SC 13D/A 1 dsc13da.txt SCHEDULE 13D SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 Morgan Stanley, Dean Witter, Discover & Co. ------------------------------------------ (Name of Issuer) Common Stock, $.01 par value ---------------------------- (Title of Class of Securities) 617446448 --------- (CUSIP Number) Jonathan M. Clark, Esq. General Counsel and Secretary Morgan Stanley & Co. Incorporated 1585 Broadway New York, NY 10036 (212) 761-4000 ------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) May 31, 1997 ----------------------------------------------------- (Date of Event Which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box: [ ] 1 SCHEDULE 13D CUSIP NO. 617446448 ----------------- - ------------------------------------------------------------------------------ NAMES OF REPORTING PERSON 1 S.S. or I.R.S. IDENTIFICATION NUMBER OF ABOVE PERSON Richard B. Fisher - ------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* 2 (a) [X] (b) [_] - ------------------------------------------------------------------------------ SEC USE ONLY 3 - ------------------------------------------------------------------------------ SOURCE OF FUNDS* 4 OO - ------------------------------------------------------------------------------ CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] 5 - ------------------------------------------------------------------------------ CITIZENSHIP OR PLACE OF ORGANIZATION 6 United States - ------------------------------------------------------------------------------ SOLE VOTING POWER 7 NUMBER OF less than 1% SHARES ----------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 OWNED BY 94,355,578 ----------------------------------------------------------- EACH SOLE DISPOSITIVE POWER 9 REPORTING 1-2% PERSON ----------------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 - ------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 94,360,127 - ------------------------------------------------------------------------------ CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* 12 [_] - ------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 15.7 - ------------------------------------------------------------------------------ TYPE OF REPORTING PERSON* 14 IN - ------------------------------------------------------------------------------ 2 SCHEDULE 13D CUSIP NO. 617446448 ----------------- - ------------------------------------------------------------------------------ NAMES OF REPORTING PERSON 1 S.S. or I.R.S. IDENTIFICATION NUMBER OF ABOVE PERSON Each of the persons described on Appendix A. - ------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* 2 (a) [X] (b) [_] (Applies to each person listed on Appendix A) - ------------------------------------------------------------------------------ SEC USE ONLY 3 ------------------------------------------------------------------------------ SOURCE OF FUNDS* 4 OO (Applies to each person listed on Appendix A) - ------------------------------------------------------------------------------ CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] 5 (Applies to each person listed on Appendix A) - ------------------------------------------------------------------------------ CITIZENSHIP OR PLACE OF ORGANIZATION 6 As stated on Apendix A - ------------------------------------------------------------------------------ SOLE VOTING POWER 7 NUMBER OF less than 1% (Applies to each person on Appendix A) SHARES ----------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 94,355,578 (Applies to each person listed on Appendix OWNED BY A) ----------------------------------------------------------- EACH SOLE DISPOSITIVE POWER 9 REPORTING less than 1% (Applies to each person on Appendix A) PERSON ----------------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 - ------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 As stated on Appendix A. - ------------------------------------------------------------------------------ CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* 12 [_] (Applies to each person listed on Appendix A) - ------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 As stated on Appendix A. - ------------------------------------------------------------------------------ TYPE OF REPORTING PERSON (See Instructions) 14 IN (Applies to each person listed on Appendix A) - ------------------------------------------------------------------------------ 3 Appendix A

26 ITEM 1. SECURITY AND ISSUER. ------------------- This statement relates to the Common Stock, par value $.01 per share (the "MSDWD Shares"), of Morgan Stanley, Dean Witter, Discover & Co., a Delaware corporation (the "Company"). The merger (the "Merger") of Morgan Stanley Group Inc. ("Morgan Stanley") with and into Dean Witter, Discover & Co. ("Dean Witter Discover") was effective as of May 31, 1997. Pursuant to the Merger, Dean Witter Discover, which is the surviving corporation of the Merger, changed its name to "Morgan Stanley, Dean Witter, Discover & Co." As a result of the Merger, each issued and outstanding share of Morgan Stanley common stock, par value $1.00 per share (the "MS Shares"), was converted (subject to certain exceptions) into 1.65 MSDWD Shares. The address of the principal executive office of the Company is 1585 Broadway, New York, New York 10036. ITEM 2. IDENTITY AND BACKGROUND. ----------------------- (a)-(c), (f) The cover sheets to this statement and Appendix A hereto contain the names of the persons (the "Reporting Persons") who beneficially own MSDWD Shares that are subject to the voting and any disposition restrictions set forth in (1) the employee Stockholders' Agreement and/or any of the Plan Agreements or (2) the MAS Agreements, all as described in Item 6, to which such persons are party to and on whose behalf this filing is made. The cover sheets to this statement and Appendix A provide the name, citizenship and aggregate amount beneficially held by each Reporting Person. The business address of each of the Reporting Persons is 1585 Broadway, New York, NY 10036. (d)-(e) No Reporting Person during the last five years has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or state securities laws or finding any violation with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. ---------------------------- The MSDWD Shares held by the Reporting Persons are beneficially owned pursuant to one or more of the following: (1) Pursuant to the recapitalization (the "Recapitalization") effective February 14, 1986 in which holders of Morgan Stanley's then outstanding privately-held common stock and non-cumulative preferred stock received MS Shares, and holders of Morgan Stanley's outstanding $8 cumulative senior preferred stock received shares of $8 Cumulative Convertible Preferred Stock, stated value $100 per share (the "Convertible Preferred Shares"), all of which were subsequently converted into MS Shares (the MSDWD Shares beneficially owned by the Reporting Persons and resulting from the conversion in the Merger of MS Shares (including MS Shares previously received upon conversion of the Convertible Preferred Shares) that had been received by the Reporting Persons pursuant to the Recapitalization are referred to herein as "Recapitalization Shares"); 27 (2) Pursuant to participation in Morgan Stanley's 1986 Stock Option Plan (the "Option Plan"), Morgan Stanley's Performance Unit Plan (the "PUP Plan"), Morgan Stanley's 1988 Equity Incentive Compensation Plan (the "1988 Equity Incentive Plan"), Morgan Stanley's 1995 Equity Incentive Compensation Plan (the "1995 Equity Incentive Plan" and, together with the 1988 Equity Incentive Plan, the "Equity Incentive Plans") and/or the Morgan Stanley U.K. Group Profit Sharing Scheme (the "U.K. Profit Sharing Scheme") and/or similar employee benefit plans or arrangements (the Option Plan, the PUP Plan and the Equity Incentive Plans are referred to collectively as the "Plans", and the MSDWD Shares beneficially owned pursuant to participation in such Plans and the U.K. Profit Sharing Scheme being referred to herein as "Benefit Plan Shares"); (3) Pursuant to the acquisition of MS Shares (which were subsequently converted in the Merger into MSDWD Shares) as part of the purchase price paid to certain of the Reporting Persons (the "Former MAS General Partners") in respect of the sale on January 3, 1996 of their general partnership interests in Miller Anderson & Sherrerd, LLP, a Pennsylvania registered limited liability partnership ("MAS"), to Morgan Stanley Asset Management Holdings Inc., an indirect wholly-owned subsidiary of the Company ("MSAMHI") (such MSDWD Shares being referred to herein as the "MAS Shares"); and (4) Pursuant to privately negotiated or open market transactions (the MSDWD Shares beneficially owned pursuant to such transactions being referred to herein as "Separately Acquired Shares"). In addition, many of the Reporting Persons are participants in the Morgan Stanley Group Inc. and Subsidiaries Employee Stock Ownership Plan (the "ESOP"), under which they have been allocated shares of the Company's ESOP Convertible Preferred Stock (the "ESOP Stock") (including shares of Morgan Stanley ESOP Convertible Preferred Stock that were converted in the Merger into ESOP Stock). Shares of ESOP Stock are convertible into MSDWD Shares, and shares of ESOP Stock are entitled to vote on all matters submitted to a vote of the holders of MSDWD Shares, voting together with the holders of MSDWD Shares as one class, all as described more fully below. The MS Shares that were converted in the Merger into each Reporting Person's Recapitalization Shares, if any, were acquired in exchange for such Person's shares of Morgan Stanley's privately-held common stock and non-cumulative preferred stock and/or as a result of the conversion of the Convertible Preferred Shares; the MS Shares that were converted in the Merger into each Reporting Person's Benefit Plan Shares and shares of ESOP Stock, if any, were acquired pursuant to the terms of the Plans, the U.K. Profit Sharing Scheme and the ESOP in consideration of services rendered and, in the case of MSDWD Shares to be acquired pursuant to an exercise of options granted under a Plan, will be acquired by payment of the exercise price of the option; the MS Shares that were converted in the Merger into each Former MAS General Partner's MAS Shares were acquired as part of the purchase price paid in connection with the sale of their general partnership interests in MAS as described above; and the MS Shares that were converted in the Merger into each Reporting Person's Separately Acquired Shares, if any, were acquired by payment of personal funds or as a gift. 28 ITEM 4. PURPOSE OF TRANSACTION. ---------------------- RECAPITALIZATION SHARES The Recapitalization was effected as of February 14, 1986, and the Recapitalization Shares were acquired in order to facilitate an initial public offering of the MS Shares. Prior to the Recapitalization, the then Managing Directors and Principals of Morgan Stanley & Co. Incorporated, a subsidiary of the Company (and, at the time of the Recapitalization, a subsidiary of Morgan Stanley), owned all of Morgan Stanley's common stock. After the Recapitalization and the initial public offering of the MS Shares, such Managing Directors and Principals (as a group) owned approximately 79% of the MS Shares, the voting and disposition of which were subject to the Stockholders' Agreement (defined below in Item 6). The voting and disposition restrictions currently applicable to the Recapitalization Shares are discussed in Item 6. BENEFIT PLAN SHARES Subsequent to April 3, 1996 up to an aggregate of 87,466,484 MS Shares corresponding to 144,319,698 MSDWD Shares following the Merger, were authorized for issuance pursuant to the 1995 Equity Incentive Plan. Awards may no longer be granted under the Option Plan, the PUP Plan and the 1988 Equity Incentive Plan, although MSDWD Shares beneficially owned pursuant to such plans (as a result of the conversion of MS Shares in the Merger) remain outstanding. Each of the Plans is administered by the Compensation Committee of the Board of Directors (the "Compensation Committee"), which selects the particular eligible persons who will receive awards under the Plans and determines the size and terms of such awards. All members of the Compensation Committee are outside directors. OPTION PLAN The purpose of the Option Plan is to provide an incentive to certain Managing Directors, Principals, officers, key employees and consultants of the Company and its subsidiaries ("Certain Personnel") to remain in the employ of the Company and such subsidiaries and to increase their interest in the success of the Company by offering them an opportunity to obtain a proprietary interest in the Company through the grant of options to purchase MS Shares (all options outstanding at the time of the Merger having been converted into options to purchase MSDWD Shares). The Option Plan provides for the issuance of incentive stock options which meet the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), options that are not qualified under the Code and stock appreciation rights. Only nonqualified options have been granted under the Option Plan ("SOP Options"). Awards were granted under the Option Plan from 1986-1988; awards may no longer be granted under the Option Plan. The exercise price of an SOP Option was not permitted to be less than 100% of the fair market value of the MS Shares subject to the SOP Option as of the grant date, as determined by the Compensation Committee. An SOP Option became exercisable at a rate of one-third of the number of MS Shares covered by such option grant after each of the first three anniversaries of the date of 29 grant, unless the Compensation Committee otherwise provides. All SOP Options are currently exercisable and required to expire within 10 years and one day of the date of grant. The individual option agreement entered into by any Reporting Person pursuant to the Option Plan contains restrictions on voting of any MS Shares (or following the Merger, MSDWD Shares) acquired pursuant to the Option Plan discussed in Item 6. PUP PLAN The purpose of the PUP Plan is to benefit and advance the interests of the Company and its subsidiaries by rewarding Certain Personnel for their contributions to the financial success of the Company and thereby motivate them to continue to make such contributions in the future by awarding performance units (the "Performance Units") whose value was determined by reference to earnings per share of the MS Shares over a stated period of time. Awards were granted under the PUP Plan from 1986-1988; awards may no longer be granted under the PUP Plan. The value of a Performance Unit is equal to Morgan Stanley's consolidated earnings per share (as determined by the Compensation Committee in accordance with the terms of the PUP Plan) during the period commencing on the first date of Morgan Stanley's fiscal quarter which includes the date as of which a Performance Unit was awarded (the "Base Date") and ending on the earlier of (i) the last day of Morgan Stanley's fiscal year which includes the date on which such Performance Unit was awarded and (ii) the last day of Morgan Stanley's fiscal quarter in which a participant's employment is terminated by reason of death, long-term disability or retirement, or to such other date as is determined by the Compensation Committee (the "Valuation Date"). After the value of Performance Units was determined, such value generally was distributed to the recipient in equal installments on or as soon as practicable following each of the first and second anniversaries of the Valuation Date. The PUP Plan provides that 50% of each installment of such value is paid in MS Shares, and the balance is paid in cash, although the Compensation Committee may increase the percentage paid in cash or in MS Shares. All MS Shares paid to participants in the PUP Plan were converted into MSDWD Shares in the Merger. The individual PUP Plan agreement entered into by a Reporting Person pursuant to the PUP Plan contains restrictions on voting and disposition of any MSDWD Shares acquired as discussed in Item 6. EQUITY INCENTIVE PLANS The purpose of the Equity Incentive Plans is to attract, retain and motivate Certain Personnel, to compensate them for their contributions to the growth and profits of the Company and to encourage ownership by them of MS Shares (or, following the Merger, MSDWD Shares). Under the 1995 Equity Incentive Plan the following individuals are also eligible to receive awards: nonemployee directors of subsidiaries of the Company; employees and consultants of joint ventures, partnerships or similar business organizations in which the Company has an equity or similar interest; and former employees or former consultants of the Company and of such joint 30 ventures, partnerships or similar business organizations. The 1995 Equity Incentive Plan was adopted in accordance with the requirements of Section 162(m) of the Code. Awards under the Equity Incentive Plans may be in the form of (i) stock awards consisting of one or more MSDWD Shares granted or offered for sale to eligible individuals ("Restricted Shares"), (ii) stock units which are settled by delivery of MSDWD Shares ("Stock Units") and/or (iii) nonqualified options to purchase MSDWD Shares ("EIP Options"). Awards under the 1995 Equity Incentive Plan may also be in the form of incentive stock options, stock appreciation rights and other forms of equity-based or equity-related awards as determined by the Compensation Committee; to date, these types of awards have not been granted. MSDWD Shares issued pursuant to the Equity Incentive Plans may, in the discretion of the Compensation Committee, be made subject to the same voting restrictions that are set forth in the Stockholders' Agreement and in the Plan Agreements (as defined in Item 6). Awards under the Equity Incentive Plans may, in the discretion of the Compensation Committee, be made in substitution for cash or other compensation payable to an eligible individual. The Compensation Committee may establish rules pursuant to which an eligible individual may elect to receive one form of award in lieu of any other form of award, or may elect to receive additional awards in lieu of some or all of the cash portion of his compensation. An EIP Option entitles the participant to acquire a specified number of MSDWD Shares at an exercise price as determined by the Compensation Committee. The exercise price may be paid in cash or MSDWD Shares or a combination thereof. The Compensation Committee has also authorized a "cashless" exercise procedure that affords participants the opportunity to sell immediately some or all of the MSDWD Shares underlying the unexercised portion of an EIP Option in order to generate sufficient cash to pay the exercise price and/or to satisfy withholding tax obligations related to the EIP Option. EIP Options expire not later than ten years from the date of award. Awards were granted under the 1988 Equity Incentive Plan from 1988-1996; awards may no longer be granted under the 1988 Equity Incentive Plan. No awards shall be made under the 1995 Equity Incentive Plan after April 3, 2006 or, in the case of incentive stock options, November 28, 2005. U.K. PROFIT SHARING SCHEME MSDWD Shares purchased on behalf of certain Reporting Persons pursuant to the U.K. Profit Sharing Scheme are purchased with profit-sharing awards and are held pursuant to the terms of the U.K. Profit Sharing Scheme for investment purposes. Such MSDWD Shares are not subject to the restrictions on voting and disposition contained in the Stockholders' Agreement. MAS SHARES The acquisition of MAS by MSAMHI (together with two of its affiliates) was effected on January 3, 1996, and the MAS Shares were acquired by the Former MAS General Partners as part of the purchase price paid in connection with the sale of their general partnership interests in MAS. The voting and disposition of the MAS Shares are subject to the MAS Agreements (as defined 31 in Item 6). The voting and disposition and other restrictions currently applicable to the MAS Shares are discussed in Item 6. SEPARATELY ACQUIRED SHARES Separately Acquired Shares are held by Reporting Persons for investment purposes. Such MSDWD Shares are not subject to the restrictions on voting and disposition contained in the Stockholders' Agreement or the Plan Agreements. ESOP STOCK Shares of ESOP Stock are allocated to each participant in the ESOP on December 31 in each year. Each share of ESOP Stock is convertible into MSDWD Shares by the trustee of the ESOP at any time prior to the date fixed for redemption of the ESOP Stock at a conversion rate of one share of ESOP Stock to 3.3 MSDWD Shares, which rate is subject to adjustment. The ESOP Stock is redeemable at the Company's option at $35.88 per share (subject to adjustment) plus accrued dividends at any time after September 19, 2000 and prior thereto under certain circumstances at specified prices. The Company may pay the redemption price of the ESOP Stock in cash, in MSDWD Shares or a combination thereof. Neither ESOP Stock nor MSDWD Shares issued to participants in the ESOP are subject to the restrictions on voting and disposition contained in the Stockholders' Agreement or the Plan Agreements. * * * Except for (i) the possible acquisition from time to time of additional Separately Acquired Shares for investment purposes and (ii) the acquisition of MSDWD Shares issued by the Company in the ordinary course of business pursuant to the Plans and the U.K. Profit Sharing Scheme, none of the Reporting Persons has any plans or proposals which relate to or would result in their acquisition of additional MSDWD Shares. Subject to the restrictions described in Item 6, dispositions of MSDWD Shares by Reporting Persons may be made from time to time pursuant to (i) Rule 144 under the Securities Act of 1933, as amended (the "Act"), (ii) a registration statement filed under the Act or (iii) any available exemption from registration under the Act, and in accordance with the individual investment objectives of the Reporting Person disposing of such MSDWD Shares. Except as previously described in this Item 4, the Reporting Persons as a group do not have any plans or proposals that relate to or would result in any of the matters described in subparagraphs (a)-(j) of Item 4 of Schedule 13D. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. ------------------------------------ (a) Items (11) and (13) of the cover page for each of the Reporting Persons are hereby incorporated by reference. As of the date of this report, the Reporting Persons as a group may be deemed to beneficially own an aggregate of 94,355,578 MSDWD Shares, or approximately 15.7% of the total MSDWD Shares outstanding (585,664,437). The Reporting Persons as a group hereby 32 disclaim beneficial ownership of any MSDWD Shares held by any Reporting Person as to which such Reporting Person has sole voting and dispositive power. Each Reporting Person hereby disclaims beneficial ownership of any MSDWD Shares which may be deemed to be beneficially owned by other Reporting Persons as members of a group. Except as described in Schedule I, no Reporting Person has the right to acquire MSDWD Shares within 60 days from the date hereof. (b) Items (7) - (10) of the cover page or the information provided on Appendix A for each of the Reporting Persons are hereby incorporated by reference. (c) No Reporting Person has effected any transactions in any MSDWD Shares during the past 60 days. (d) None. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. ---------------------------------------- Reporting Persons who own Recapitalization Shares have entered into a Stockholders' Agreement dated as of February 14, 1986 (the "Stockholders' Agreement") (Exhibits A and B hereto) which contains restrictions regarding the voting and disposition of the Recapitalization Shares. Pursuant to the terms of the Plans, the Compensation Committee has required that certain participants in such Plans enter into agreements that place restrictions on the voting and disposition of MSDWD Shares acquired pursuant to such Plans similar to those restrictions set forth in the Stockholders' Agreement. Reference is hereby made to the terms of the agreements or certificates that impose such restrictions pursuant to the Plans (collectively, the "Plan Agreements"), the forms of which are included as Exhibits H, I , J, K and L. Reporting Persons who own MAS Shares have entered into a Purchase Agreement dated as of June 29, 1995, as amended (the "MAS Purchase Agreement"), the relevant provisions of which relating to transfer and other restrictions with respect to the MAS Shares are described under "MAS Shares" below, and have executed (or agreed to become subject to) voting agreements (the "MAS Voting Agreements" (substantially in the form of Exhibit L hereto) and collectively with the MAS Purchase Agreement, the "MAS Agreements"), that place restrictions on voting and disposition of the MAS Shares that are substantially similar to restrictions contained in the Plan Agreements. The following descriptions are qualified in their entirety by reference to the Stockholders' Agreement, the Plan Agreements and the MAS Voting Agreements. VOTING RESTRICTIONS AND ARRANGEMENTS Each of the individuals listed on the cover pages to this report and Appendix A hereto is a party to one or more of the Stockholders' Agreement and the Plan Agreements and, in the case of the Former MAS General Partners, the MAS Agreements. Pursuant to the voting restrictions contained in the Stockholders' Agreement, the Plan Agreements and the MAS Voting Agreements, the Reporting Persons, prior to any vote of the stockholders of the Company at a meeting called 33 with respect to any corporate action or before action is taken by written consent, may vote all MSDWD Shares subject to the voting restrictions in a preliminary vote in such manner as each Reporting Person may determine in his sole discretion (the "Preliminary Vote"). At the subsequent stockholders' meeting or in connection with any action taken by written consent, the Reporting Persons must then vote all such MSDWD Shares on the matter at issue in accordance with the vote of the majority of the MSDWD Shares present and voting in the Preliminary Vote. Reporting Persons who cease to be employed by the Company or any of its subsidiaries on or prior to the date of the Preliminary Vote do not participate in and are not bound by the Preliminary Vote. Recipients of Restricted Shares under the Equity Incentive Plans are entitled to exercise voting rights with respect to the MSDWD Shares underlying such awards upon receipt of such awards. On March 6, 1991 the Company established a trust (the "Trust") pursuant to the Trust Agreement between the Company and State Street Bank and Trust Company, as Trustee (the "Trustee"), dated March 5, 1991 (the "Trust Agreement") (Exhibits M, N and O) pursuant to which the MSDWD Shares that correspond to Stock Units are placed in the Trust pending vesting and conversion. Subject to the Company's right to amend or terminate the Trust at any time, the terms of the Trust Agreement permit the active employees of the Company who are holders of Stock Units (other than Certain Personnel in certain non-U.S. jurisdictions as described below) to direct the vote of the MSDWD Shares held in the Trust for purposes of the Preliminary Vote. In accordance with the terms of the Voting Agreement between the Trustee and the Company dated March 5, 1991 (Exhibit P), the Trustee has the obligation to vote the MSDWD Shares held in the Trust (including MSDWD Shares corresponding to Stock Units held by former employees, who do not participate in the Preliminary Vote) in accordance with the result of the Preliminary Vote. Holders of ESOP Stock are entitled to vote on all matters submitted to a vote of the holders of MSDWD Shares, voting together with the holders of MSDWD Shares as one class. Each share of ESOP Stock is entitled to the number of votes equal to 1.35 times the number of MSDWD Shares into which such share of ESOP Stock could be converted on the record date for such vote. Each Reporting Person who is a participant in the ESOP has the ability to instruct the trustee of the ESOP how to vote the shares of ESOP Stock allocated to his account. In addition, unallocated shares of ESOP Stock are voted by the trustee on a pro rata basis with the instructions received with respect to the allocated ESOP Stock. RESTRICTIONS ON DISPOSITION AND OTHER ARRANGEMENTS RECAPITALIZATION SHARES, PUP PLAN The Stockholders' Agreement presently permits each Reporting Person that is a party thereto to dispose of Recapitalization Shares and/or MSDWD Shares acquired pursuant to the PUP Plan (together with the Recapitalization Shares, "Total Restricted Stock") in the following amounts: % of Total Restricted Stock Age at Date of Sale Permitted to be Sold ------------------- ------------------------ 35 through 38 10% 39 through 42 Additional 10% 43 through 46 Additional 10% 47 through 49 Additional 10% 50 and above Additional 10% 34 If a Reporting Person ceases to be an employee of the Company or any of its subsidiaries, the Stockholders' Agreement permits such Reporting Person to dispose of his Recapitalization Shares without restriction. Reporting Persons may dispose of their Total Restricted Stock Shares at any time, in any amount regardless of the foregoing restrictions, with the consent of the Board of Directors of the Company. MSDWD Shares issued to recipients under the PUP Plan and under the jurisdiction of the United Kingdom, are not subject to voting or disposition restrictions. EQUITY INCENTIVE PLANS A participant will vest in any Restricted Shares, Stock Units or EIP Options, the restrictions on the transferability of Restricted Shares will lapse, Stock Units will convert into MSDWD Shares, and any EIP Options awarded will become exercisable, all in accordance with a schedule established by the Compensation Committee. The Compensation Committee may, however, accelerate the vesting of any award, the lapse of restrictions on the transferability of any Restricted Shares, the date on which Stock Units convert into MSDWD Shares and the date on which any EIP Option first becomes exercisable. Prior to vesting and the lapse of restrictions on transferability, none of the awards under the Equity Incentive Plans may be sold, assigned, exchanged or transferred, pledged, hypothecated or otherwise disposed of or encumbered. Certain awards under the Equity Incentive Plans, whether vested or unvested, are also subject to forfeiture in circumstances specified by the Compensation Committee. Recipients of Restricted Shares are entitled to receive dividends with respect to MSDWD Shares underlying such awards upon receipt of such awards. Recipients of Stock Units are entitled to receive dividend equivalent amounts prior to receipt of MSDWD Shares. The Company may require a participant to pay a sum to the Company or, pursuant to reduced MSDWD Share delivery provisions, the Company may retain the number of MSDWD Shares having an equivalent value as may be necessary to cover any taxes or charges imposed with respect to property or income received by a participant pursuant to the Equity Incentive Plans. In addition, upon conversion of Stock Units into MSDWD Shares or exercise of EIP Options, the Company may withhold a number of MSDWD Shares sufficient to satisfy any obligation a participant owes to the Company resulting from any payment made on the participant's behalf under the tax equalization program for expatriate employees. Under the terms of awards made under the 1995 Equity Incentive Plan, upon payment of an award of Stock Units or exercise of EIP Options, the Company may withhold a number of MSDWD Shares sufficient to satisfy any obligation an award recipient owes the Company. From time to time the Compensation Committee has adopted certain additional and/or different terms and conditions for the grant of Restricted Shares and Stock Units to Certain Personnel in certain non-U.S. jurisdictions (including to Japanese local employees or expatriates working in Japan) to permit such persons to qualify for favorable tax treatment under, or otherwise to comply with, the laws of such non-U.S. jurisdictions. In such cases the Company may not issue MSDWD Shares corresponding to Stock Units and recipients may not have the ability to vote or the underlying MSDWD Shares may not be subject to the restrictions on voting described under "Voting Restrictions and Arrangements" above. The Compensation Committee also has adopted certain additional and/or different terms and conditions for the grant of EIP Options to Certain 35 Personnel in certain non-U.S. jurisdictions in order to permit such persons to qualify for favorable tax treatment under the laws of such non-U.S. jurisdictions. U.K. PROFIT SHARING SCHEME The U.K. Profit Sharing Scheme provides that MSDWD Shares awarded to the participants are held by a trustee in the name and on behalf of each participant for a period of two years from the date of such award (the "Retention Period"). Each participant is fully vested in, and is the beneficial owner of, the MSDWD Shares held on his behalf as of the award date of the MSDWD Shares. During the Retention Period, a participant may not assign, pledge or otherwise dispose of such MSDWD Shares; however, a participant is able to instruct the trustee how to vote such MSDWD Shares on his behalf. MAS SHARES The MAS Shares are subject to the following transfer and other restrictions under the MAS Purchase Agreement. The MAS Shares issued to each Former MAS General Partner generally vest in accordance with the following vesting schedule: (i) one-sixth of such shares vested on January 3, 1996 (the "MAS Closing Date"); and (ii) one-sixth of such shares shall vest on each of the next five succeeding anniversaries of the MAS Closing Date (each date referred to in this clause (ii), a "Vesting Date"); provided, that no shares registered in the name of any Former MAS General Partner shall vest on any Vesting Date unless such Former MAS General Partner is actively employed by Morgan Stanley Asset Management Inc. ("MSAM") on such Vesting Date pursuant to an employment agreement with MSAM, unless such failure to be so employed is (a) as a result of such Former MAS General Partner's death or disability, or (b) as a result of the termination of such Former MAS General Partner's employment by MSAM without "Cause" or by the Former MAS General Partner for "Good Reason," as such terms are defined in such employment agreement. Notwithstanding the foregoing, in the case described in clause (b) of the foregoing proviso, the continued vesting of shares as aforesaid shall be subject to the Former MAS General Partner's continued compliance with the noncompetition, nonsolicitation and confidentiality provisions of his or her employment agreement with MSAM for a period of one year from the date of termination of employment, or if shorter, for a period from the date of termination of employment to December 1, 2000. If the Former MAS General Partner does not comply continuously with the provisions for such period, any remaining unvested shares shall be forfeited as of the date of the first failure to so comply. Any shares so vested shall thereafter be free of any such vesting requirements, and any shares which are so forfeited shall be returned to the Company. Prior to vesting, all MAS Shares shall be nontransferable. Sales of vested MAS Shares by a Former MAS General Partner will also be subject to the Company's internal rules and policies applicable from time to time with respect to MSDWD Shares held by officers of the Company or its affiliates. In accordance with the MAS Voting Agreements, so long as a MAS General Partner is an employee of the Company or any of its subsidiaries, such MAS General Partner will be subject to 36 the voting restrictions and procedures described in the first paragraph under "Voting Restrictions and Arrangements" above in this Item 6. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. -------------------------------- Certain of the following exhibits, as indicated parenthetically, were previously filed as exhibits to registration statements or reports filed by Morgan Stanley under the Securities Act of 1933 or the Securities Exchange Act of 1934, respectively, or reports filed by the Reporting Persons under the Securities Exchange Act of 1934, and are hereby incorporated by reference to such statements or reports. Exhibit A Stockholders' Agreement dated February 14, 1986 among certain Reporting Persons and Morgan Stanley (Morgan Stanley's Annual Report on Form 10-K for the fiscal year ended January 31, 1993). Exhibit B Form of Consent and Amendment dated as of January 31, 1996 between Morgan Stanley and certain signatories to the Stockholders' Agreement referred to in Exhibit A (Morgan Stanley's Annual Report on Form 10-K for the fiscal period ended November 30, 1995). Exhibit C Morgan Stanley Group Inc. 1986 Stock Option Plan, as amended and restated to date (Morgan Stanley's Annual Report on Form 10-K for the fiscal year ended January 31, 1993). Exhibit D Morgan Stanley Group Inc. Performance Unit Plan, as amended and restated to date (Morgan Stanley's Annual Report on Form 10-K for the fiscal year ended January 31, 1993). Exhibit E Morgan Stanley Group Inc. 1988 Equity Incentive Compensation Plan, as amended and restated to date (Morgan Stanley's Annual Report on Form 10-K for the fiscal year ended January 31, 1993). Exhibit F Morgan Stanley Group Inc. 1995 Equity Incentive Compensation Plan (Morgan Stanley's Proxy Statement for 1996 Meeting of Stockholders). Exhibit G Trust Deed and Rules of the Morgan Stanley International Profit Sharing Scheme (approved under the Finance Act 1978 as amended), dated 12 November, 1987, of Morgan Stanley Group Inc., Morgan Stanley International and Noble Lowndes Settlement Trustees Limited (Morgan Stanley's Annual Report on Form 10-K for the fiscal year ended January 31, 1993). Exhibit H Form of Nonqualified Stock Option Agreement Under the Morgan Stanley Group Inc. 1986 Stock Option Plan (Morgan Stanley's Registration Statement on Form S-8 (No. 33-42464)). Exhibit I Form of Award Agreement Under the Morgan Stanley Group Inc. Performance Unit Plan (Morgan Stanley's Registration Statement on Form S-8 (No. 33-42464)). 37 Exhibit J Form of Stock Unit Certificate Under the Morgan Stanley Group Inc. 1988 Equity Incentive Compensation Plan (previously filed as Exhibit V with Amendment No. 5 to the Reporting Persons' Schedule 13D dated December 31, 1990 relating to MS Shares). Exhibit K Form of Stock Option Certificate Under the Morgan Stanley Group Inc. 1988 Equity Incentive Compensation Plan (previously filed as Exhibit W with Amendment No. 5 to the Reporting Persons' Schedule 13D dated December 31, 1990 relating to MS Shares). Exhibit L Form of Voting Agreement Under the Morgan Stanley Group Inc. 1988 Equity Incentive Compensation Plan (previously filed as Exhibit X with Amendment No. 5 to the Reporting Persons' Schedule 13D dated December 31, 1990 relating to MS Shares). Exhibit M Trust Agreement between Morgan Stanley and State Street Bank and Trust Company dated March 5, 1991 (Morgan Stanley's Annual Report on Form 10-K for the fiscal year ended January 31, 1993). Exhibit N First Amendment to Trust Agreement dated April 3, 1996 between Morgan Stanley and State Street Bank and Trust Company (Morgan Stanley's Annual Report on Form 10-K for the fiscal year ended November 30, 1996). Exhibit O Second Amendment to Trust Agreement dated May 31, 1997 between the Company and State Street Bank and Trust Company.* Exhibit P Voting Agreement among Morgan Stanley, State Street Bank and Trust Company and Other Persons Signing Similar Agreements dated March 5, 1991 (Morgan Stanley's Annual Report on Form 10-K for the fiscal year ended January 31, 1993). - ------------ * Filed herewith. 38 Schedule I RIGHTS TO ACQUIRE MSDWD SHARES ------------------------------ As of August 8, 1997 (60 days from June 9, 1997), 1,218 Reporting Persons have the right to acquire 14,855,968 MSDWD Shares pursuant to the exercise of options. No Reporting Person individually has options presently exercisable covering more than 1% of the MSDWD Shares outstanding as of the date hereof. After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: June 9, 1997 By: /s/ Ralph L. Pellecchio ------------------------- Ralph L. Pellecchio Attorney-in-Fact 39 EX-99.(O) 2 SECOND AMENDMENT TO TRUST AGREEMENT DATED SECOND AMENDMENT TO TRUST AGREEMENT This Amendment Agreement, made as of this 31st day of May, 1997, by and between Morgan Stanley, Dean Witter, Discover & Co. and State Street Bank and Trust Company, a Massachusetts trust company (the "Trustee"). R E C I T A L S: - - - - - - - - WHEREAS, Morgan Stanley Group Inc. ("Morgan Stanley Group") and the Trustee entered into a Trust Agreement, dated as of March 5, 1991(the "Trust Agreement"; terms used herein without definition shall have the meanings ascribed to such terms in the Trust Agreement); and WHEREAS, pursuant to the Amended and Restated Agreement and Plan of Merger, dated as of April 10, 1997 between Morgan Stanley Group and Dean Witter, Discover & Co., a Delaware Corporation ("Dean Witter, Discover"), Morgan Stanley Group was merged with and into Dean Witter, Discover on May 31, 1997, with the surviving corporation of such merger being known as Morgan Stanley, Dean Witter, Discover & Co. ("MSDWD"); WHEREAS, by operation of law, effective as of May 31, 1997, MSDWD has succeeded to all of the rights and obligations of Morgan Stanley Group including without limitation all of Morgan Stanley Group's rights and obligations under the Trust Agreement, the Trust and the Plan; WHEREAS, MSDWD desires to amend the Trust Agreement to reflect the merger of Morgan Stanley Group with and into Dean Witter, Discover and the succession by MSDWD of all of the rights and obligations of Morgan Stanley Group thereunder; 40 NOW, THEREFORE, for good and valuable consideration, MSDWD and the Trustee hereby agree as follows: 1. The introductory paragraph to the Trust Agreement is amended by deleting the name "Morgan Stanley Group Inc." contained therein and substituting therefor the name "Morgan Stanley, Dean Witter, Discover & Co.", and all references to the "Company" which appear thereafter in the Trust Agreement shall be deemed to refer to MSDWD. 2. The first recital contained in the Trust Agreement is amended by deleting the words "Morgan Stanley Group Inc. common stock, par value $1.00 per share" contained therein and substituting therefor "Morgan Stanley, Dean Witter, Discover & Co. common stock, par value $.01 per share," and all references to the "Common Stock" which appear thereafter in the Trust Agreement shall be deemed to refer to the common stock, par value $.01 per share, of MSDWD. 3. The second recital contained in the Trust Agreement is amended by deleting the names "Morgan Stanley & Co. Incorporated, Morgan Stanley International Incorporated, Morgan Stanley & Co. International Limited and Morgan Stanley Securities Services, Inc." contained therein and substituting therefor the words "any subsidiary of the Company any of whose employees are, as of the relevant date of determination, Participants in the Plan". 4. All references to "this Agreement," "herein," "hereunder," or words of like import contained in the Trust Agreement shall be references to the Trust Agreement as amended by this Amendment. 5. Except as expressly amended hereby, the Trust Agreement shall remain in full force and effect. All actions taken consistent with this Amendment prior to the date hereof are hereby approved, confirmed and ratified in all respects. IN WITNESS WHEREOF, MSDWD and the Trustee have executed this Amendment Agreement as of the date first above written. MORGAN STANLEY, DEAN WITTER, DISCOVER & CO. By: _________________________________ STATE STREET BANK AND TRUST COMPANY By: _________________________________ 41

AFFILIATE STKHLDRS OF MORGAN STANLEY DEAN WITTER DISCOVER&CO SC 13D/A