3, Registration No. 333-27919, and incorporated
herein by reference).
4-d Form of Deposit Agreement (including Form of Depositary
Receipt) (previously filed as an exhibit to Morgan Stanley's
Registration Statement on Form S-3, Registration No.
333-27919, and incorporated herein by reference).
4-e Amended and Restated Senior Indenture dated as of May 1, 1999
between Morgan Stanley Dean Witter & Co. and JPMorgan Chase
Bank (formerly known as The Chase Manhattan Bank), Trustee
(previously filed as an exhibit to Morgan Stanley's
Registration Statement on Form S-3, Registration No. 333-
75289, and incorporated herein by reference).
4-f First Supplemental Senior Indenture dated as of September 15,
2000 between Morgan Stanley Dean Witter & Co. and JPMorgan
Chase Bank (formerly known as The Chase Manhattan Bank),
Trustee (previously filed as an exhibit to Morgan Stanley's
Registration Statement on Form S-3, Registration No. 333-
47576, and incorporated herein by reference).
4-g Amended and Restated Subordinated Indenture dated as of May 1,
1999 between Morgan Stanley Dean Witter & Co. and Bank One Trust
Company, N.A. (successor to The First National Bank of Chicago),
Trustee (previously filed as an exhibit to Morgan Stanley's
Registration Statement on Form S-3, Registration No. 333-75289,
and incorporated herein by reference).
4-h* Form of Floating Rate Senior Note.
II-2
Exhibit
Number Description
------- -----------
4-i* Form of Fixed Rate Senior Note.
4-j* Form of Senior Variable Rate Renewable Note.
4-k* Form of Floating Rate Subordinated Note.
4-l* Form of Fixed Rate Subordinated Note.
4-m* Form of Subordinated Variable Rate Renewable Note.
4-n* Form of Fixed Rate Amortizing Senior Note.
4-o* Form of Floating/Fixed Rate Senior Note.
4-p* Form of Temporary Global Floating Rate Senior Bearer Note.
4-q* Form of Permanent Global Floating Rate Senior Bearer Note.
4-r* Form of Definitive Floating Rate Senior Bearer Note.
4-s* Form of Temporary Global Fixed Rate Senior Bearer Note.
4-t* Form of Permanent Global Fixed Rate Senior Bearer Note.
4-u* Form of Definitive Fixed Rate Senior Bearer Note.
4-v* Form of Euro Fixed Rate Senior Registered Note.
4-w* Form of Euro Fixed Rate Subordinated Registered Note.
4-x* Form of Euro Senior Registered Floating Rate Renewable Note.
4-y Form of Debt Warrant Agreement for Warrants Sold Attached to Debt
Securities (previously filed as an exhibit to Morgan Stanley's
Registration Statement on Form S-3, Registration No. 333-75289,
and incorporated herein by reference).
4-z Form of Debt Warrant Agreement for Warrants Sold Alone
(previously filed as an exhibit to Morgan Stanley's Registration
Statement on Form S-3, Registration No. 333-75289, and
incorporated herein by reference).
4-aa Form of Warrant Agreement for Universal Warrants (previously
filed as an exhibit to Morgan Stanley's Registration Statement on
Form S-3, Registration No. 333-75289, and incorporated herein by
reference).
4-bb Form of Unit Agreement (previously filed as an exhibit to Morgan
Stanley's Registration Statement on Form S-3, Registration No.
333-75289, and incorporated herein by reference).
4-cc Form of Put Warrant (included in Exhibit 4-aa) (previously filed
as an exhibit to Morgan Stanley's Registration Statement on Form
S-3, Registration No. 333-75289, and incorporated herein by
reference).
4-dd Form of Call Warrant (included in Exhibit 4-aa) (previously filed
as an exhibit to Morgan Stanley's Registration Statement on Form
S-3, Registration No. 333-75289, and incorporated herein by
reference).
II-3
Exhibit
Number Description
------- -----------
4-ee Form of Purchase Contract (Issuer Sale) (included in Exhibit
4-bb) (previously filed as an exhibit to Morgan Stanley's
Registration Statement on Form S-3, Registration No. 333-75289,
and incorporated herein by reference).'
4-ff Form of Purchase Contract (Issuer Purchase) (included in Exhibit
4-bb) (previously filed as an exhibit to Morgan Stanley's
Registration Statement on Form S-3, Registration No. 333-75289,
and incorporated herein by reference).
4-gg Form of Unit Certificate (included in Exhibit 4-bb) (previously
filed as an exhibit to Morgan Stanley's Registration Statement on
Form S-3, Registration No. 333-75289, and incorporated herein by
reference).
4-hh Form of Pre-Paid Purchase Contract (previously filed as an
exhibit to Morgan Stanley's Registration Statement on Form S-3,
Registration No. 333-34392, and incorporated herein by
reference).
4-ii Form of Unit Agreement Without Holders' Obligations (previously
filed as an exhibit to Morgan Stanley's Registration Statement on
Form S-3, Registration No. 333-75289, and incorporated herein by
reference).
4-jj Certificate of Trust of Morgan Stanley Capital Trust III
(previously filed as an exhibit to Morgan Stanley's Registration
Statement on Form S-3, Registration No. 333-46403, and
incorporated herein by reference).
4-kk Certificate of Amendment of Certificate of Trust of Morgan
Stanley Capital Trust III dated as of September 24, 2001.
4-ll Certificate of Trust of Morgan Stanley Capital Trust IV
(previously filed as an exhibit to Morgan Stanley's Registration
Statement on Form S-3, Registration No. 333-46403, and
incorporated herein by reference).
4-mm Certificate of Amendment of Certificate of Trust of Morgan
Stanley Capital Trust IV dated as of September 24, 2001.
4-nn Certificate of Trust of Morgan Stanley Capital Trust V
(previously filed as an exhibit to Morgan Stanley's Registration
Statement on Form S-3, Registration No. 333-46403, and
incorporated herein by reference).
4-oo Certificate of Amendment of Certificate of Trust of Morgan
Stanley Capital Trust V dated as of September 24, 2001.
4-pp Certificate of Trust of Morgan Stanley Capital Trust VI.
4-qq Certificate of Trust of Morgan Stanley Capital Trust VII.
4-rr Trust Agreement of Morgan Stanley Capital Trust III (previously
filed as an exhibit to Morgan Stanley's Registration Statement on
Form S-3, Registration No. 333-46403, and incorporated herein by
reference).
4-ss Amendment No. 1 dated as of September 24, 2001 to Trust Agreement
of Morgan Stanley Capital Trust III.
4-tt Trust Agreement of Morgan Stanley Capital Trust IV (previously
filed as an exhibit to Morgan Stanley's Registration Statement on
Form S-3, Registration No. 333-46403, and incorporated herein by
reference).
4-uu Amendment No. 1 dated as of September 24, 2001 to Trust Agreement
of Morgan Stanley Capital Trust IV.
II-4
Exhibit
Number Description
------- -----------
4-vv Trust Agreement of Morgan Stanley Capital Trust V (previously
filed as an exhibit to Morgan Stanley's Registration Statement on
Form S-3, Registration No. 333-46403, and incorporated herein by
reference).
4-ww Amendment No. 1 dated as of September 24, 2001 to Trust Agreement
of Morgan Stanley Capital Trust V.
4-xx Trust Agreement of Morgan Stanley Capital Trust VI.
4-yy Trust Agreement of Morgan Stanley Capital Trust VII.
4-zz Form of Amended and Restated Trust Agreement to be used in
connection with the issuance of the Capital Securities
(previously filed as an exhibit to Morgan Stanley's Registration
Statement on Form S-3, Registration No. 333-46403, and
incorporated herein by reference).
4-aaa Junior Subordinated Indenture dated as of March 1, 1998 between
Morgan Stanley Dean Witter & Co. and The Bank of New York,
Trustee, to be used in connection with the issuance of the Junior
Subordinated Debentures and the Capital Securities (previously
filed as an exhibit to Morgan Stanley's Quarterly Report on Form
10-Q for the quarter ended February 28, 1998, and incorporated
herein by reference).
4-bbb Form of Capital Security (included in Exhibit 4-zz) (previously
filed as an exhibit to Morgan Stanley's Registration Statement on
Form S-3, Registration No. 333-46403, and incorporated herein by
reference).
4-ccc Form of Junior Subordinated Debenture (previously filed as an
exhibit to Morgan Stanley's Registration Statement on Form S-3,
Registration No. 333-46403, and incorporated herein by
reference).
4-ddd Form of Capital Securities Guarantee (previously filed as an
exhibit to Morgan Stanley's Registration Statement on Form S-3,
Registration No. 333-46403, and incorporated herein by
reference).
5-a* Opinion of Sidley Austin Brown & Wood LLP.
5-b Opinion of Richards, Layton & Finger, P.A., with respect to
Morgan Stanley Capital Trust III.
5-c Opinion of Richards, Layton & Finger, P.A., with respect to
Morgan Stanley Capital Trust IV.
5-d Opinion of Richards, Layton & Finger, P.A., with respect to
Morgan Stanley Capital Trust V.
5-e Opinion of Richards, Layton & Finger, P.A., with respect to
Morgan Stanley Capital Trust VI.
5-f Opinion of Richards, Layton & Finger, P.A., with respect to
Morgan Stanley Capital Trust VII.
8* Tax opinion of Sidley Austin Brown & Wood LLP.
12-a Computation of Consolidated Ratio of Earnings to Fixed Charges.
12-b Computation of Consolidated Ratio of Earnings to Fixed Charges
and Preferred Stock Dividends. 23-a Consent of Deloitte & Touche
LLP.
23-b* Consent of Sidley Austin Brown & Wood LLP (included in Exhibits
5-a and 8).
23-c Consents of Richards, Layton & Finger, P.A. (included in Exhibits
5-b through 5-f).
II-5
Exhibit
Number Description
------- -----------
24-a Powers of Attorney for Morgan Stanley Dean Witter & Co. (included
on the signature pages).
24-b Powers of Attorney for Morgan Stanley Dean Witter & Co., as
sponsor, to sign the Registration Statement on behalf of Morgan
Stanley Capital Trust III, Morgan Stanley Capital Trust IV,
Morgan Stanley Capital Trust V, Morgan Stanley Capital Trust VI
and Morgan Stanley Capital Trust VII (included in Exhibits 4-ss,
4-uu and 4-ww through 4-yy).
25-a Statement of Eligibility of JPMorgan Chase Bank, Trustee under
the Amended and Restated Senior Indenture.
25-b Statement of Eligibility of Bank One Trust Company, N.A., as
successor to The First National Bank of Chicago, Trustee under
the Amended and Restated Subordinated Indenture.
25-c Statement of Eligibility of The Bank of New York, Trustee under
the Junior Subordinated Indenture.
25-d Statement of Eligibility of The Bank of New York, Trustee under
the Amended and Restated Trust Agreement of Morgan Stanley
Capital Trust III.
25-e Statement of Eligibility of The Bank of New York, Trustee under
the Amended and Restated Trust Agreement of Morgan Stanley
Capital Trust IV.
25-f Statement of Eligibility of The Bank of New York, Trustee under
the Amended and Restated Trust Agreement of Morgan Stanley
Capital Trust V.
25-g Statement of Eligibility of The Bank of New York, Trustee under
the Amended and Restated Trust Agreement of Morgan Stanley
Capital Trust VI.
25-h Statement of Eligibility of The Bank of New York, Trustee under
the Amended and Restated Trust Agreement of Morgan Stanley
Capital Trust VII.
25-i Statement of Eligibility of The Bank of New York, Trustee under
the Capital Securities Guarantee of Morgan Stanley Dean Witter &
Co. with respect to the Capital Securities of Morgan Stanley
Capital Trust III.
25-j Statement of Eligibility of The Bank of New York, Trustee under
the Capital Securities Guarantee of Morgan Stanley Dean Witter &
Co. with respect to the Capital Securities of Morgan Stanley
Capital Trust IV.
25-k Statement of Eligibility of The Bank of New York, Trustee under
the Capital Securities Guarantee of Morgan Stanley Dean Witter &
Co. with respect to the Capital Securities of Morgan Stanley
Capital Trust V.
25-l Statement of Eligibility of The Bank of New York, Trustee under
the Capital Securities Guarantee of Morgan Stanley Dean Witter &
Co. with respect to the Capital Securities of Morgan Stanley
Capital Trust VI.
25-m Statement of Eligibility of The Bank of New York, Trustee under
the Capital Securities Guarantee of Morgan Stanley Dean Witter &
Co. with respect to the Capital Securities of Morgan Stanley
Capital Trust VII.
- ---------
* To be filed by amendment.
II-6
Item 17. Undertakings
(1) The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
Morgan Stanley's annual report pursuant to section 13(a) or section 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(2) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrants pursuant to the foregoing provisions, or otherwise,
the registrants have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by a
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, such registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(3) The undersigned registrants hereby undertake:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in this registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this registration
statement or any material change to such information in this
registration statement;
provided, however, that paragraphs (3)(a)(i) and (3)(a)(ii) do not apply
if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
registrants pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in this
registration statement.
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(4) The undersigned registrants (other than Morgan Stanley) hereby
undertake to provide to the underwriter at the closing specified in the
underwriting agreements, certificates in such denominations and registered in
such names as required by the underwriter to permit prompt delivery to each
purchaser.
II-7
(5) The undersigned registrants hereby undertake that:
(a) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the forms of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrants pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act of 1933 shall be deemed to be part of this
registration statement as of the time it was declared effective.
(b) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Morgan Stanley Dean Witter & Co. certifies that it has reasonable grounds to
believe that it meets all the requirements for filing on Form S-3 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in The City of New York, State of New
York, as of this 1st day of March, 2002.
MORGAN STANLEY DEAN WITTER & CO.
(Registrant)
By: /s/ Philip J. Purcell
-------------------------------------
Name: Philip J. Purcell
Title: Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that each person whose signature
appears below hereby constitutes and appoints Stephen S. Crawford, Alexander C.
Frank, Ronald T. Carman and Martin M. Cohen, and each of them singly, his or
her true and lawful attorney-in-fact and agent with full power of substitution
and resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities, to sign any and all amendments, including
post-effective amendments, to this Registration Statement (any of which
amendments may make such changes and additions to this Registration Statement
as such attorneys-in-fact may deem necessary or appropriate) and to file the
same, with all exhibits thereto, and any other documents that may be required
in connection therewith, granting unto said attorneys-in-fact and agents full
power and authority to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, or their
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirement of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons on
behalf of the Registrant and in the capacities indicated as of this 1st day of
March, 2002.
Signature Title
--------- -----
/s/ Philip J. Purcell Chairman of the Board
- -------------------------------------- and Chief Executive Officer
Philip J. Purcell
/s/ Robert G. Scott President, Chief Operating Officer
- -------------------------------------- and Director
Robert G. Scott
/s/ Stephen S. Crawford Executive Vice President and
- -------------------------------------- Chief Financial Officer (Principal
Stephen S. Crawford Financial Officer)
/s/ Joanne Pace Controller
- -------------------------------------- (Principal Accounting Officer)
Joanne Pace
II-9
Signature Title
--------- -----
/s/ Robert P. Bauman Director
- --------------------------------------
Robert P. Bauman
/s/ Edward A. Brennan Director
- --------------------------------------
Edward A. Brennan
/s/ John E. Jacob
- -------------------------------------- Director
John E. Jacob
/s/ C. Robert Kidder Director
- --------------------------------------
C. Robert Kidder
/s/ Charles F. Knight Director
- --------------------------------------
Charles F. Knight
/s/ John W. Madigan Director
- --------------------------------------
John W. Madigan
/s/ Miles L. Marsh Director
- --------------------------------------
Miles L. Marsh
/s/ Michael A. Miles Director
- --------------------------------------
Michael A. Miles
/s/ Laura D'Andrea Tyson Director
- --------------------------------------
Laura D'Andrea Tyson
II-10
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Morgan Stanley Capital Trust III, Morgan Stanley Capital Trust IV, Morgan
Stanley Capital Trust V, Morgan Stanley Capital Trust VI and Morgan Stanley
Capital Trust VII each certifies that it has reasonable grounds to believe that
it meets all the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in The City of New York, State of New York, as of this 1st day
of March, 2002.
MORGAN STANLEY CAPITAL TRUST III
(Registrant)
By: Morgan Stanley Dean Witter & Co.
By: /s/ Alexander C. Frank
---------------------------------------
Name: Alexander C. Frank
Title: Treasurer
MORGAN STANLEY CAPITAL TRUST IV
(Registrant)
By: Morgan Stanley Dean Witter & Co.
By: /s/ Alexander C. Frank
---------------------------------------
Name: Alexander C. Frank
Title: Treasurer
MORGAN STANLEY CAPITAL TRUST V
(Registrant)
By: Morgan Stanley Dean Witter & Co.
By: /s/ Alexander C. Frank
---------------------------------------
Name: Alexander C. Frank
Title: Treasurer
MORGAN STANLEY CAPITAL TRUST VI
(Registrant)
By: Morgan Stanley Dean Witter & Co.
By: /s/ Alexander C. Frank
---------------------------------------
Name: Alexander C. Frank
Title: Treasurer
MORGAN STANLEY CAPITAL TRUST VII
(Registrant)
By: /s/ Alexander C. Frank
---------------------------------------
Name: Alexander C. Frank
Title: Treasurer
II-11
EXHIBIT INDEX
Exhibit
Number Description
------- -----------
1-a Form of Underwriting Agreements for Debt Securities, Warrants,
Purchase Contracts and Units.
1-b Form of Underwriting Agreement for Preferred Stock and Depositary
Shares.
1-c Form of Underwriting Agreement for Capital Securities.
1-d Form of U.S. Distribution Agreement.
1-e Form of Euro Distribution Agreement.
4-h* Form of Floating Rate Senior Note.
4-i* Form of Fixed Rate Senior Note.
4-j* Form of Senior Variable Rate Renewable Note.
4-k* Form of Floating Rate Subordinated Note.
4-l* Form of Fixed Rate Subordinated Note.
4-m* Form of Subordinated Variable Rate Renewable Note.
4-n* Form of Fixed Rate Amortizing Senior Note.
4-o* Form of Floating/Fixed Rate Senior Note.
4-p* Form of Temporary Global Floating Rate Senior Bearer Note.
4-q* Form of Permanent Global Floating Rate Senior Bearer Note.
4-r* Form of Definitive Floating Rate Senior Bearer Note.
4-s* Form of Temporary Global Fixed Rate Senior Bearer Note.
4-t* Form of Permanent Global Fixed Rate Senior Bearer Note.
4-u* Form of Definitive Fixed Rate Senior Bearer Note.
4-v* Form of Euro Fixed Rate Senior Registered Note.
4-w* Form of Euro Fixed Rate Subordinated Registered Note.
4-x* Form of Euro Senior Registered Floating Rate Renewable Note.
4-kk Certificate of Amendment of Certificate of Trust of Morgan
Stanley Capital Trust III dated as of September 24, 2001.
4-mm Certificate of Amendment of Certificate of Trust of Morgan
Stanley Capital Trust IV dated as of September 24, 2001.
E-1
Exhibit
Number Description
------- -----------
4-oo Certificate of Amendment of Certificate of Trust of Morgan
Stanley Capital Trust V dated as of September 24, 2001.
4-pp Certificate of Trust of Morgan Stanley Capital Trust VI.
4-qq Certificate of Trust of Morgan Stanley Capital Trust VII.
4-ss Amendment No. 1 to Trust Agreement of Morgan Stanley Capital
Trust III dated as of September 24, 2001.
4-uu Amendment No. 1 to Trust Agreement of Morgan Stanley Capital
Trust IV dated as of September 24, 2001.
4-ww Amendment No. 1 to Trust Agreement of Morgan Stanley Capital
Trust V dated as of September 24, 2001.
4-xx Trust Agreement of Morgan Stanley Capital Trust VI.
4-yy Trust Agreement of Morgan Stanley Capital Trust VII.
5-a* Opinion of Sidley Austin Brown & Wood LLP.
5-b Opinion of Richards, Layton & Finger, P.A., with respect to
Morgan Stanley Capital Trust III.
5-c Opinion of Richards, Layton & Finger, P.A., with respect to
Morgan Stanley Capital Trust IV.
5-d Opinion of Richards, Layton & Finger, P.A., with respect to
Morgan Stanley Capital Trust V.
5-e Opinion of Richards, Layton & Finger, P.A., with respect to
Morgan Stanley Capital Trust VI.
5-f Opinion of Richards, Layton & Finger, P.A., with respect to
Morgan Stanley Capital Trust VII.
8* Tax opinion of Sidley Austin Brown & Wood llp.
12-a Computation of Consolidated Ratio of Earnings to Fixed Charges.
12-b Computation of Consolidated Ratio of Earnings to Fixed Charges
and Preferred Stock Dividends.
23-a Consent of Deloitte & Touche LLP.
23-b* Consent of Sidley Austin Brown & Wood LLP (included in Exhibits
5a and 8).
23-c Consents of Richards, Layton & Finger, P.A. (included in Exhibits
5-b through 5-f).
24-a Powers of Attorney for Morgan Stanley Dean Witter & Co. (included
on the signature pages).
24-b Powers of Attorney for Morgan Stanley Dean Witter & Co., as
sponsor, to sign the Registration Statement on behalf of Morgan
Stanley Capital Trust III, Morgan Stanley Capital Trust IV,
Morgan Stanley Capital Trust V, Morgan Stanley Capital Trust VI
and Morgan Stanley Capital Trust VII (included in Exhibits 4-ss,
4-uu and 4-ww through 4-yy).
25-a Statement of Eligibility of JPMorgan Chase Bank, Trustee under
the Amended and Restated Senior Indenture.
E-2
Exhibit
Number Description
------- -----------
25-b Statement of Eligibility of Bank One Trust Company, N.A., as
successor to The First National Bank of Chicago, Trustee under
the Amended and Restated Subordinated Indenture.
25-c Statement of Eligibility of The Bank of New York, Trustee under
the Junior Subordinated Indenture.
25-d Statement of Eligibility of The Bank of New York, Trustee under
the Amended and Restated Trust Agreement of Morgan Stanley
Capital Trust III.
25-e Statement of Eligibility of The Bank of New York, Trustee under
the Amended and Restated Trust Agreement of Morgan Stanley
Capital Trust IV.
25-f Statement of Eligibility of The Bank of New York, Trustee under
the Amended and Restated Trust Agreement of Morgan Stanley
Capital Trust V.
25-g Statement of Eligibility of The Bank of New York, Trustee under
the Amended and Restated Trust Agreement of Morgan Stanley
Capital Trust VI.
25-h Statement of Eligibility of The Bank of New York, Trustee under
the Amended and Restated Trust Agreement of Morgan Stanley
Capital Trust VII.
25-i Statement of Eligibility of The Bank of New York, Trustee under
the Capital Securities Guarantee of Morgan Stanley Dean Witter &
Co. with respect to the Capital Securities of Morgan Stanley
Capital Trust III.
25-j Statement of Eligibility of The Bank of New York, Trustee under
the Capital Securities Guarantee of Morgan Stanley Dean Witter &
Co. with respect to the Capital Securities of Morgan Stanley
Capital Trust IV.
25-k Statement of Eligibility of The Bank of New York, Trustee under
the Capital Securities Guarantee of Morgan Stanley Dean Witter &
Co. with respect to the Capital Securities of Morgan Stanley
Capital Trust V.
25-l Statement of Eligibility of The Bank of New York, Trustee under
the Capital Securities Guarantee of Morgan Stanley Dean Witter &
Co. with respect to the Capital Securities of Morgan Stanley
Capital Trust VI.
25-m Statement of Eligibility of The Bank of New York, Trustee under
the Capital Securities Guarantee of Morgan Stanley Dean Witter &
Co. with respect to the Capital Securities of Morgan Stanley
Capital Trust VII.
- ---------
* To be filed by amendment.
E-3