Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Item 1.01. | | Entry into Material Definitive Agreement |
| |
| Securities Purchase Agreement |
| |
| As previously announced, on September 29, 2008, Morgan Stanley (the |
| “Company”) entered into a Securities Purchase Agreement, dated as of September 29, 2008, by |
| and between the Company and Mitsubishi UFJ Financial Group, Inc. (“MUFG”), pursuant to |
| which, among other things, the Company agreed to issue and sell to MUFG, and MUFG agreed |
| to purchase, for an aggregate purchase price of $9,000,000,000, (i) 6,045,750 shares of a newly |
| created series of preferred stock designated the 10% Series B Non-Cumulative Non-Voting |
| Perpetual Convertible Preferred Stock, par value $0.01 per share (the “Series B Preferred |
| Stock”), at a purchase price of $1,000.00 per share and (ii) 117,000,000 shares of the Company’s |
| common stock, par value $0.01 per share (the “Common Stock”), at a purchase price of $25.25 |
| per share. On October 3, 2008, the Company and MUFG entered into an amendment to the |
| Securities Purchase Agreement, dated as of September 29, 2008 (as amended, the “Securities |
| Purchase Agreement”), pursuant to which the Company and MUFG amended the closing |
| condition set forth in Section 3.3(c) thereof and finalized the terms of certain exhibits thereto. |
| |
| The Company and MUFG have also agreed to discuss and negotiate definitive |
| documentation relating to the establishment of a global strategic alliance, with particular focus |
| on corporate and investment banking. The Company and MUFG are targeting June 30, 2009 as |
| the date by which such definitive documents will be executed. |
| |
| Completion of the sale transaction (the “Closing”) is subject to customary closing |
| conditions, including the receipt of certain required governmental and regulatory approvals. In |
| connection with the Closing, the parties have agreed to enter into an Investor Agreement and a |
| Registration Rights Agreement, in each case substantially in the form attached as Exhibit B and |
| Exhibit C, respectively, to the Securities Purchase Agreement. |
| |
| Series B Preferred Stock |
| |
| The terms, rights, obligations, and preferences of the Series B Preferred Stock are |
| set forth in the Certificate of Designations (the “Preferred Stock CoD”) in the form attached as |
| Exhibit A to the Securities Purchase Agreement, and will be filed with the Secretary of State of |
| the State of Delaware prior to the Closing. Dividends on the Series B Preferred Stock are |
| payable, on a non-cumulative basis, as and if declared by the Board of Directors of the Company |
| (the “Board”), in cash, at the rate per annum of 10% of the liquidation preference of $1,000 per |
| share. Declared dividends on the Series B Preferred Stock will be payable quarterly, in arrears, |
| on each January 15, April 15, July 15 and October 15, commencing on January 15, 2009. The |
| Company is prohibited from paying any dividend with respect to shares of Common Stock or |
| other junior securities or repurchasing or redeeming any shares of Common Stock or other junior |
| securities in any quarter unless full dividends are paid on the Series B Preferred Stock in such |
| quarter. | | |
| |
| One-half of the Series B Preferred Stock, subject to certain ownership limits on |
| MUFG and its affiliates, will mandatorily convert into Common Stock when, at any time on and |
| after the first anniversary of the Closing, the market price of the Common Stock exceeds one- |
| hundred fifty percent (150%) of the Conversion Price (as defined below) for twenty (20) trading |
| days within any period of thirty (30) consecutive trading days beginning after such first |
| anniversary. The remainder of the Series B Preferred Stock will mandatorily convert on the |
| same basis following the second anniversary of the Closing. Each share of Series B Preferred |
| Stock is convertible into 32 shares of Common Stock (the “Conversion Rate”), subject to |
| customary anti-dilution adjustments. The Conversion Rate also will be adjusted upon the |
| occurrence of certain make-whole merger or acquisition transactions and fundamental changes. |
| The “Conversion Price” is $1,000 divided by the Conversion Rate, for an initial Conversion |
| Price of $31.25 per share of Common Stock. |
| |
| Shares of the Series B Preferred Stock are also convertible at the option of the |
| holder into a number of shares of Common Stock equal to the Conversion Rate. |
| |
| The Series B Preferred Stock is neither redeemable by the Company nor by |
| MUFG. Holders of the Series B Preferred Stock and other voting preferred stock will be entitled |
| to vote for the election of two additional members of the Board if dividends have not been |
| declared and paid for the equivalent of six or more quarters, whether or not consecutive. These |
| voting rights will continue until dividends on the Series B Preferred Stock have been fully paid |
| for at least four quarters. Other than the aforementioned rights, holders of the Series B Preferred |
| Stock do not have any voting rights, including the right to elect any directors, other than limited |
| voting rights with respect to matters affecting the rights and privileges of the Series B Preferred |
| Stock. |
| |
| Investor Agreement |
| |
| Under the Investor Agreement, the Company agrees to take all lawful action to |
| cause one of MUFG’s senior officers or directors to be a member of the Board and also |
| grants MUFG the right to one Board observer, in each case, for so long as MUFG beneficially |
| owns at least 10% of the outstanding Common Stock on a fully diluted basis. Subject to limited |
| exceptions, the Series B Preferred Stock and Common Stock sold to MUFG under the Securities |
| Purchase Agreement may not be transferred, and exposure to the Common Stock (including |
| Common Stock issuable upon conversion of the Series B Preferred Stock) may not be hedged, |
| for a period of one year after the issuance. Thereafter, subject to limited exceptions, MUFG may |
| not transfer such Series B Preferred Stock or Common Stock, or hedge its exposure to the |
| Common Stock (including Common Stock issuable upon conversion of the Series B Preferred |
| Stock), in one transaction or a series of transactions, having an aggregate value exceeding $2.5 |
| billion in any three month period until the third anniversary of the Closing. Subject to certain |
| exceptions, MUFG may not knowingly offer, sell, pledge or otherwise transfer the Series B |
| Preferred Stock or Common Stock to any person if the transfer would result in such person |
| beneficially owning in excess of 5% of the then outstanding shares of Common Stock. |
| Furthermore, until the earlier of the fifth anniversary of the date of the Closing or the date on |
| which MUFG ceases to hold at least 10% of the outstanding Common Stock on a fully diluted |
| basis, MUFG is subject to certain customary standstill restrictions limiting or prohibiting, among |
| other things, the acquisition of additional shares of Common Stock, making or proposing a |
| merger or change of control transaction, soliciting proxies or supporting any other person or |
| group seeking to engage in any of the foregoing. |
| Under the Investor Agreement, for a period of 30 months following the date of the |
| Closing, subject to earlier termination under certain circumstances, the Company grants MUFG |
| customary preemptive rights on offerings of Securities resulting in proceeds equal to or |
| exceeding $500,000,000. |
| |
| Registration Rights Agreement |
| |
| Pursuant to the Registration Rights Agreement, the Company agrees to grant |
| MUFG five demand registrations (one of which may be a shelf registration) with respect to the |
| Common Stock purchased by MUFG at the Closing and the Common Stock into which the |
| Series B Preferred Stock purchased by MUFG at the Closing may be converted. Such |
| registration rights apply only to demands of at least $500,000,000 and are not available until |
| after the first anniversary of the Closing. |
| |
| The descriptions of the Securities Purchase Agreement, the Preferred Stock CoD |
| and the terms of the Series B Preferred Stock, the Investor Agreement and the Registration |
| Rights Agreement contained in this Item 1.01 are summaries and are qualified in their entirety by |
| reference to the full text of the Securities Purchase Agreement attached as Exhibit 10.1 hereto, |
| the form of Preferred Stock CoD attached as Exhibit A to the Securities Purchase Agreement, the |
| form of Investor Agreement attached as Exhibit B to the Securities Purchase Agreement, and the |
| form of Registration Rights Agreement attached as Exhibit C to the Securities Purchase Agreement, each |
| of which is incorporated herein by reference. |
| |
| Item 3.02 | | Unregistered Sales of Equity Securities |
| |
| The information set forth in Item 1.01 hereof is incorporated herein by reference. |
| |
| The issuance and sale of the Common Stock and the Series B Preferred Stock is |
| exempt from registration under the Securities Act of 1933 pursuant to Section 4(2) of the |
| Securities Act of 1933. The Company has not engaged in general solicitation or advertising with |
| regard to the issuance and sale of the Common Stock or the Series B Preferred Stock and has not |
| offered securities to the public in connection with this issuance and sale. |
| |
| |
| Item 3.03 | | Material Modification to Rights of Security Holders |
| |
| Pursuant to the Securities Purchase Agreement, the Company will issue 6,045,750 |
| shares of its Series B Preferred Stock, the terms of which are more fully described in the |
| Preferred Stock CoD, which will be filed with the Secretary of State of the State of Delaware |
| prior to the Closing. The holders of the Series B Preferred Stock will have preferential dividend |
| and liquidation rights over the holders of the Common Stock. The applicable terms and |
| preferences attached to the Series B Preferred Stock are more fully described in Item 1.01 above, |
| and are contained in the Preferred Stock CoD. |
| |
| The above summary is qualified in its entirety by reference to the Preferred Stock |
| CoD, the form of which is attached as Exhibit A to the Securities Purchase Agreement attached |
| hereto as Exhibit 10.1 |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
