exv4w1



 





Exhibit 4.1




AMENDMENT NO. 2

TO

PREFERRED STOCK RIGHTS AGREEMENT




          This Amendment No. 2, dated as of April 5, 2004 (this “Amendment”), to the
Preferred Stock Rights Agreement, dated as of August 15, 2001, by and between
Barra, Inc., a Delaware corporation (the “Company”), and Mellon Investor
Services LLC, a New Jersey limited liability company, as rights agent (the
“Rights Agent”), as amended by Amendment No. 1 to the Preferred Stock Rights
Agreement, dated as of February 12, 2003, by and between the Company and the
Rights Agent (as so amended, the “Rights Agreement”).



WITNESSETH




          WHEREAS, the Company and the Rights Agent have heretofore executed and
entered into the Rights Agreement;



          WHEREAS, pursuant to Section 27 of the Rights Agreement, the Company and
the Rights Agent may from time to time supplement or amend the Rights Agreement
in accordance with the provisions of Section 27 thereof; and



          WHEREAS, the Board of Directors of the Company has determined that it is
in the best interests of the Company and the holders of the Rights to amend the
Rights Agreement as provided herein.



          NOW THEREFORE, in consideration of the foregoing and the mutual agreements
set forth herein, the Company and the Rights Agent agree as follows:



          1. Any term not defined herein shall have the meaning ascribed to it in
the Rights Agreement.



          2. Section 1(a) shall be amended and restated in its entirety as follows:




          “(a) “ACQUIRING PERSON” shall mean any Person, who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the Common Shares of the Company then
outstanding, but shall not include (i) the Company, any Subsidiary of
the Company or any employee benefit plan of the Company or of any
Subsidiary of the Company, or any entity holding Common Shares for or
pursuant to the terms of any such plan or (ii) Morgan Stanley, a
Delaware corporation (“Parent”), Morgan Stanley Risk Holdings, Inc., a
Delaware corporation (“Merger Sub”), or any Affiliate or Associate of
Parent or Merger Sub; provided, however, that Parent, Merger Sub or any
Affiliate or Associate of Parent or Merger Sub will become an “Acquiring
Person” in the event that Parent, Merger Sub or any Affiliate or
Associate of Parent or Merger Sub becomes the Beneficial Owner,
individually or in the aggregate, of an aggregate of 15% or more of the
Common Shares of the Company then outstanding other than pursuant to the
terms of the Agreement and Plan of Merger dated as of April 5, 2004 (the
“Merger Agreement”), among the Company, Parent and Merger Sub. Notwithstanding the



 









 






foregoing, Andrew Rudd, the current Chairman of the Board of Directors
of the Company, shall not be deemed an Acquiring Person unless and until
he is the Beneficial Owner of 25% or more of the Common Shares of the
Company then outstanding (as to Andrew Rudd, in each case in which the
number “15%” is used in this Section or elsewhere in this Agreement in
connection with any determination as to whether a Person is an
“Acquiring Person,” such number shall be read to equal the current
percentage threshold applicable to Mr. Rudd under this Section 1(a)),
and no Person shall be deemed to be an Acquiring Person as the result of
an acquisition of Common Shares of the Company by the Company which, by
reducing the number of shares outstanding, increases the proportionate
number of shares beneficially owned by such Person to 15% or more of the
Common Shares of the Company then outstanding; provided, however, that
if a Person shall become the Beneficial Owner of 15% or more of the
Common Shares of the Company then outstanding by reason of share
purchases by the Company and shall, after such share purchases by the
Company, become the Beneficial Owner of any additional Common Shares of
the Company (other than pursuant to a dividend or distribution paid or
made by the Company on the outstanding Common Shares of the Company in
Common Shares of the Company or pursuant to a split or subdivision of
the outstanding Common Shares of the Company), then such Person shall be
deemed to be an Acquiring Person unless upon becoming the Beneficial
Owner of such additional Common Shares of the Company such Person does
not beneficially own 15% or more of the Common Shares of the Company
then outstanding. Notwithstanding the foregoing, (i) if the Company’s
Board of Directors determines in good faith that a Person who would
otherwise be an “Acquiring Person,” as defined pursuant to the foregoing
provisions of this paragraph (a), has become such inadvertently
(including, without limitation, because (A) such Person was unaware that
it beneficially owned a percentage of the Common Shares of the Company
that would otherwise cause such Person to be an “Acquiring Person,” as
defined pursuant to the foregoing provisions of this paragraph (a), or
(B) such Person was aware of the extent of the Common Shares of the
Company it beneficially owned but had no actual knowledge of the
consequences of such beneficial ownership under this Agreement) and
without any intention of changing or influencing control of the Company,
and if such Person divested or divests as promptly as practicable a
sufficient number of Common Shares of the Company so that such Person
would no longer be an “Acquiring Person,” as defined pursuant to the
foregoing provisions of this paragraph (a), then such Person shall not
be deemed to be or to have become an “Acquiring Person” for any purposes
of this Agreement; and (ii) if, as of the date hereof, any Person is the
Beneficial Owner of 15% or more of the Common Shares of the Company
outstanding, such Person shall not be or become an “Acquiring Person,”
as defined pursuant to the foregoing provisions of this paragraph (a),
unless and until such time as such Person shall become the Beneficial
Owner of additional Common Shares of the Company (other than pursuant to
a dividend or distribution paid or made by the Company on the
outstanding Common Shares of the Company in Common Shares of the Company
or pursuant to a split or subdivision of the outstanding Common Shares
of the Company), unless, upon becoming the Beneficial Owner of such
additional Common Shares of the Company, such Person is not then the
Beneficial Owner of 15% or more of the Common Shares of the Company then
outstanding.”


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          3. Section 1(q) shall be amended and restated in its entirety as follows:




          “(q) “EXPIRATION DATE” shall mean the earliest to occur of: (i)
the Close of Business on the Final Expiration Date, (ii) the Redemption
Date, (iii) the time at which the Board of Directors orders the exchange
of the Rights as provided in Section 24 hereof or (iv) upon written
notice thereof from the Company to the Rights Agent, immediately prior
to the Effective Time of the Merger (as such term is defined in the
Merger Agreement).”



          4. Section 1(hh) of the Rights Agreement is hereby amended by adding as
the final sentence thereto the following:




“Notwithstanding anything in this Agreement to the
contrary, no Shares Acquisition Date shall be deemed
to have occurred solely as a result of (i) the
approval, execution or delivery of the Merger
Agreement and the Voting Agreement (as such term is
defined in the Merger Agreement); (ii) the
announcement or consummation of the Merger (as such
term is defined in the Merger Agreement) or the
consummation of any of the other transactions
contemplated by the Merger Agreement or the Voting
Agreement or (iii) the acquisition of Common Shares of
the Company by Parent or Merger Sub pursuant to the
Merger.”



          5. Section 3(a) of the Rights Agreement is hereby amended by adding as the
final sentence thereto the following:




“Notwithstanding anything in this Agreement to the
contrary, no Distribution Date shall be deemed to have
occurred solely as a result of (i) the approval,
execution or delivery of the Merger Agreement and the
Voting Agreement (as such term is defined in the
Merger Agreement); (ii) the announcement or
consummation of the Merger (as such term is defined in
the Merger Agreement) or the consummation of any of
the other transactions contemplated by the Merger
Agreement or the Voting Agreement or (iii) the
acquisition of Common Shares of the Company by Parent
or Merger Sub pursuant to the Merger.”



          6. Section 11(a)(ii) of the Rights Agreement is hereby amended by adding
as the final sentence thereto the following:


“Notwithstanding anything in this Agreement to the
contrary, no Triggering Event shall be deemed to have
occurred solely as a result of (i) the approval,
execution or delivery of the Merger Agreement and the
Voting Agreement (as such term is defined in the
Merger Agreement); (ii) the announcement or
consummation of the Merger (as such term is defined in
the Merger Agreement) or the consummation of any of
the other transactions contemplated


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by the Merger Agreement or the Voting Agreement or
(iii) the acquisition of Common Shares of the Company
by Parent or Merger Sub pursuant to the Merger.”



          7. Section 13(a) of the Rights Agreement is hereby amended by adding as
the final sentence thereto the following:




“Notwithstanding anything in this Agreement to the
contrary, none of the events described in clauses (i)
through (iii) of Section 13(a) shall be deemed to have
occurred solely as a result of (i) the approval,
execution or delivery of the Merger Agreement and the
Voting Agreement (as such term is defined in the
Merger Agreement); (ii) the announcement or
consummation of the Merger (as such term is defined in
the Merger Agreement) or the consummation of any of
the other transactions contemplated by the Merger
Agreement or the Voting Agreement or (iii) the
acquisition of Common Shares of the Company by Parent
or Merger Sub pursuant to the Merger.”



          8. A new Section 20(l) is hereby added to the Rights Agreement as follows:




“(l) The Rights Agent shall not be subject to, nor be
required to comply with, or determine if any Person
has complied with, the Merger Agreement or any
agreements or documents related to or referred to in
the Merger Agreement or any other agreement between or
among the parties thereto, even though reference
thereto may be made in this Agreement, or to determine
any calculation set forth in the Merger Agreement or
to determine whether any condition set forth in the
Merger Agreement has been met, or to comply with any
notice, instruction, direction, request or other
communication, paper or document other than as
expressly set forth in this Agreement.”



          9. This Amendment shall be deemed to be a contract made under the laws of
the State of Delaware and for all purposes shall be governed by and construed
in accordance with the laws of such State applicable to contracts to be made
and performed entirely within such State; provided, however, that all
provisions regarding the rights, duties and obligations of the Rights Agent
shall be governed by and construed in accordance with the laws of the State of
New York applicable to contracts made and to be performed entirely within such
State.



          10. This Amendment may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and
all such counterparts shall together constitute but one and the same
instrument.



          11. Except as expressly amended hereby, the Rights Agreement shall remain
in full force and effect.


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          12. The undersigned officer of the Company, does hereby certify to the
Rights Agent that this Amendment (i) complies with the terms of Section 27 of
the Rights Agreement and (ii) will not change or increase the rights, duties,
liabilities or obligations of the Rights Agent under the Rights Agreement.



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     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.



	 	 	 	 	 
	 	 	BARRA, INC., a Delaware corporation
	 
	 	 	 	 
	

	 	By:	 	/s/ Kamal Duggirala
	

	 	 	 	
 
	

	 	 	 	Name: Kamal Duggirala
	

	 	 	 	Title: Chief Executive Officer
	 
	 	 	 	 
	 	 	MELLON INVESTOR
SERVICES LLC,

 as Rights Agent
	 
	 	 	 	 
	

	 	By:	 	/s/ Asa Drew
	

	 	 	 	
 
	

	 	 	 	Name: Asa Drew
	

	 	 	 	Title: Assistant Vice President