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As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 12/04/20 Morgan Stanley S-4 7:3.7M Edgarfilings Ltd. |
Document/Exhibit Description Pages Size 1: S-4 Registration Statement - Securities for a Merger HTML 2.90M 2: EX-5.1 Opinion of Counsel re: Legality HTML 9K 4: EX-23.1 Consent of Expert or Counsel HTML 5K 5: EX-23.2 Consent of Expert or Counsel HTML 5K 6: EX-99.1 Miscellaneous Exhibit HTML 8K 7: EX-99.2 Miscellaneous Exhibit HTML 8K 3: EX-15.1 Letter re: Unaudited Interim Financial Info HTML 5K
Delaware | | | 6211 | | | 36-3145972 |
(State
or Other Jurisdiction of Incorporation or Organization) | | | (Primary Standard Industrial Classification Code Number) | | | (I.R.S.
Employer Identification Number) |
Marc O. Williams, Esq. Brian Wolfe, Esq. Davis
Polk & Wardwell LLP 450 Lexington Avenue (212) 450-4000 | | | Frederick
S. Marius Vice President, Secretary and Chief Legal Officer Eaton Vance Corp. Two International Place (617) 482-8260 | | | Joseph B. Conahan, Esq. Eric P. Hanson, Esq. Wilmer
Cutler Pickering Hale and Dorr LLP 60 State Street (617) 526-6000 |
Large accelerated filer | | | ☒ | | | Accelerated
filer | | | ☐ |
Non-accelerated filer | | | ☐ | | | Smaller
reporting company | | | ☐ |
(Do not check if a smaller reporting company) |
Title
of Each Class of Security Being Registered | | | Amount to be Registered(1) | | | Proposed
Maximum Offering Price Per Share | | | Proposed Maximum Aggregate Offering
Price(2) | | | Amount of Registration Fee(3) |
Common
stock, $0.01 par value per share | | | 77,922,667 | | | N/A | | | $1,516,270,781.63(2) | | | $165,425.14 |
(1) | Represents the maximum number of shares of the registrant’s common stock estimated to be issuable upon the completion of the mergers described herein (other than to the Voting Trust, the Voting Trustees and holders of Voting Trust Receipts (as each such term is defined herein)), based on the sum of (i) 115,838,051 shares of non-voting common stock, par value $.00390625 per share, of Eaton Vance (“Eaton Vance Non-Voting Common Stock”) outstanding as of November 30, 2020, including restricted shares of Eaton Vance Non-Voting Common Stock, multiplied by a mixed election stock exchange ratio of 0.5833 (the “Mixed Election Stock Exchange Ratio”), plus (ii) up to an aggregate of 17,751,297
shares of Eaton Vance Non-Voting Common Stock issuable in respect of stock options, restricted stock unit awards, deferred stock unit awards and subsidiary employee equity awards outstanding as of November 30, 2020, multiplied by the Mixed Election Stock Exchange Ratio. |
(2) | Estimated solely for the purpose of calculating the registration fee required by Section 6(b) of the Securities Act and computed pursuant to Rule 457(f)(1) and 457(c) of the Securities Act. The proposed maximum aggregate offering price of the registrant’s common stock was calculated based upon: (a) the product of: (i) $67.89, the average of the high and low prices per share of Eaton Vance Non-Voting Common Stock on
November 30, 2020, as reported on the New York Stock Exchange, and (ii) the approximate number of shares of Eaton Vance Non-Voting Common Stock which may be cancelled and exchanged pursuant to the mergers described herein, calculated as set forth under footnote (1) above, minus (b) $3,773,899,081 (the estimated minimum amount of cash to be paid to Eaton Vance stockholders in the mergers). |
(3) | Determined in accordance with Section 6(b) of the Securities Act at a rate equal to $109.10 per $1,000,000 of the proposed maximum aggregate offering price. |
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| | Thomas
E. Faust Jr. | |
| | Chairman, Chief Executive Officer and President | |
| | Eaton
Vance Corp. |
Eaton
Vance | | | Morgan Stanley |
Two International Place | | | 1585
Broadway |
| | ||
Attention: Investor Relations | | | Attention: Investor Relations |
617-672-6744 | | | 1-212-762-8131 |
| |
Eaton Vance | | | Morgan
Stanley |
Two International Place | | | 1585 Broadway |
| | ||
Attention: Investor Relations | | | Attention: Investor Relations |
617-672-6744 | | | 1-212-762-8131 |
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Q: | Why am I receiving this document? |
A: | Morgan
Stanley, Mirror Merger Sub 1, Inc., a wholly owned subsidiary of Morgan Stanley (“Merger Sub 1”), Mirror Merger Sub 2, LLC., a wholly owned subsidiary of Morgan Stanley (“Merger Sub 2”), and Eaton Vance have entered into an Agreement and Plan of Merger, dated as of October 7, 2020 (as it may be amended from time to time, the “Merger Agreement”), providing for the merger of Merger Sub 1 with and into Eaton Vance (the “First Merger”), with Eaton Vance surviving the First Merger (Eaton Vance, as the surviving corporation in the First Merger, the “Surviving Corporation”) as a wholly owned subsidiary of Morgan Stanley. Immediately following the effective time of the
First Merger (the “Effective Time”), the Surviving Corporation will merge with and into Merger Sub 2 (the “Second Merger” and together with the First Merger, the “Mergers”), with Merger Sub 2 surviving the Second Merger as a wholly owned subsidiary of Morgan Stanley (Merger Sub 2, as the surviving company in the Second Merger, the “Surviving Company”). In order to complete the Mergers, a majority of the Voting Trustees (the “Voting Trustees”) of the Voting Trust (the “Voting Trust”) created pursuant to that certain Voting Trust Agreement dated as of October 30, 1997, as amended (the “Voting
Trust Agreement”), the holders of a majority of the outstanding Voting Trust Receipts (the “Voting Trust Receipts”) and the Voting Trust, as the sole holder of the voting common stock of Eaton Vance (“Eaton Vance Voting Common Stock”), were required to approve the proposal by the Board of Directors of Eaton Vance to approve the Merger Agreement and the Mergers and the transactions contemplated by the Merger Agreement, and all other conditions to the Mergers must be satisfied or waived. On October 7, 2020, the Voting Trustees unanimously approved the Merger Agreement and the Mergers, the holders of outstanding Voting Trust Receipts delivered a unanimous written consent to the Voting Trust approving the Merger Agreement and the Mergers and other
transactions contemplated by the Merger Agreement, and the Voting Trust subsequently delivered to Eaton Vance a written consent approving the Merger Agreement and the Mergers and the other transactions contemplated by the Merger Agreement (the “Eaton Vance Stockholder Approval”). Accordingly, the Merger Agreement and the Mergers and the other transactions have been approved by the stockholders of Eaton Vance. |
Q: | What are Eaton Vance stockholders entitled to receive in the Mergers? |
A: | If the Mergers are completed, each share of Eaton Vance Voting Common Stock and non-voting common stock of Eaton Vance (“Eaton Vance Non-Voting Common Stock, and together with Eaton Vance Voting Common Stock, “Eaton Vance Common Stock”) outstanding
immediately prior to the Effective Time (other than shares held by Morgan Stanley, Merger Sub 1, Merger Sub 2 (other than any such shares that are fiduciary shares) or any subsidiary of Eaton Vance, collectively the “Excluded Shares”) will convert into, at the election of the holder of such share, subject to automatic adjustment as described under “The Merger Agreement—Allocation of Merger Consideration and Illustrative Elections and Calculations” on page 87 of this information statement/prospectus, either (i) “Mixed Consideration,” which consists of $28.25 in cash and 0.5833 of a share of Morgan Stanley Common Stock, (ii) “Cash Consideration,” which consists of an amount of cash equal to the sum,
rounded to two decimal places, of (a) $28.25 plus (b) the product of 0.5833 multiplied by the volume-weighted average closing price, rounded to four decimal places, of one share of Morgan Stanley Common Stock on the New York Stock Exchange (the “NYSE”) for the ten consecutive trading day period |
Q: | If I am an Eaton Vance stockholder, how do I make an election for the type of Merger Consideration that I prefer to receive? |
A: | Each holder of record of Eaton Vance Common Stock will be mailed a form of election (“Form of Election”). These materials will be mailed at least twenty (20) business days in advance of the Effective Time. Each Eaton Vance stockholder should specify in the Form of Election (1) the number of shares of Eaton Vance Common Stock that such stockholder elects to have exchanged for the Mixed Consideration, (2) the number of shares of Eaton
Vance Common Stock that such stockholder elects to have exchanged for the Cash Consideration and (3) the number of shares of Eaton Vance Common Stock that such stockholder elects to have exchanged for the Stock Consideration. Any Eaton Vance stockholder who does not make an election will be deemed to have made an election to receive the Mixed Consideration. The consideration to be paid to Eaton Vance stockholders electing to receive only Cash Consideration or Stock Consideration is subject, pursuant to the terms of the Merger Agreement, to automatic adjustment, as applicable, to ensure that the total amount of cash paid, and the total number of shares of Morgan Stanley Common Stock issued, in the Mergers is the same as what would be paid and issued if all Eaton Vance stockholders entitled to the Merger Consideration
were to receive the Mixed Consideration. No fractional shares of Morgan Stanley Common Stock will be issued in the Mergers, and Eaton Vance stockholders will receive cash in lieu of any fractional shares of Morgan Stanley Common Stock. An election will have been properly made only if the designated exchange agent (the “Exchange Agent”) has received a properly completed Form of Election at its designated office by 5:00 p.m., New York City time, on the date that is three (3) business days preceding the closing date (the “Election Deadline”). |
Q: | How will I receive the Merger Consideration to which I am entitled? |
A: | The
conversion of Eaton Vance Common Stock into the right to receive the Merger Consideration will occur automatically upon the completion of the Mergers. Promptly after the Effective Time and in any event within three (3) business days of the completion of the Mergers, the Exchange Agent will mail to each holder of record of Eaton Vance Common Stock (whose shares were converted into the right to receive the Merger Consideration pursuant to the Merger Agreement) a letter of transmittal and instructions for use in effecting the surrender of certificates representing shares of Eaton Vance Common Stock (“Certificates”) and book-entry shares representing shares of Eaton Vance Common Stock (“Uncertificated Shares”) in exchange for the applicable Merger Consideration and any dividends or other distributions
to which such Certificates or Uncertificated Shares become entitled to pursuant to the Merger Agreement. |
Q: | Will I receive the form of Merger Consideration that I request on the Form of Election? |
A: | Not
necessarily. The aggregate amount of cash and the aggregate number of shares of Morgan Stanley Common Stock to be paid and issued, respectively, to Eaton Vance stockholders pursuant to the Merger Agreement are fixed. Each share of Eaton Vance Common Stock with respect to which an Eaton Vance stockholder makes an |
Q: | What is the deadline for making an election? |
A: | Your election, to be properly made, must be received by the Exchange Agent at its designated office by the Election Deadline, which is 5:00 p.m. New York City time on the date that is three (3) business days preceding the closing date of the Mergers.
Morgan Stanley and Eaton Vance will publicly announce the anticipated election deadline at least five (5) business days before the anticipated Election Deadline. |
Q: | What happens if I do not send a Form of Election or it is not received by the Election Deadline? |
A: | If the Exchange Agent does not receive a properly completed Form of Election from you at or prior to the Election Deadline, then you will be deemed to have elected to receive Mixed Consideration with respect to your shares of Eaton Vance Common Stock. You bear the risk of delivery of the Form of Election to the
Exchange Agent. |
Q: | Can I change my election after the Form of Election has been submitted? |
A: | Yes. You may revoke your election at or prior to the Election Deadline by submitting a written notice of revocation to the Exchange Agent. Revocations must specify the name in which your shares are registered on the share transfer books of Eaton Vance and any other information that the Exchange Agent may request. If you wish to submit a new election, you must do so in accordance with the election procedures described in this information
statement/prospectus and the Form of Election. If you instructed a bank, broker, trust or other nominee holder to submit an election for your shares, you must follow directions from your bank, broker, trust or other nominee for changing those instructions. The notice of revocation must be received by the Exchange Agent at or prior to the Election Deadline in order for the revocation to be valid. |
Q: | May I transfer shares of Eaton Vance Common Stock after making an election? |
A: | Yes, but only if you revoke your election or the Merger Agreement is terminated. Once you properly
make an election with respect to any shares of Eaton Vance Common Stock, you will be unable to sell or otherwise transfer those shares, unless you properly revoke your election or the Merger Agreement is terminated. |
Q: | Who will own Morgan Stanley Common Stock immediately following the Mergers? |
A: | Morgan Stanley and Eaton Vance estimate that, as of immediately following completion of the Mergers, holders of Morgan Stanley Common Stock as of immediately prior to the Mergers will hold approximately [•]% and holders
of Eaton Vance Common Stock as of immediately prior to the Mergers will hold approximately [•]% of the outstanding shares of Morgan Stanley Common Stock (or, on a fully diluted basis, holders of Morgan Stanley Common Stock as of immediately prior to the Mergers will hold approximately [•]% and holders of Eaton Vance Common Stock as of immediately prior to the Mergers will hold approximately [•]% of the shares of Morgan Stanley Common Stock). |
Q: | Will the Morgan Stanley Common Stock received at the time of completion of the Mergers be traded on an exchange? |
A: | Yes.
It is a condition to the consummation of the Mergers that the shares of Morgan Stanley Common Stock to be issued to Eaton Vance stockholders in connection with the Mergers be authorized for listing on the NYSE, subject to official notice of issuance. |
Q: | How will Morgan Stanley stockholders be affected by the Mergers? |
A: | Upon completion of the Mergers, each Morgan Stanley stockholder will hold the same number of shares of Morgan Stanley stock that such stockholder held immediately prior to completion of the Mergers. As a result of the Mergers, Morgan
Stanley stockholders will own shares in a larger consolidated company with more assets. However, because in connection with the Mergers, Morgan Stanley will be issuing additional shares of Morgan Stanley Common Stock to Eaton Vance stockholders in exchange for their shares of Eaton Vance Common Stock, each outstanding share of Morgan Stanley Common Stock as of immediately prior to the Mergers will represent a smaller percentage of the aggregate number of shares of Morgan Stanley Common Stock outstanding after the Mergers. |
Q: | What are the U.S. federal income tax consequences of the Mergers and Special Dividend to holders of Eaton Vance Common Stock? |
A: | The
Mergers. For U.S. federal income tax purposes, the Mergers, taken together, are intended to constitute a single integrated transaction that qualifies as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). It is a condition to the obligations of Morgan Stanley and Eaton Vance to complete the Mergers that each of Morgan Stanley and Eaton Vance receive an opinion from Davis Polk & Wardwell LLP (“Davis Polk”) and Wilmer Cutler Pickering Hale and Dorr LLP (“WilmerHale”), respectively (or, in each case, another third party nationally recognized law or accounting firm reasonably agreed to by the parties), dated the closing date of the Mergers, to the effect that the Mergers, taken together as an integrated
transaction, will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. These opinions of counsel will be based on assumptions, representations, warranties and covenants of Eaton Vance, Morgan Stanley, Merger Sub 1 and Merger Sub 2. If any of the assumptions, representations, covenants or undertakings is incorrect, incomplete, inaccurate, or is violated, the validity of the opinions may be affected and the U.S. federal income tax consequences of the Mergers could differ materially from those described in this information statement/prospectus. Neither Morgan Stanley nor Eaton Vance will request a ruling from the Internal Revenue Service (the “IRS”) with respect to the tax treatment of the Mergers. |
Q: | What vote is
required to approve the Mergers? |
A: | Under Section 3-105 of the MGCL and Eaton Vance’s Articles of Incorporation, as amended, the approval of the Mergers by Eaton Vance’s stockholders required the affirmative vote of the holders of a majority of outstanding shares of Eaton Vance Voting Common Stock. As of October 7, 2020, the Voting Trust held all of the outstanding shares of Eaton Vance Voting Common Stock. Under the Voting Trust Agreement, which governs the Voting Trust, the approval
of the Mergers by the Voting Trust required the vote or written consent of at least a majority of the Voting Trustees and the vote or written consent of the holders of at least a majority of the outstanding Voting Trust Receipts. On October 7, 2020, the Voting Trustees unanimously approved the Merger Agreement and the Mergers, the holders of outstanding Voting Trust Receipts delivered a unanimous written consent to the Voting Trust approving the Merger Agreement and the Mergers, and the Voting Trust subsequently delivered to Eaton Vance a written consent approving the Merger Agreement and the Mergers. Accordingly, the approval of the Mergers by Eaton Vance’s stockholders was effected in accordance with Section 3-105 of the MGCL. No further approval of the stockholders
of Eaton Vance is required to adopt or approve the Merger Agreement, the Mergers or the other Transactions. As a result, Eaton Vance has not solicited and will not be soliciting your vote for approving the Mergers or the Merger Agreement and does not intend to call a meeting of stockholders for purposes of voting on the approval of the Merger Agreement or the Mergers. |
Q: | When do Morgan Stanley and Eaton Vance expect to complete the Mergers? |
A: | Morgan Stanley and Eaton Vance currently expect to complete the Mergers in the second quarter of 2021. However,
neither Morgan Stanley nor Eaton Vance can predict the actual date on which the Mergers will be completed, nor can the parties provide any assurance that the Mergers will be completed. See “Risk Factors,” “The Mergers—Regulatory Approvals Required for the Mergers” and “The Merger Agreement—Conditions to Completion of the Mergers” beginning on pages 30, 80 and 93, respectively, of this information statement/prospectus. |
Q: | Is
the completion of the Mergers subject to any conditions? |
A: | Yes. Morgan Stanley and Eaton Vance are not required to complete the Mergers unless certain conditions are satisfied (or, to the extent permitted by applicable law, waived). These conditions include, among others, the Eaton Vance Stockholder Approval (which approval was obtained on October 7, 2020), the expiration or termination of any applicable waiting period, or any extension thereof, under the HSR Act (in respect of which early termination was granted on November 10, 2020), the receipt by Eaton Vance of consent to the transaction from
a certain proportion of its clients and receipt of certain other governmental approvals. For a more complete summary of the conditions that must be satisfied (or, to the extent permitted by applicable law, waived) prior to completion of the Mergers, see “The Merger Agreement—Conditions to Completion of the Mergers” and “The Mergers—Regulatory Approvals Required for the Mergers” beginning on pages 93 and 80, respectively, of this information statement/prospectus. |
Q: | What happens if the Mergers are not completed? |
A: | In the event that the Mergers are not completed for any other reason, Eaton Vance’s stockholders will not receive any consideration for shares of Eaton Vance stock they own. Instead, Eaton Vance will remain an independent public company, Eaton Vance Non-Voting Common Stock
will continue to be listed and traded on the NYSE and registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Eaton Vance will continue to file periodic reports with the Securities and Exchange Commission (the “SEC”) on account of Eaton Vance’s Non-Voting Common Stock. |
Q: | What
happens if I sell or otherwise transfer my shares of Eaton Vance Common Stock before the completion of the Mergers? |
A: | Only holders of shares of Eaton Vance Common Stock at the Effective Time will become entitled to receive the Merger Consideration and only holders of shares of Eaton Vance Common Stock at the applicable record date will become entitled to receive the Special Dividend. If you sell your shares of Eaton Vance Common Stock prior to the completion of the Mergers, you will not become entitled to receive the Merger Consideration by virtue of the Mergers and if you sell your shares of Eaton Vance Common Stock prior to the applicable record date for the Special Dividend, you will
not become entitled to receive the Special Dividend. On November 23, 2020, Eaton Vance declared the Special Dividend and stated that it will be paid on December 18, 2020 to holders of record on December 4, 2020. |
Q: | Do any of the officers or directors of Eaton Vance have interests in the Mergers that may differ from or be in addition to my interests as an Eaton Vance stockholder? |
A: | Certain of Eaton Vance’s non-employee directors and executive officers
have interests in the Mergers that are different from, or in addition to, those of Eaton Vance’s stockholders generally. These interests include, among others, the accelerated vesting of outstanding equity awards pursuant to the Merger Agreement, potential severance benefits and other payments and rights to ongoing indemnification and insurance coverage. The members of the Eaton Vance board of directors were aware of and considered these interests, among other matters, in evaluating and negotiating the Merger Agreement and the Mergers. See “The Mergers—Background of the Mergers” and “The Mergers—Eaton Vance’s Reasons for the Mergers; Recommendation of the Eaton Vance Board of Directors” beginning on pages 43
and 54, respectively, of this information statement/prospectus. |
Q: | If the Mergers are consummated, what will happen to the Eaton Vance Common Stock owned by the Voting Trust, the Voting Trustees and the owners of Voting Trust Receipts? |
A: | Morgan
Stanley will issue Morgan Stanley Common Stock directly to the owners of Eaton Vance Common Stock owned by the Voting Trust, the Voting Trustees and the owners of the Voting Trust Receipts. Within one business day following the consummation of the Mergers, Morgan Stanley will file a registration statement with the SEC permitting the public resale of the Morgan Stanley Common Stock that was issued directly to the Voting Trust, the Voting Trustees and the owners of the Voting Trust Receipts. If that registration statement is not automatically effective, then Morgan Stanley must use its reasonable best efforts to have the registration statement declared effective by the SEC as soon as practicable following the filing thereof. |
Q: | Do
Eaton Vance stockholders have dissenters’ or appraisal rights? |
A: | Eaton Vance stockholders are not entitled to dissenters’ or appraisal rights in connection with the Mergers. See “The Mergers—No Dissenters’ or Appraisal Rights” beginning on page 82 of this information statement/prospectus. |
Q: | How can I find more information about Morgan Stanley and Eaton Vance? |
A: | You
can find more information about Morgan Stanley and Eaton Vance from various sources described in “Where You Can Find More Information” beginning on page 153 of this information statement/prospectus. |
Q: | Who can answer any questions I may have about the Mergers or the transactions contemplated by the Merger Agreement? |
A: | If you have any questions about the Mergers or the other transactions contemplated by the Merger Agreement or, if an Eaton Vance stockholder, how to submit your Form of Election, or if you need additional copies of this information
statement/prospectus or documents incorporated by reference herein, or the attached Form of Election, you should contact Morgan Stanley or Eaton Vance. |
• | Institutional Securities provides investment banking, sales and trading, lending and other services to corporations, governments, financial institutions and high to ultra-high net worth clients. Investment banking services consist of capital raising and financial advisory services, including services relating to the underwriting of debt, equity and other securities, as well as advice on mergers and acquisitions, restructurings, real estate and project finance. Sales and trading services include sales, financing, prime brokerage and market making activities in the equity and fixed income businesses. Lending activities include originating corporate loans and commercial real estate loans, providing
secured lending facilities, and extending financing to sales and trading customers. Other activities include Asia wealth management services, investments and research. |
• | Wealth Management provides a comprehensive array of financial services and solutions to individual investors and small to medium sized businesses and institutions covering: financial advisor-led brokerage and investment advisory services; self-directed brokerage services; financial and wealth planning services; stock plan administration services; annuity and insurance products; securities based lending, residential real estate loans and other lending products; banking; and retirement plan services. |
• | Investment
Management provides investment strategies and products that span geographies, asset classes, and public and private markets to a diverse group of clients across institutional and intermediary channels. Strategies and products, which are offered through a variety of investment vehicles, include equity, fixed income, liquidity and alternative/other products. Institutional clients include defined benefit/defined contribution plans, foundations, endowments, government entities, sovereign wealth funds, insurance companies, third-party fund sponsors and corporations. Individual clients are generally served through intermediaries, including affiliated and non-affiliated distributors. |
• | Morgan Stanley & Co. LLC, registered broker-dealer; |
• | Morgan Stanley Smith Barney LLC, registered broker-dealer and investment adviser; |
• | Morgan Stanley Investment Management, Inc., registered investment adviser; |
• | Morgan Stanley Bank, N.A. and Morgan Stanley Private Bank, National Association, principal U.S. banking entities; |
• | Morgan
Stanley & Co. International plc, principal U.K. broker-dealer; and |
• | Morgan Stanley MUFG Securities Co., Ltd., a joint venture company in Japan formed by Morgan Stanley and Mitsubishi UFJ Financial Group, Inc. (“MUFG”), in which Morgan Stanley owns a 40% economic interest and MUFG owns the other 60% economic interest. |
• | the Eaton Vance Stockholder Approval, which approval was obtained on October 7, 2020; |
• | absence of (x) any applicable law or order preventing or making illegal the consummation of the Mergers or any of the other transactions contemplated by the Merger Agreement and (y) any litigation or similar legal action
by any governmental authority (in any jurisdiction in which Morgan Stanley, Eaton Vance or any of their respective subsidiaries conducts material operations) seeking to prohibit or restrain the Mergers; |
• | effectiveness of the registration statement for the shares of Morgan Stanley Common Stock being issued in the Mergers (of which this information statement/prospectus forms a part) and the absence of any stop order suspending that effectiveness or any pending proceedings for that purpose; |
• | approval for the listing on the NYSE of the shares of Morgan Stanley Common Stock to be issued
in the Mergers, subject to official notice of issuance; |
• | accuracy of the representations and warranties made in the Merger Agreement by, in the case of Morgan Stanley, Merger Sub 1 and Merger Sub 2’s obligations to complete the Mergers, Eaton Vance and, in the case of Eaton Vance’s obligation to complete the Mergers, Morgan Stanley, in each case, as of the date of the Merger Agreement and as of the date of completion of the Mergers, subject to certain materiality thresholds; |
• | performance in all material respects by, in the case of Morgan Stanley, Merger Sub 1 and Merger Sub 2’s obligations to complete the Mergers, Eaton Vance and, in the case of Eaton Vance’s obligation
to complete the Mergers, Morgan Stanley, Merger Sub 1 and Merger Sub 2, of the obligations required to be performed by it at or prior to the Effective Time; |
• | the absence since the date of the Merger Agreement of a Material Adverse Effect on, in the case of Morgan Stanley, Merger Sub 1 and Merger Sub 2’s obligations to complete the Mergers, Eaton Vance and, in the case of Eaton Vance’s obligation to complete the Mergers, Morgan Stanley (see “The Merger Agreement—Definition of ‘Material Adverse Effect”’ beginning on page 98 of this information statement/prospectus for the definition of Material Adverse Effect); |
• | receipt
of a certificate signed by an executive officer of, in the case of Morgan Stanley, Merger Sub 1 and Merger Sub 2’s obligations to complete the Mergers, Eaton Vance, as to the satisfaction of the conditions described in the preceding three bullets and the bullet immediately below, and in the case of Eaton Vance’s obligation to complete the Mergers, Morgan Stanley, as to the satisfaction of the conditions described in the preceding three bullets; |
• | the Client Consent Percentage will be at least 80% (see The Merger Agreement—Advisory Agreement Consents and Client Consent Percentage” beginning on page 95 of this information statement/prospectus for the definition of Client Consent Percentage); |
• | (i)(x) the
expiration or termination of any applicable waiting period, or any extension thereof, under the HSR Act (in respect of which early termination was granted on November 10, 2020) and (y) certain governmental filings and/or approvals (as described under “The Mergers—Regulatory Approvals Required |
• | receipt by Morgan Stanley of an opinion of Davis Polk & Wardwell LLP (“Davis Polk”), counsel to Morgan Stanley, to the effect that the Mergers, taken together as an integrated transaction, will be treated for United States federal income tax purposes as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code
of 1986 (the “Code”), which opinion shall be dated the closing date; provided that if Davis Polk does not render such opinion for any reason, this condition will nonetheless be satisfied if a third party nationally recognized law or accounting firm as reasonably agreed by Morgan Stanley and Eaton Vance renders such opinion to Morgan Stanley; and |
• | receipt by Eaton Vance of an opinion of Wilmer Cutler Picking Hale and Dorr LLP (“WilmerHale”), counsel to Eaton Vance, to the effect that the Mergers, taken together as an integrated transaction, will be treated for United States federal income tax purposes as a “reorganization” within the meaning of Section 368(a) of the Code, which opinion shall be dated the closing date; provided that if WilmerHale does not render such opinion for any reason, this condition
will nonetheless be satisfied if a third party nationally recognized law or accounting firm as reasonably agreed by Morgan Stanley and Eaton Vance renders such opinion to Eaton Vance. |
• | by mutual written agreement of Morgan Stanley and Eaton Vance; |
• | by either Morgan Stanley or Eaton Vance, if: |
○ | the Mergers have not been completed on or before the End Date; however, the right to terminate the Merger Agreement at the End Date will not be available to any party to the Merger Agreement whose breach
of any provision of the Merger Agreement results in the failure of the Mergers to be completed by such time; |
○ | there is in effect any applicable law, order or injunction that permanently enjoins, prevents or prohibits the completion of the Mergers and, if such applicable law is an order or injunction, such applicable order or injunction has become final and non-appealable; however, the right to terminate the Merger Agreement as described in this bullet will not be available to any party to the Merger Agreement which has not complied with its obligations under the Merger Agreement in respect of any such applicable law; |
○ | the
Eaton Vance Stockholder Approval, which was obtained on October 7, 2020, had not been obtained by 5:00 p.m. on October 8, 2020; |
○ | there has been a breach by the other party of any representation or warranty or failure to perform any covenant or agreement that would result in the failure of the other party to satisfy an applicable condition to the completion of the Mergers related to the accuracy of representations and warranties or performance of covenants, and such breach has not been cured within 45 days of notice thereof or is incapable of being cured, but only so long as the
party seeking to terminate the Merger Agreement pursuant to this bullet is not then in breach of its representations, warranties, covenants or agreements contained in the Merger Agreement, which breach would cause the applicable condition to the completion of the Mergers not to be satisfied; or |
○ | any required regulatory consent (including with respect to the expiration or termination of any applicable waiting period, or any extension thereof, under the HSR Act (in respect of which early |
• | by Morgan Stanley, if: |
○ | prior to the Eaton Vance Stockholder Approval, which was obtained on October 7, 2020, (i) the Eaton Vance board of directors made a Company Adverse Recommendation Change or (ii) there has been a willful and material breach by Eaton Vance of its obligations described under “The Merger Agreement—No Solicitation” beginning on page 102
of this information statement/prospectus, other than in the case where (w) such breach is a result of an isolated action by a representative of Eaton Vance (other than one of its directors or officers), (x) such breach was not caused by, or within the knowledge of, Eaton Vance, (y) Eaton Vance takes appropriate actions to remedy such breach promptly upon discovery thereof and (z) Morgan Stanley is not harmed as a result thereof; or |
• | by Eaton Vance: |
○ | prior to the Eaton Vance Stockholder Approval, which was obtained on October 7,
2020, in order to enter into an alternative acquisition agreement with respect to a Company Superior Proposal, as described under “The Merger Agreement—No Solicitation” beginning on page 102 of this information statement/prospectus, provided that prior to or concurrently with such termination, Eaton Vance pays, or causes to be paid, to Morgan Stanley, in immediately available funds a termination fee, as described below. |
| | Nine
Months ended September 30, | | | Fiscal Year ended December 31, | ||||||||||||||||
| | 2020 | | | 2019 | | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | 2015 | |
Revenues | | | | | | | | | | | | | | | |||||||
Total
non-interest revenues(1) | | | $30,116 | | | $27,301 | | | $36,725 | | | $36,301 | | | $34,645 | | | $30,933 | | | $32,062 |
Interest
income | | | 7,917 | | | 13,146 | | | 17,098 | | | 13,892 | | | 8,997 | | | 7,016 | | | 5,835 |
Interest
expense | | | 3,475 | | | 9,885 | | | 12,404 | | | 10,086 | | | 5,697 | | | 3,318 | | | 2,742 |
Net
interest | | | 4,442 | | | 3,261 | | | 4,694 | | | 3,806 | | | 3,300 | | | 3,698 | | | 3,093 |
Net
revenues | | | 34,558 | | | 30,562 | | | 41,419 | | | 40,107 | | | 37,945 | | | 34,631 | | | 35,155 |
Non-interest
expenses | | | | | | | | | | | | | | | |||||||
Compensation
and benefits | | | 15,404 | | | 13,609 | | | 18,837 | | | 17,632 | | | 17,166 | | | 15,878 | | | 16,016 |
Non-compensation
expenses(1) | | | 9,166 | | | 8,385 | | | 11,281 | | | 11,238 | | | 10,376 | | | 9,905 | | | 10,644 |
Total
non-interest expenses | | | 24,570 | | | 21,994 | | | 30,118 | | | 28,870 | | | 27,542 | | | 25,783 | | | 26,660 |
Income
from continuing operations before income taxes | | | 9,988 | | | 8,568 | | | 11,301 | | | 11,237 | | | 10,403 | | | 8,848 | | | 8,495 |
Provision
for (benefit from) income taxes | | | 2,221 | | | 1,636 | | | 2,064 | | | 2,350 | | | 4,168 | | | 2,726 | | | 2,200 |
Income
from continuing operations | | | 7,767 | | | 6,932 | | | 9,237 | | | 8,887 | | | 6,235 | | | 6,122 | | | 6,295 |
Income
(loss) from discontinued operations, net of income taxes | | | — | | | — | | | — | | | (4) | | | (19) | | | 1 | | | (16) |
Net
income | | | $7,767 | | | $6,932 | | | $9,237 | | | $8,883 | | | $6,216 | | | $6,123 | | | $6,279 |
Net
income applicable to noncontrolling interests | | | 156 | | | 129 | | | 195 | | | 135 | | | 105 | | | 144 | | | 152 |
Net
income applicable to Morgan Stanley | | | $7,611 | | | $6,803 | | | $9,042 | | | $8,748 | | | $6,111 | | | $5,979 | | | $6,127 |
Preferred
stock dividends and other | | | 377 | | | 376 | | | 530 | | | 526 | | | 523 | | | 471 | | | 456 |
Earnings
applicable to Morgan Stanley common shareholders | | | $7,234 | | | $6,427 | | | $8,512 | | | $8,222 | | | $5,588 | | | $5,508 | | | $5,671 |
Amounts
Applicable to Morgan Stanley | | | | | | | | | | | | | | | |||||||
Income
from continuing operations | | | $7,611 | | | $6,803 | | | $9,042 | | | $8,752 | | | $6,130 | | | $5,978 | | | $6,143 |
Income
(loss) from discontinued operations | | | — | | | — | | | — | | | (4) | | | (19) | | | 1 | | | (16) |
Net
income applicable to Morgan Stanley | | | $7,611 | | | $6,803 | | | $9,042 | | | $8,748 | | | $6,111 | | | $5,979 | | | $6,127 |
Effective
income tax rate from continuing operations | | | 22.2% | | | 19.1% | | | 18.3% | | | 20.9% | | | 40.1% | | | 30.8% | | | 25.9% |
| | Nine Months Ended September 30, | | | Fiscal
Year ended December 31, | ||||||||||||||||
| | 2020 | | | 2019 | | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | 2015 | |
ROE(2) | | | 12.6%
| | | 11.8% | | | 11.7% | | | 11.8% | | | 8.0% | | | 8.0% | | | 8.5% |
ROTCE(2),(3) | | | 14.3%
| | | 13.5% | | | 13.4% | | | 13.5% | | | 9.2% | | | 9.3% | | | 9.9% |
| | Nine
Months Ended September 30, | | | Fiscal Year Ended December 31, | ||||||||||||||||
| | 2020 | | | 2019 | | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | 2015 | |
Per
common share | | | | | | | | | | | | | | | |||||||
Earnings
(basic)(4) | | | $4.68 | | | $3.94 | | | $5.26 | | | $4.81 | | | $3.14 | | | $2.98 | | | $2.97 |
Earnings
(diluted)(4) | | | 4.62 | | | 3.89 | | | 5.19 | | | 4.73 | | | 3.07 | | | 2.92 | | | 2.90 |
Book
value(5) | | | 50.67 | | | 45.49 | | | 45.82 | | | 42.20 | | | 38.52 | | | 36.99 | | | 35.24 |
Tangible
book value(3),(5) | | | 44.81 | | | 39.73 | | | 40.01 | | | 36.99 | | | 33.46 | | | 31.98 | | | 30.26 |
Dividends
declared | | | 1.05 | | | 0.95 | | | 1.30 | | | 1.10 | | | 0.90 | | | 0.70 | | | 0.55 |
Common
shares outstanding | | | | | | | | | | | | | | | |||||||
At
September 30 | | | 1,576 | | | 1,624 | | | n/a | | | n/a | | | n/a | | | n/a | | | n/a |
Nine
month average: | | | | | | | n/a | | | n/a | | | n/a | | | n/a | | | n/a | ||
Basic | | | 1,546 | | | 1,632 | | | n/a | | | n/a | | | n/a | | | n/a | | | n/a |
Diluted | | | 1,565 | | | 1,653 | | | n/a | | | n/a | | | n/a | | | n/a | | | n/a |
At
December 31 | | | n/a | | | n/a | | | 1,594 | | | 1,700 | | | 1,788 | | | 1,852 | | | 1,920 |
Annual
average: | | | | | | | | | | | | | | | |||||||
Basic | | | n/a | | | n/a | | | 1,617 | | | 1,708 | | | 1,780 | | | 1,849 | | | 1,909 |
Diluted | | | n/a | | | n/a | | | 1,640 | | | 1,738 | | | 1,821 | | | 1,887 | | | 1,953 |
| | As of September 30, | | | As
of December 31, | |||||||||||||
| | 2020 | | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | 2015 | |
Liquidity
Resources(6) | | | $267,292 | | | $215,868 | | | n/a | | | n/a | | | n/a | | | n/a |
GLR(6) | | | n/a | | | $217,457 | | | $249,735 | | | $192,660 | | | $202,297 | | | $203,264 |
Loans(7) | | | 146,237 | | | 130,637 | | | 115,579 | | | 104,126 | | | 94,248 | | | 85,759 |
Total
assets | | | 955,940 | | | 895,429 | | | 853,531 | | | 851,733 | | | 814,949 | | | 787,465 |
Deposits | | | 239,253 | | | 190,356 | | | 187,820 | | | 159,436 | | | 155,863 | | | 156,034 |
Borrowings | | | 203,444 | | | 192,627 | | | 189,662 | | | 192,582 | | | 165,716 | | | 155,941 |
Morgan
Stanley shareholders’ equity | | | 88,394 | | | 81,549 | | | 80,246 | | | 77,391 | | | 76,050 | | | 75,182 |
Common
shareholders’ equity | | | 79,874 | | | 73,029 | | | 71,726 | | | 68,871 | | | 68,530 | | | 67,662 |
Tangible
common shareholders’ equity(3) | | | 70,646 | | | 63,780 | | | 62,879 | | | 59,829 | | | 59,234 | | | 58,098 |
(1) | Effective January 1, 2018, Morgan Stanley adopted new accounting guidance related to Revenue from Contracts with Customers, which, among other things, requires a gross presentation of certain costs that were previously netted against net revenues. Prior period results have not been restated pursuant to this guidance. Additionally, effective January 1, 2020, Morgan Stanley adopted new accounting guidance related to Financial Instruments - Credit Losses, which among other things, impacted the impairment model for certain financial assets measured at amortized cost by requiring a current expected credit loss methodology
to estimate expected credit losses over the entire life of the financial asset, recorded at inception or purchase. Prior period results have not been restated pursuant to this guidance. |
(2) | ROE and ROTCE represent earnings applicable to Morgan Stanley common shareholders as a percentage of average common equity and average tangible common equity, respectively. |
(3) | Represents a non-GAAP measure. See “Executive Summary—Selected Non-GAAP Financial Information” in Morgan Stanley’s Annual Report on Form 10-K for the year ended December 31, 2019 and Morgan Stanley’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2020, which are incorporated by reference into this information statement/prospectus. |
(4) | For further information on basic and diluted earnings (loss) per common share, see Note 16 to the financial statements in Morgan Stanley’s Annual Report on Form 10-K for the year ended December 31, 2019, which is incorporated by reference into this information statement/prospectus |
(5) | Book value per common share and tangible book value per common share equal
common shareholders’ equity and tangible common shareholders’ equity, respectively, divided by common shares outstanding. |
(6) | In the first quarter of 2020, Morgan Stanley changed its internal measure of liquidity from the Global Liquidity Reserve to Liquidity Resources. Prior periods (except fiscal year ended December 31, 2019, which has been recast as shown above) have not been recast. For a discussion of Liquidity Resources, see “Liquidity and Capital Resources—Liquidity Risk Management Framework—Liquidity Resources” in Morgan Stanley’s Quarterly Report on Form 10-Q for the period ended March 31, 2020, which is incorporated by reference into this proxy statement/prospectus.
For a discussion of the GLR, see “Liquidity and Capital Resources—Liquidity Risk Management Framework—Global Liquidity Reserve” in Morgan Stanley’s Annual Report on Form 10-K for the year ended December 31, 2019, which is incorporated by reference into this information statement/prospectus. |
(7) | Amounts include loans held for investment (net of allowance) and loans held for sale but exclude loans at fair value, which are included in Trading assets in the balance sheets (see Note 8 to the financial statements in Morgan Stanley’s Annual Report on Form 10-K for the year ended December 31, 2019, which is incorporated by
reference into this information statement/prospectus). Additionally, effective January 1, 2020, Morgan Stanley adopted new accounting guidance related to Financial Instruments - Credit Losses, which among other things, impacted the impairment model for certain financial assets measured at amortized cost by requiring a current expected credit loss |
(in thousands, except per share data) | | | For
the Nine-Months Ended July 31, | | | For the Years Ended October 31, | |||||||||||||||
| 2020 | | | 2019 | | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | 2015 | ||
Income
Statement Data: | | | | | | | | | | | | | | | |||||||
Total
revenue(1) | | | $1,279,284 | | | $1,249,512 | | | $1,683,252 | | | $1,692,422 | | | $1,532,111 | | | $1,337,067 | | | $1,398,455 |
Operating
income(2) | | | 387,896 | | | 385,438 | | | 520,871 | | | 555,202 | | | 482,758 | | | 414,268 | | | 400,447 |
Net
income(2) | | | 167,280 | | | 313,926 | | | 432,876 | | | 397,905 | | | 306,373 | | | 264,757 | | | 238,191 |
Net
income attributable to non-controlling and other beneficial interests(3) | | | 7,170 | | | (23,097) | | | (32,841) | | | (15,967) | | | (24,242) | | | (23,450) | | | (7,892) |
Net
income attributable to Eaton Vance Corp. shareholders(2) | | | 174,450 | | | 290,829 | | | 400,035 | | | 381,938 | | | 282,131 | | | 241,307 | | | 230,299 |
Per
Share Data: | | | | | | | | | | | | | | | |||||||
Earnings
per share: | | | | | | | | | | | | | | | |||||||
Basic | | | $1.60 | | | $2.63 | | | $3.63 | | | $3.33 | | | $2.54 | | | $2.20 | | | $2.00 |
Diluted | | | 1.55 | | | 2.54 | | | 3.50 | | | 3.11 | | | 2.42 | | | 2.12 | | | 1.92 |
Cash
dividends declared | | | 1.125 | | | 1.05 | | | 1.425 | | | 1.280 | | | 1.150 | | | 1.075 | | | 1.015 |
(in
thousands, except per share data) | | | As of July 31, | | | As of October 31, | ||||||||||||
| 2020 | | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | 2015 | ||
Balance
Sheet Data: | | | | | | | | | | | | | ||||||
Total
assets(4)(5) | | | $4,182,397 | | | $4,253,629 | | | $3,599,328 | | | $2,330,901 | | | $1,730,382 | | | $2,113,737 |
Debt(5)(6) | | | 621,139 | | | 620,513 | | | 619,678 | | | 618,843 | | | 571,773 | | | 571,077 |
Redeemable
non-controlling interests (temporary equity) | | | 185,510 | | | 285,915 | | | 335,097 | | | 250,823 | | | 109,028 | | | 88,913 |
Total
Eaton Vance Corp. shareholders' equity | | | 1,275,287 | | | 1,184,119 | | | 1,107,431 | | | 1,011,396 | | | 703,789 | | | 620,231 |
Non-redeemable
non-controlling interests | | | — | | | — | | | 1,000 | | | 864 | | | 786 | | | 1,725 |
Total
permanent equity | | | 1,275,287 | | | 1,184,119 | | | 1,108,431 | | | 1,012,260 | | | 704,575 | | | 621,956 |
(1) | Revenue amounts for years prior to 2019 have been restated to reflect Eaton Vance’s full retrospective adoption of Accounting Standard Update (ASU) 2014-09 on November 1, 2018. |
(2) | Operating income, net income and net income attributable to Eaton Vance shareholders reflect a one-time payment of $73.0 million to terminate service and additional compensation arrangements in place with a major distribution partner for certain Eaton Vance closed-end funds in fiscal 2015. |
(3) | Net
income attributable to non-controlling and other beneficial interests reflects an increase (decrease) of $0.5 million, $0.2 million and $(0.2) million in the estimated redemption value of non-controlling interests in Eaton Vance’s affiliates redeemable at other than fair value in fiscal 2017, 2016 and 2015, respectively. There were no holders of non-controlling interests in Eaton Vance’s affiliates redeemable at other than fair value in fiscal 2019 and 2018. Net income attributable to non-controlling and other beneficial interests also includes net income (loss) of $9.8 million and $(5.8) million, respectively, in fiscal 2016 and 2015 attributable to other beneficial interest holders of consolidated CLO entities. The net income (loss) of consolidated CLO entities in fiscal 2019, 2018 and 2017 was entirely attributable to Eaton Vance as a result of Eaton Vance’s application of the measurement alternative to Accounting Standard Codification (ASC) 820 for collateralized
financing entities. |
(4) | Total assets on July 31, 2020 and October 31, 2019, 2018, 2017 and 2015 include $1.6 billion, $1.8 billion, $1.1 billion, $31.3 million and $467.1 million of assets held by consolidated CLO entities, respectively. Eaton Vance did not consolidate any CLO entities as of October 31, 2016. |
(5) | In fiscal 2017, Eaton Vance adopted ASU 2015-03, which
requires certain debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability. Total assets and debt were each reduced by $2.2 million and $2.7 million as of October 31, 2016 and 2015, respectively, to reflect the reclassification of debt issuance costs from other assets to debt. |
(6) | In fiscal 2017, Eaton Vance issued $300 million of 3.5 percent senior notes due April 2027 and used the net proceeds from the issuance in part to retire the remaining $250 million aggregate principal amount of its 6.5 percent senior notes due October 2017. Eaton Vance recognized a loss on extinguishment of debt totaling $5.4 million in conjunction with the retirement
in fiscal 2017. |
| | For
the Nine Months Ended/As of 2020(1) | | | For
the Year Ended/As of 2019(2) | |
Morgan Stanley Historical per Common Share Data: | | | | | ||
Earnings-basic | | | $4.68 | | | $5.26 |
Earnings-diluted | | | $4.62 | | | $5.19 |
Cash
dividends declared | | | $1.05 | | | $1.30 |
Book
value(3) | | | $50.67 | | | $45.82 |
Eaton
Vance Historical per Common Share Data: | | | | | ||
Earnings-basic | | | $1.60 | | | $3.63 |
Earnings-diluted | | | $1.55 | | | $3.50 |
Cash
dividends declared | | | $1.125 | | | $1.425 |
Book
value(3) | | | $11.12 | | | $10.43 |
| | For
the Nine Months Ended/As of 2020(1) | | | For
the Year Ended/As of 2019(2) | |
Unaudited Pro Forma Combined per Morgan Stanley Common Share Data(6): | | | | | ||
Earnings-basic | | | $4.55 | | | $5.21 |
Earnings-diluted | | | $4.50 | | | $5.14 |
Cash
dividends declared(4) | | | N/A | | | N/A |
Book
value(3) | | | $50.60 | | | $45.93 |
Unaudited
Pro Forma per Eaton Vance Equivalent Share Data(7): | | | | | ||
Earnings-basic | | | $2.66 | | | $3.04 |
Earnings-diluted | | | $2.62 | | | $3.00 |
Cash
dividends declared | | | N/A | | | N/A |
Book
value | | | $29.52 | | | $26.79 |
(1) | Morgan
Stanley financial information is reflected as of September 30, 2020 and for the nine months ended on that date. Eaton Vance financial information is reflected as of July 31, 2020 and for the nine months ended on that date. |
(2) | Morgan Stanley financial information is reflected as of December 31, 2019 and for the year ended on that date. Eaton Vance financial information is reflected as of October 31, 2019 and for the year ended on that date. |
(3) | Amount is calculated
by dividing the applicable total stockholders’ equity by the applicable total number of shares of common stock outstanding at the end of the applicable period. |
(4) | Pro forma combined dividends per share data is not provided due to the fact that the dividend policy for the combined company will be determined by the Morgan Stanley board of directors following completion of the Mergers. |
(5) | Amount is calculated by dividing the pro forma total stockholders’ equity by the pro forma number of shares of common stock outstanding at the end of the applicable period. |
(6) | Amounts
are calculated by dividing the unaudited pro forma combined net income applicable to holders of common shares by the pro forma number of shares of common stock outstanding for the applicable period. |
(7) | Amounts are calculated by multiplying unaudited pro forma combined per Morgan Stanley common share data amounts by the number of shares of Morgan Stanley Common Stock to be exchanged for each share of Eaton Vance Common Stock as part of the Mixed Consideration (0.5833 of a share of Morgan Stanley Common Stock for each share of Eaton Vance Common Stock). |
| | Morgan
Stanley Common Stock | | | Eaton Vance Non- Voting
Common Stock | | | Implied Per Share Value of Merger
Consideration | |
| | $48.71 | | | $40.94 | | | $56.50 | |
| | $64.06 | | | $65.00 | | | $65.62 |
• | Morgan Stanley’s ability to successfully combine the businesses of Morgan Stanley and Eaton Vance; |
• | whether the combined business will perform as expected; |
• | the possibility that Morgan Stanley paid more for Eaton Vance than the value Morgan Stanley will derive from the acquisition; and |
• | the assumption of known
and unknown liabilities of Eaton Vance. |
• | combining certain of the companies’ operations, financial, reporting and corporate functions; |
• | integrating
the companies’ technologies; |
• | integrating and unifying the product offerings and services available to clients; |
• | identifying and eliminating redundant and underperforming functions and assets; |
• | harmonizing the companies’ operating practices, employee development and compensation programs, internal controls and other policies, procedures and processes; |
• | maintaining existing
agreements with commercial counterparties and avoiding delays in entering into new agreements with prospective commercial counterparties; |
• | addressing possible differences in business backgrounds, corporate cultures and management philosophies; |
• | consolidating the companies’ administrative and information technology infrastructure; |
• | coordinating sales, distribution and marketing efforts; |
• | managing
the movement of certain businesses and positions to different locations; |
• | coordinating geographically dispersed organizations; |
• | consolidating offices of Morgan Stanley and Eaton Vance that are currently in or near the same location; and |
• | effecting potential actions that may be required in connection with obtaining regulatory approvals. |
• | Morgan Stanley and Eaton Vance may experience negative reactions from the financial markets, including negative impacts on their respective stock prices; |
• | Morgan Stanley and Eaton Vance may experience negative reactions from their respective clients, regulators and employees; |
• | Morgan
Stanley and Eaton Vance will be required to pay certain costs relating to the Mergers, whether or not the Mergers are completed; |
• | the Merger Agreement places certain restrictions on the conduct of Morgan Stanley’s and Eaton Vance’s businesses prior to completion of the Mergers, and such restrictions, the waiver of which are subject to the written consent of the other party (in certain cases, not to be unreasonably withheld, conditioned or delayed), and subject to certain exceptions and qualifications, may prevent Eaton Vance and Morgan Stanley from making certain acquisitions, taking certain other specified actions or otherwise pursuing business opportunities during the pendency of the Mergers that Morgan Stanley or Eaton Vance would have made, taken or pursued if these restrictions were not in place (see “The Merger
Agreement—Conduct of Business Pending the Mergers” beginning on page 99 of this information statement/prospectus for a description of the restrictive covenants applicable to Eaton Vance and Morgan Stanley); and |
• | matters relating to the Mergers (including integration planning) will require substantial commitments of time and resources by Morgan Stanley and Eaton Vance management, which would otherwise have been devoted to day-to-day operations and other opportunities that may have been beneficial to either Morgan Stanley or Eaton Vance as an independent company. |
• | Institutional
Securities provides investment banking, sales and trading, lending and other services to corporations, governments, financial institutions and high to ultra-high net worth clients. Investment banking services consist of capital raising and financial advisory services, including services relating to the underwriting of debt, equity and other securities, as well as advice on mergers and acquisitions, restructurings, real estate and project finance. Sales and trading services include sales, financing, prime brokerage and market making activities in the equity and fixed income businesses. Lending activities include originating corporate loans and commercial real estate loans, providing secured lending facilities, and extending financing to sales and trading customers. Other activities include Asia wealth management services, investments and research. |
• | Wealth
Management provides a comprehensive array of financial services and solutions to individual investors and small to medium sized businesses and institutions covering: financial advisor-led brokerage and investment advisory services; self-directed brokerage services; financial and wealth planning services; stock plan administration services; annuity and insurance products; securities based lending, residential real estate loans and other lending products; banking; and retirement plan services. |
• | Investment Management provides investment strategies and products that span geographies, asset classes, and public and private markets to a diverse group of clients across institutional and intermediary channels. Strategies and products, which are offered through a variety of investment vehicles, include
equity, fixed income, liquidity and alternative/other products. Institutional clients include defined benefit/defined contribution plans, foundations, endowments, government entities, sovereign wealth funds, insurance companies, third-party fund sponsors and corporations. Individual clients are generally served through intermediaries, including affiliated and non-affiliated distributors. |
• | Morgan Stanley & Co. LLC, registered broker-dealer; |
• | Morgan
Stanley Smith Barney LLC, registered broker-dealer and investment adviser; |
• | Morgan Stanley Investment Management, Inc., registered investment adviser; |
• | Morgan Stanley Bank, N.A. and Morgan Stanley Private Bank, National Association, principal U.S. banking entities; |
• | Morgan Stanley & Co. International plc, principal U.K. broker-dealer; and |
• | Morgan Stanley MUFG Securities
Co., Ltd., a joint venture company in Japan formed by Morgan Stanley and MUFG, in which Morgan Stanley owns a 40% economic interest and MUFG owns the other 60% economic interest. |
• | Institutional Securities provides investment banking, sales and trading, lending and other services to corporations, governments, financial institutions and high to ultra-high net worth clients. Investment banking services consist of capital raising and financial advisory services, including services relating to the underwriting of debt, equity and other securities,
as well as advice on mergers and acquisitions, restructurings, real estate and project finance. Sales and trading services include sales, financing, prime brokerage and market making activities in the equity and fixed income businesses. Lending activities include originating corporate loans and commercial real estate loans, providing secured lending facilities, and extending financing to sales and trading customers. Other activities include Asia wealth management services, investments and research. |
• | Wealth Management provides a comprehensive array of financial services and solutions to individual investors and small to medium sized businesses and institutions covering: financial advisor-led brokerage and investment advisory services; self-directed brokerage services; financial and wealth planning
services; stock plan administration services; annuity and insurance products; securities based lending, residential real estate loans and other lending products; banking; and retirement plan services. |
• | Investment Management provides investment strategies and products that span geographies, asset classes, and public and private markets to a diverse group of clients across institutional and intermediary channels. Strategies and products, which are offered through a variety of investment vehicles, include equity, fixed income, liquidity and alternative/other products. Institutional clients include defined benefit/defined contribution plans, foundations, endowments, government entities, sovereign wealth funds, insurance
companies, third-party fund sponsors and corporations. Individual clients are generally served through intermediaries, including affiliated and non-affiliated distributors. |
• | Morgan Stanley & Co. LLC, registered broker-dealer; |
• | Morgan Stanley Smith Barney LLC, registered broker-dealer and investment adviser; |
• | Morgan
Stanley Investment Management, Inc., registered investment adviser; |
• | Morgan Stanley Bank, N.A. and Morgan Stanley Private Bank, National Association, principal U.S. banking entities; |
• | Morgan Stanley & Co. International plc, principal U.K. broker-dealer; and |
• | Morgan Stanley MUFG Securities Co., Ltd., a joint venture company in Japan formed by Morgan Stanley and MUFG, in which Morgan Stanley owns a 40% economic interest and MUFG owns the other 60% economic interest. |
• | Compelling Value. The Eaton Vance board of directors’ belief that the Cash Consideration of $28.25 per share plus Stock Consideration of 0.5833 shares of Morgan Stanley Common Stock for each share of Eaton |
○ | Eaton
Vance’s business and operations, historical results of operations, financial and market position, strategic business plans and prospects of Eaton Vance on a standalone basis, opportunities and risks and uncertainties in executing Eaton Vance’s strategic plans, and current and historical trading prices of Eaton Vance Non-Voting Common Stock; |
○ | the financial multiples and premiums represented by the implied value of the Cash Consideration, Stock Consideration calculated as of October 7, 2020 and Special Dividend, taken together on a combined basis: |
• | 16.7x
multiple based on Eaton Vance management’s estimate of Eaton Vance’s fiscal 2020 adjusted earnings per diluted share; |
• | 15.6x multiple based on Eaton Vance management’s estimate of Eaton Vance’s fiscal 2021 adjusted earnings per diluted share; |
• | 13.7x multiple based on Eaton Vance management’s estimate of Eaton Vance’s fiscal 2022 adjusted earnings per diluted share; |
• | 13.2x multiple based on Eaton Vance management’s estimate of Eaton Vance’s last twelve months (LTM) Adjusted earnings before interest, taxes, depreciation,
and amortization (EBITDA); |
• | 13.4x multiple based on Eaton Vance management’s estimate of Eaton Vance’s fiscal 2020 Adjusted EBITDA; |
• | 12.2x multiple based on Eaton Vance management’s estimate of Eaton Vance’s fiscal 2021 Adjusted EBITDA; |
• | implied premium of 48.8% over Eaton Vance Non-Voting Common Stock’s closing price of $40.94 on the NYSE on October 7, 2020; |
• | implied
premium of 55.1% over Eaton Vance Non-Voting Common Stock’s volume weighted average price of $39.28 on the NYSE for the 30-day period ended October 7, 2020; |
• | implied premium of 58.1% over Eaton Vance Non-Voting Common Stock’s volume weighted average price of $38.52 on the NYSE for the 60-day period ended October 7, 2020; and |
• | implied premium of 56.9% over Eaton Vance Non-Voting Common Stock’s volume weighted average price of $38.81 on the NYSE for the 90-day period ended October 7, 2020. |
• | Compelling
Premium Compared to Comparable Transactions. The Eaton Vance board of directors’ belief that the Merger Consideration offered by Morgan Stanley in the Mergers and the Special Dividend, taken together, represented a compelling premium to the market trading price of Eaton Vance Non-Voting Common Stock compared to comparable transactions, as more fully described below under “The Mergers—Opinions of Eaton Vance’s Financial Advisors” beginning on page 64 of this information statement/prospectus. |
• | Compelling Strategic Logic. The Eaton Vance board of directors’ belief that the proposed transaction with Morgan Stanley is strategically compelling and that Eaton Vance’s stockholders would, to the extent they receive Morgan Stanley
Common Stock that is retained post-closing, benefit from being stockholders in a significantly more risk-diversified business than Eaton Vance currently maintains. The Eaton Vance board of directors also believed that Eaton Vance’s stockholders would, to the extent they retain Morgan Stanley Common Stock received as Merger Consideration, benefit from the complementary strengths of Eaton Vance and Morgan Stanley and the unique and compelling potential strategic benefits to be realized from the Mergers, such as the combined company’s ability to broaden distribution access, fill product and services gaps through highly complementary offerings, increase the scale and breadth of Morgan Stanley’s |
• | Best Reasonably Available Alternative for Maximizing Stockholder Value. The Eaton Vance board of directors’ determination, after consultation with senior management and its financial and legal advisors, that entering into the Merger Agreement with Morgan
Stanley was more favorable to Eaton Vance stockholders than other alternatives reasonably available to Eaton Vance, including continued operation of Eaton Vance on a standalone basis or the pursuit of a potential alternative transaction with Party A or any other party. In making its determination, the Eaton Vance board of directors took into account a number of factors, including: |
○ | the Eaton Vance board of directors’ assessment of Eaton Vance’s business and operations, historical results of operations, financial prospects and conditions, and the determination that continued operation of Eaton Vance on a standalone basis was not likely to produce, on a risk-adjusted basis, more value for Eaton Vance stockholders than the Merger
Consideration offered by Morgan Stanley taken together with the Special Dividend; |
○ | the Eaton Vance board of directors’ belief as to the attractive potential to create meaningful business opportunities and favorable market valuation effects for Morgan Stanley as a result of combining with Eaton Vance, from which Eaton Vance stockholders will have the opportunity to benefit (fractionally in equal proportion for all Eaton Vance stockholders to the extent reflected in the price performance of Morgan Stanley Common Stock prior to the closing, and thereafter fully reflected in the value of the Merger Consideration received in the form
of Morgan Stanley Common Stock that is retained by Eaton Vance stockholders post-closing); |
○ | that, according to a backward-looking comparison (the “October 4 Comparison”) prepared by Centerview and presented to the Eaton Vance board of directors at the meeting of the Eaton Vance board of directors held on October 4, 2020, the value per share of Eaton Vance Common Stock implied by the Morgan Stanley Second Proposal exceeded that of the Party A Third Proposal on approximately 50% of the trading days over the three months preceding such meeting. The October 4 Comparison assumed, for the stock portion
of the transaction consideration, an exchange ratio of 0.5998 shares of Morgan Stanley Common Stock for each share of Eaton Vance Common Stock and was prepared by calculating, for each trading day and each proposal, the value per share of Eaton Vance Common Stock of the stock consideration proposed to be paid by each bidder based on the closing price of the bidder’s common stock that day and adding to the result the cash amount per share of Eaton Vance Common Stock proposed to be received by Eaton Vance stockholders in each bidder’s proposal (including, as applicable, through payment of a special dividend); |
○ | that according to a backward-looking comparison
(the “October 6 Comparison”) prepared by Centerview and presented to the Eaton Vance board of directors at the meeting of the Eaton Vance board of directors held on October 6, 2020, the value per share of Eaton Vance Common Stock implied by the Morgan Stanley Third Proposal exceeded that of the Party A Third Proposal on approximately 70% of the trading days over the three months preceding such meeting. The October 6 Comparison assumed, for the stock portion of the transaction consideration, an exchange ratio of 0.5813 shares of Morgan Stanley Common Stock for each share of Eaton Vance Common Stock and otherwise was prepared on the same basis as the October 4 Comparison; |
○ | the fact that the merger consideration proposed by each of Morgan Stanley and Party A included a fixed-share component, the value of which would be subject to market fluctuations from the announcement of any transaction until the closing of such transaction; |
○ | the belief of members of the
Eaton Vance board of directors that announcement of a transaction between Eaton Vance and Morgan Stanley would likely have a more favorable effect on the performance of Morgan Stanley Common Stock than announcement of a transaction with Party A would have on the performance of Party A common stock, and that the overall prospects for Morgan Stanley Common Stock were likely more favorable than the prospects for Party A common stock over the period until the closing of a potential transaction with each party and in the post-closing period; |
○ | the Eaton Vance board of directors’ assessment at the time of such determination of the relative certainty of being
able to expeditiously execute a definitive merger agreement with Morgan Stanley and the relative uncertainty of being able to execute a definitive merger agreement with Party A on a similar timeline or at all; |
○ | the risks of delaying the execution of a definitive merger agreement, including that potential market volatility associated with the U.S. elections to be held on November 3, 2020 might affect the market price of the common stock of Morgan Stanley, Party A or Eaton Vance such that either or both of Morgan Stanley or Party A might withdraw or substantially reduce their proposals to acquire Eaton Vance; |
○ | the
possibility that a delay in executing a definitive merger agreement might lead to an increased risk of leaks and market rumors prior to execution, which might harm Eaton Vance in the event that an agreement was not reached; |
○ | the possibility that Party A was no longer interested in pursuing an acquisition of Eaton Vance on the terms described in the Party A Third Proposal or at all; and |
○ | Mr. Faust’s opinion conveyed to the Eaton Vance board of directors that the Voting Trustees (whose approval would be required for the
Voting Trust, as the sole holder of the Eaton Vance Voting Common Stock, to approve any merger transaction) would likely approve either proposal if recommended by the Eaton Vance board of directors. |
• | Appropriateness of Process. The Eaton Vance board of directors’ determination that negotiating a potential transaction with Morgan Stanley was most likely to result in the best transaction reasonably available for Eaton Vance stockholders based on the Eaton Vance board of directors’ belief that (i) Eaton Vance’s process of reviewing strategic alternatives, including contacting multiple other potential bidders as part of its market check, was appropriate and fulsome, (ii) among the prospective bidders, Morgan Stanley
was best positioned to provide the highest value of consideration to Eaton Vance stockholders in light of Morgan Stanley’s strategic interest and priorities and the expected business opportunities and favorable market valuation effects for Morgan Stanley arising from the Mergers (benefitting all Eaton Vance stockholders to the extent reflected in the price performance of Morgan Stanley Common Stock prior to the closing of the transaction and thereafter benefitting those Eaton Vance stockholders who receive all or a portion of the Merger Consideration in Morgan Stanley Common Stock that they continue to hold post-closing), and (iii) the course of discussions and negotiations between Eaton Vance and Morgan Stanley resulted in improvement in the value of the consideration to be received by Eaton Vance stockholders and the terms of the Merger Agreement, as compared with the initial proposal made by either Morgan Stanley or Party A. |
• | Appropriate
Time to Pursue a Strategic Transaction. While Eaton Vance’s business continues to present opportunities for growth, it has also become subject to increasing competitive pressures in the investment management and wealth management industries due to, among other factors, a changing competitive landscape, including the need for greater scale driven by clients and distribution partners seeking to reduce the number of investment management and wealth management provider relationships they maintain and to extract greater value from those provider relationships. As such, there are increasing challenges to maintaining Eaton Vance’s historical growth rate, profitability and valuation as a standalone company. In evaluating the Mergers, the Eaton Vance board of directors considered that there were significant risks to executing on Eaton Vance’s standalone plan. |
• | Market, Industry, Political, Economic and Regulatory Conditions. In evaluating the Mergers, the Eaton Vance board of directors considered the current market, industry, political, economic and regulatory conditions. In particular, the Eaton Vance board of directors noted the significant disruption in business activity and the performance of global financial markets caused by the COVID-19 pandemic, the uncertain outlook for the U.S. and global capital markets, the uncertainty related to the November 2020
U.S. elections, the potential for adverse legal, regulatory and tax law changes as a result of legislative and regulatory initiatives that may increase costs and limit Eaton Vance’s ability to pursue business opportunities, the potential for reduced access to markets outside the U.S. due to restrictions on global trade or other factors, and the potential for meaningful declines in market prices of common stocks and other risk assets, which would adversely affect the revenue and profitability of Eaton Vance’s investment management and wealth management businesses. |
• | Ability of Stockholders to Elect the Form of Merger Consideration and Participate in the Combined Company. In evaluating the Mergers, the Eaton Vance board of directors also considered that the Merger
Agreement allows Eaton Vance stockholders to elect to receive Stock Consideration or Mixed Consideration through which they could participate post-closing in the value created by the combination of Eaton Vance and Morgan Stanley and the future growth of Morgan Stanley through ownership of Morgan Stanley Common Stock, while also permitting Eaton Vance stockholders to elect, subject to a proration and adjustment mechanism, to receive Cash Consideration upon completion of the Mergers. The structure of the Merger Agreement provides for all Eaton Vance stockholders, whether they elect to receive Stock Consideration, Mixed Consideration or Cash Consideration, to participate fractionally in equal proportion in the appreciation (or depreciation) of Morgan Stanley Common Stock over the period until the transaction closes. |
• | Tax
Status of the Transaction. The Eaton Vance board of directors considered the expected tax treatment of the Mergers for U.S. federal income tax purposes, including that it is anticipated that the transaction will not be taxable to Eaton Vance stockholders to the extent that they receive Morgan Stanley Common Stock as consideration, as more fully described below under the section entitled “The Mergers—U.S. Federal Income Tax Considerations of the Mergers” beginning on page 82 of this information statement/prospectus. |
• | High Likelihood of Completion. The Eaton Vance board of directors’ view that the likelihood of completion of the Mergers is high, particularly in light of the terms of the Merger Agreement and the conditions
to closing the Mergers, including an achievable threshold of client consents required to be obtained and the obligation of Morgan Stanley to use reasonable best efforts to obtain regulatory approvals required to complete the Mergers and to use reasonable best efforts to resolve impediments or objections, if any, asserted by any governmental authority with respect to the Mergers in connection with obtaining all consents required to be obtained from any governmental authority, in each case subject to the limitations described under “The Merger Agreement—Reasonable Best Efforts Covenant” beginning on page 105 of this information statement statement/prospectus. |
• | Favorable Terms in the Merger Agreement. The Eaton Vance board of directors’
view that the Merger Agreement was the product of arm’s length negotiations and contained customary terms and conditions for similar transactions, and its consideration of a number of other factors pertaining to the Merger Agreement, including: |
○ | the right of the Eaton Vance board of directors to terminate the agreement if the requisite stockholder vote had not been obtained by 5:00 p.m. eastern time on October 8, 2020; |
○ | the limited closing conditions, including an achievable threshold of client consents required to be obtained;
|
○ | the termination provisions in the Merger Agreement, including that the end date under the Merger Agreement upon which either party, subject to specified exceptions, can terminate the Merger Agreement should provide sufficient time to consummate the Mergers; |
○ | Eaton Vance’s ability to specifically enforce, or seek damages upon, any breach of Morgan Stanley’s obligations under the Merger Agreement, including Morgan Stanley’s obligation to consummate the Mergers; |
○ | Eaton Vance’s right to declare and pay all or a portion of the Special Dividend at any time prior to the closing of the transaction; |
○ | that the Mergers are intended to qualify as a reorganization for U.S. federal income tax purposes; |
○ | that
the Merger Agreement provides Eaton Vance with sufficient operating flexibility between the signing of the Merger Agreement and the completion of the Mergers to conduct its business in the ordinary course consistent with past practice; and |
○ | the unanimous approval of the Merger Agreement by the Eaton Vance board of directors, which consists of a majority of independent directors who are not affiliated with Morgan Stanley and are not employees of Eaton Vance or any of its subsidiaries, and which retained and received advice from Eaton Vance’s outside financial and legal advisors in evaluating,
negotiating and recommending the terms of the Merger Agreement. |
• | Financial Analysis of Financial Advisors and Receipt of Fairness Opinions. |
○ | The opinion of Centerview rendered orally to the Eaton Vance board of directors on October 7, 2020 (which was subsequently confirmed in writing by delivery of Centerview’s written opinion addressed to the Eaton Vance board of directors dated such date) that, as of such date and based upon and subject to the assumptions made, procedures
followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, the Merger Consideration and the Special Dividend, taken together (and not separately), to be paid to the holders of Eaton Vance Non-Voting Common Stock (other than as specified in such opinion) pursuant to the Merger Agreement was fair, from a financial point of view, to such holders, as well as its related analyses, as more fully described below under “The Mergers—Opinions of Eaton Vance’s Financial Advisors—Centerview Partners LLC” beginning on page 64 of this information statement/prospectus. |
○ | The
financial analysis reviewed by Houlihan Lokey with the Eaton Vance board of directors as well as the oral opinion of Houlihan Lokey rendered to the Eaton Vance board of directors on October 7, 2020 (which was subsequently confirmed in writing by delivery of Houlihan Lokey’s written opinion addressed to the Eaton Vance board of directors dated such date) to the effect that, as of such date and based upon and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations set forth in its written opinion, and taking into account the Special Dividend, the Merger Consideration (which for purposes of Houlihan Lokey’s opinion means the cash and shares of Morgan Stanley Common Stock to be received
in the Mixed Consideration, the Cash Consideration and the Stock Consideration, taken in the aggregate) to be received by the holders of Eaton Vance Non-Voting Common Stock (other than Morgan Stanley and affiliates of Eaton Vance) in the First Merger pursuant to the Merger Agreement was fair to such holders from a financial point of view. For more information, see “The Mergers—Opinions of Eaton Vance’s Financial Advisors—Opinion of Houlihan Lokey Capital, Inc.” beginning on page 71 of this information statement/prospectus and Annex C to this information statement/prospectus. |
• | That Eaton Vance was required to use its reasonable best efforts to cause delivery of the Eaton Vance Stockholder Approval by 5:00 p.m. eastern time on October 8, 2020 and that, under the terms of the Merger Agreement, following receipt of the Eaton Vance Stockholder Approval, the Eaton Vance board of directors would be unable to change its recommendation in response to a superior proposal or an intervening event or to terminate the Merger Agreement to accept a superior proposal. |
• | That,
because the Merger Consideration in part consists of a fixed exchange ratio of shares of Morgan Stanley Common Stock per share of Eaton Vance Common Stock and because the value of the stock portion of the Merger Consideration at the closing cannot be predicted, holders of Eaton Vance Common Stock could be adversely affected to an unpredictable extent by a decrease in the trading price of Morgan Stanley Common Stock prior to the closing, as the Merger Agreement does not provide for either any adjustment of such exchange ratio if the trading price of Morgan Stanley Common Stock decreases or a value-based termination right to Eaton Vance. |
• | The significant costs involved in connection with entering into the Merger Agreement and the transactions contemplated thereby, and the substantial time and effort of management required to complete the transactions contemplated by the Merger Agreement, which may disrupt Eaton Vance’s business operations if continued or repeated. |
• | That the consummation of the Mergers requires receipt
of regulatory approvals and the risk that, notwithstanding Morgan Stanley’s obligations with respect to obtaining regulatory approvals as set forth in the Merger Agreement, governmental entities may delay or fail to grant the required regulatory approvals or impose unfavorable terms or conditions on such approvals. |
• | The restrictions on the conduct of Eaton Vance’s business prior to the consummation of the Mergers, including the requirement that Eaton Vance conduct business in the ordinary course, subject to specific limitations, which may delay or prevent Eaton Vance from undertaking business opportunities that may arise before the completion of the Mergers and that, absent the Merger Agreement, Eaton Vance might have pursued. |
• | That
Eaton Vance’s directors and executive officers may have interests in the Mergers that may be different from, or in addition to, those of Eaton Vance’s stockholders generally. For more information about such interests, see below under “Interests of Eaton Vance’s Directors and Executive Officers in the Mergers” beginning on page 118 of this information statement/prospectus. |
• | That, under specified circumstances, Eaton Vance may be required to pay fees and expenses in the event the Merger Agreement is terminated and the effect this could have on Eaton Vance, including: |
○ | the possibility that
Eaton Vance would be obligated to pay Morgan Stanley a termination fee of $206 million, or approximately 3% of transaction value, if the Merger Agreement were terminated under certain circumstances, although the Eaton Vance board of directors believed that the termination fee was reasonable in amount; and |
○ | if the Mergers are not consummated, Eaton Vance may be required to pay its own expenses associated with the Merger Agreement and the transactions contemplated thereby. |
• | The possibility that the requisite amount of client consents may not be
obtained, in which case Morgan Stanley would not be obligated to complete the Mergers; |
• | The possibility that the Mergers otherwise might not be consummated, and the possible adverse effect of termination of the Merger Agreement on Eaton Vance’s business or the trading price of Eaton Vance Non-Voting Common Stock and related risks that, even though the Eaton Vance Stockholder Approval has been obtained, there can be no assurance that all other conditions to the parties’ obligations to complete the Mergers will be satisfied. |
• | The effect of the public announcement of the Merger Agreement, including Eaton Vance’s ability to attract and retain key personnel and to maintain
client and distribution partner relations during the pendency of the transactions contemplated by the Merger Agreement, as well as the potential for litigation in connection with the Mergers and the associated costs, burden and inconvenience involved in defending those proceedings. |
• | The risk that Eaton Vance may lose members of management and other key personnel following announcement of the transaction and may not be able to effectively replace such persons, which could adversely affect Eaton Vance’s business during the period prior to consummation of the Mergers or, if the Mergers are not consummated, during the period prior to and after the termination of the Merger Agreement, as Eaton Vance’s operations are largely dependent on the skill and experience of its management and key personnel. |
• | The
risk to the value of the Merger Consideration (whether paid in cash, Morgan Stanley Common Stock or a combination thereof) if Morgan Stanley Common Stock declines in price prior to the closing of the transaction. |
• | For the portion of the Merger Consideration paid in Morgan Stanley Common Stock and retained by Eaton Vance stockholders following the closing of the transaction, the risk that Morgan Stanley does not benefit from the combination with Eaton Vance or otherwise fails to provide holders of Morgan Stanley Common Stock with acceptable returns. |
• | The possibility that a combination with Morgan
Stanley during a period of less market, industry, political, economic or regulatory uncertainty may have provided greater value to Eaton Vance stockholders than the Mergers. |
• | The possibility that a combination with Party A or another party may have provided greater value to Eaton Vance stockholders than the Mergers. |
• | The possibility that execution of Eaton Vance’s standalone business plan or other strategic alternatives available to Eaton Vance may have provided greater value to Eaton Vance stockholders than the Mergers. |
• |
| | Forecasts(1) | ||||||||||||||||
$mm
(except for Adjusted Earnings Per Share) | | | 2020E | | | 2021E | | | 2022E | | | 2023E | | | 2024E | | | 2025E |
Adjusted
Total Revenue(2) | | | $1,727 | | | $1,866 | | | $2,055 | | | $2,264 | | | $2,494 | | | $2,747 |
Adjusted
Operating Income(3) | | | $522 | | | $568 | | | $641 | | | $724 | | | $815 | | | $915 |
Adjusted
EBITDA(4) | | | $544 | | | $589 | | | $663 | | | $747 | | | $839 | | | $940 |
Adjusted
Net Income Attributable to Eaton Vance Corp. Shareholders(5) | | | $380 | | | $403 | | | $456 | | | $516 | | | $583 | | | $656 |
Adjusted
Earnings Per Diluted Share(6) | | | $3.35 | | | $3.56 | | | $4.03 | | | $4.57 | | | $5.16 | | | $5.80 |
Unlevered
Free Cash Flow(7) | | | $91(8) | | | $413 | | | $466 | | | $527 | | | $593 | | | $666 |
(1) | Selected measures from the Eaton Vance Forecasts. |
(2) | Adjusted Total Revenue is a non-GAAP measure defined as total revenue adjusted to add back management fees eliminated upon the consolidation of sponsored funds and collateralized lending obligation (“CLO”) entities. |
(3) | Adjusted Operating Income is a non-GAAP measure defined as operating income adjusted to 1) add back management fees eliminated upon the consolidation of sponsored funds and CLO entities and 2) subtract non-management expenses of consolidated
sponsored funds recognized upon consolidation. |
(4) | Adjusted EBITDA is a non-GAAP measure defined as Adjusted Operating Income plus depreciation and amortization. |
(5) | Adjusted Net Income Attributable to Eaton Vance Corp. Shareholders is a non-GAAP measure defined as net income attributable to Eaton Vance Corp. Shareholders adjusted to 1) add back management fees eliminated upon the consolidation of sponsored funds and CLO entities, net of tax; 2) subtract non-management expenses of consolidated sponsored funds recognized upon consolidation, net of tax; 3) eliminate the impact of net gains (losses) and other investment income related to consolidated sponsored funds
and other seed capital investments, net of tax; 4) eliminate other income (expense) of consolidated CLO entities, net of tax, and 5) subtract the net excess tax benefit from stock-based compensation plans. |
(6) | Adjusted Earnings Per Diluted Share is a non-GAAP measure defined as earnings per diluted share adjusted for the per share impact of the items identified in (5) above. |
(7) | Unlevered Free Cash Flow is defined as Adjusted Operating Income adjusted to 1) subtract tax expenses; 2) add back depreciation and amortization; 3) subtract net deferred sales commissions and 5) subtract capital expenditures. Unlevered Free Cash Flow was calculated by Centerview and Houlihan
Lokey solely for purposes of their respective discounted cash flow analyses in connection with their respective opinions, and none of Eaton Vance or Morgan Stanley assumes any responsibility for any use of such calculation, or reliance on such calculation, for any other purpose. |
(8) | Reflects estimated Unlevered Free Cash Flow calculated by Centerview for August through October 2020. Houlihan Lokey calculated estimated Unlevered Free Cash Flow of $23.9 for the 0.8 month period through October 31, 2020. |
• | a draft of the Merger Agreement dated October 7, 2020, referred to in this summary of Centerview’s opinion as the “Draft Merger Agreement”; |
• | Annual
Reports on Form 10-K of Eaton Vance for the years ended October 31, 2019, October 31, 2018 and October 31, 2017; |
• | Annual Reports on Form 10-K of Morgan Stanley for the years ended December 31, 2019, December 31, 2018 and December 31, 2017; |
• | certain interim reports to stockholders and Quarterly Reports on Form 10-Q of Eaton Vance and Morgan Stanley; |
• | certain
publicly available research analyst reports for Eaton Vance and Morgan Stanley; |
• | certain other communications from Eaton Vance and Morgan Stanley to their respective stockholders; and |
• | certain internal information relating to the business, operations, earnings, cash flow, assets, liabilities and prospects of Eaton Vance, including certain financial forecasts, analyses and projections relating to Eaton Vance prepared by management of Eaton Vance and furnished to Centerview by Eaton Vance for purposes of Centerview’s analysis, which are referred to in this summary of Centerview’s opinion as the “Forecasts,” and which are collectively referred to in this summary
of Centerview’s opinion as the “Internal Data.” |
• | Affiliated Managers Group, Inc. |
• | AllianceBernstein
Holding LP |
• | Artisan Partners Asset Management, Inc. |
• | BlackRock, Inc. |
• | Cohen & Steers, Inc. |
• | Federated Hermes, Inc. |
• | Franklin Resources, Inc. |
• | Invesco
Ltd. |
• | Janus Henderson Group PLC |
• | T. Rowe Price Group, Inc. |
Date
Announced | | | Target | | | Acquiror |
February
2020 | | | Legg Mason, Inc. | | | Franklin Resources, Inc. |
October
2018 | | | OppenheimerFunds Inc. | | | Invesco Ltd. |
March
2017 | | | Aberdeen Asset Management PLC | | | Standard Life plc |
December
2016 | | | Pioneer Investments | | | Amundi SA |
October
2016 | | | Janus Capital Group Inc. | | | Henderson Group plc |
October
2015 | | | Russell Investments | | | TA Associates |
April
2014 | | | Nuveen | | | TIAA-CREF |
• | Historical
Stock Price Trading Analysis. Centerview reviewed the historical closing trading prices of the Eaton Vance Non-Voting Common Stock for the 52-week period prior to October 7, 2020, which reflected low and high closing trading prices during such 52-week period of $23.76 to $51.68 per share of Eaton Vance Non-Voting Common Stock. |
• | Analyst Price Target Analysis. Centerview reviewed stock price targets for the Eaton Vance Non-Voting Common Stock reflected in publicly available Wall Street research analyst reports as of October 7, 2020, which indicated low and high analyst stock price targets ranging from $35.00 to $50.00 per share of Eaton Vance Non-Voting Common Stock. |
• | reviewed
a draft dated October 7, 2020 of the Merger Agreement; |
• | reviewed certain publicly available business and financial information relating to Eaton Vance and Morgan Stanley that Houlihan Lokey deemed to be relevant, including certain publicly available research analyst estimates with respect to the future financial performance of Eaton Vance and Morgan Stanley; |
• | reviewed certain information relating to the historical, current and future operations, financial condition and prospects of Eaton Vance made available to Houlihan Lokey by Eaton Vance and approved for Houlihan Lokey’s use by Eaton Vance and the Eaton Vance board
of directors, including financial projections (and adjustments thereto) prepared by the management of Eaton Vance relating to Eaton Vance for the fiscal years ending 2020 through 2025; |
• | spoke with certain members of the management of Eaton Vance and certain of its representatives and advisors regarding the business, operations, financial condition and prospects of Eaton Vance and Morgan Stanley, the Mergers, the Special Dividend and related matters; |
• | compared the financial and operating performance of Eaton Vance and Morgan Stanley with that of other public companies that Houlihan Lokey deemed to be relevant; |
• | considered
publicly available financial terms of certain transactions that Houlihan Lokey deemed to be relevant; |
• | reviewed the current and historical market prices and trading volume for certain of Eaton Vance’s and Morgan Stanley’s publicly traded securities, and the current and historical market prices and trading volume of the publicly traded securities of certain other companies that Houlihan Lokey deemed to be relevant; and |
• | conducted such other financial studies, analyses and inquiries and
considered such other information and factors as Houlihan Lokey deemed appropriate. |
• | Enterprise Value — generally, the value as of a specified date of the relevant company’s outstanding equity securities (taking into account outstanding options and other securities convertible, exercisable or exchangeable into or for equity securities of the company) plus the amount of its net debt (the amount of its outstanding indebtedness, non-convertible preferred stock, capital lease obligations and non-controlling interests less the amount of cash and cash equivalents and investments on its balance sheet). |
• | Equity
Market Value — generally, the value as of a specified date of the relevant company’s outstanding equity securities (taking into account outstanding options and other securities convertible, exercisable or exchangeable into or for equity securities of the company). |
• | Adjusted EBITDA — generally, the amount of the relevant company’s earnings before interest, taxes, depreciation and amortization for a specified time period, adjusted for certain non-recurring items. |
• | Adjusted Net Income — generally, is calculated as net income available to common shareholders, adjusted for certain non-recurring
items. |
• | Enterprise value as a multiple of estimated fiscal year 2020 Adjusted EBITDA; |
• | Enterprise value as a multiple of estimated fiscal year 2021 Adjusted EBITDA; and |
• | Enterprise value as a multiple of estimated fiscal year 2022 Adjusted EBITDA. |
• | Affiliated Managers Group, Inc. |
• | AllianceBernstein Holding L.P. |
• | Artisan Partners Asset Management Inc. |
• | BrightSphere Investment Group Inc. |
• | Federated Hermes, Inc. |
• | Franklin
Resources, Inc. |
• | Invesco Ltd. |
• | Janus Henderson Group plc |
• | T. Rowe Price Group, Inc. |
• | Victory Capital Holdings, Inc. |
• | Virtus Investment Partners, Inc. |
Financial Metric | | | Low | | | High | | | Median | | | Mean |
FY
2020E Adjusted EBITDA | | | 5.4x | | | 9.8x | | | 6.2x | | | 6.9x |
FY
2021E Adjusted EBITDA | | | 4.0x | | | 9.2x | | | 6.4x | | | 6.7x |
FY
2022E Adjusted EBITDA | | | 3.7x | | | 8.5x | | | 6.0x | | | 6.1x |
Financial Metric | | | Selected
Multiples Range | | | Implied Per Share Equity Value Reference Range |
FY 2020E Adjusted
EBITDA | | | 7.5x - 9.5x | | | $38.95 - $47.66 |
FY
2021E Adjusted EBITDA | | | 7.0x - 9.0x | | | $39.34 - $48.75 |
FY
2022E Adjusted EBITDA | | | 6.0x - 8.0x | | | $38.11- $48.76 |
• | Transaction value as a multiple of latest 12 months, or LTM, Adjusted EBITDA |
Date Announced | | | Target | | | Acquiror |
7/26/2020 | | | Barrow,
Hanley, Mewhinney & Strauss, LLC | | | Perpetual Limited |
2/18/2020 | | | Legg
Mason, Inc. | | | Franklin Resources, Inc. |
3/13/2019 | | | Oaktree
Capital Group, LLC | | | Brookfield Asset Management Inc. |
11/6/2018 | | | USAA
Asset Management Co. / USAA Transfer Agency Co. | | | Victory Capital Holdings, Inc. |
10/17/2018 | | | OppenheimerFunds,
Inc. | | | Invesco Ltd. |
4/13/2018 | | | Hermes
Fund Managers Limited | | | Federated Investors, Inc. |
12/19/2017 | | | Single
Strategy AM Business of Old Mutual Wealth Management Ltd. | | | TA Associates Management, L.P. |
10/17/2017 | | | NewStar
Financial, Inc. | | | First Eagle Holdings, Inc. |
9/28/2017 | | | ETF
Business of Guggenheim Capital LLC | | | Invesco Ltd. |
3/6/2017 | | | Aberdeen
Asset Management PLC | | | Standard Life plc (nka: Standard Life Aberdeen plc) |
12/16/2016 | | | Ridgeworth
Capital Management LLC (nka: Virtus Fund Advisers, LLC) | | | Virtus Investment Partners, Inc. |
12/12/2016 | | | Pioneer
Global Asset Management S.p.A. | | | Amundi Asset Management |
10/3/2016 | | | Janus
Capital Group Inc. | | | Henderson Group plc |
5/23/2016 | | | Resource
America, Inc. | | | C-III Capital Partners LLC |
2/29/2016 | | | Apex Capital
Management Inc. | | | Fiera US Holding Inc. |
Financial
Metric | | | Low | | | High | | | Median | | | Mean |
Transaction
Value to LTM Adjusted EBITDA | | | 6.9x | | | 12.9x | | | 10.0x | | | 10.2x |
Financial Metric | | | Selected
Multiples Range | | | Implied Per Share Equity Value Reference Range |
Transaction Value
to LTM Adjusted EBITDA | | | 9.0x - 11.0x | | | $46.41 - $54.97 |
Selected Terminal Value Multiples Range | | | Selected
Discount Rate Range | | | Implied Per Share Equity Value Reference Range |
7.0x - 9.0x | | | 9.5%
- 10.5% | | | $54.27 - $64.90 |
• | Equity market value as a multiple of estimated fiscal year 2020 Adjusted Net Income; |
• | Equity market value as a multiple of estimated
fiscal year 2021 Adjusted Net Income; and |
• | Equity market value as a multiple of estimated fiscal year 2022 Adjusted Net Income. |
• | Bank of America Corporation |
• | Citigroup,
Inc. |
• | The Goldman Sachs Group, Inc. |
• | JPMorgan Chase & Co. |
• | Barclays plc |
• | BNP Paribas SA |
• | Credit
Suisse Group AG |
• | Deutsche Bank AG |
• | Societe Generale SA |
• | UBS Group AG |
Financial
Metric | | | Low | | | High | | | Median | | | Mean | | | Morgan
Stanley |
FY 2020E Adjusted Net Income(1) | | | 7.4x | | | 15.7x | | | 11.7x | | | 11.3x | | | 9.2x |
FY
2021E Adjusted Net Income(2) | | | 7.2x | | | 12.0x | | | 8.7x | | | 8.9x | | | 9.3x |
FY
2022E Adjusted Net Income | | | 4.7x | | | 9.9x | | | 7.0x | | | 7.3x | | | 8.6x |
(1) | The multiples for Barclays plc, Deutsche Bank AG and Societe Generale SA were excluded from the low, high, median and mean data for FY 2020E Adjusted Net Income because the figures for such multiples were deemed not meaningful. |
(2) | The multiple for Deutsche Bank AG was excluded from the low, high, median and mean data for FY 2021E Adjusted Net Income because the figure for such multiple was deemed not meaningful. |
• | the product of (i) the number of Cash Electing Shares and (ii) the Per Share Cash Election Consideration (the “Cash Election Amount”) exceeds |
• | the
difference between (i) the product of (a) $28.25 and (b) the total number of shares of Eaton Vance Common Stock (other than shares held by Morgan Stanley, Merger Sub 1, Merger Sub 2 or any subsidiary of Eaton Vance) issued and outstanding immediately prior to the Effective Time minus (ii) the product of (a) the number of Mixed Consideration Electing Shares (including any Non-Electing Shares) and (b) $28.25 (such difference, the “Available Cash Election Amount”), |
• | an amount of cash, without interest, equal to the product (rounded to two decimal places) of (i) the Per Share Cash Election
Consideration and (ii) a fraction, the numerator of which will be the Available Cash Election Amount and the denominator of which will be the Cash Election Amount (the “Cash Fraction”) and |
• | a number of shares of Morgan Stanley Common Stock equal to the product of: |
○ | the sum of (i) 0.5833 of a share of Morgan Stanley Common Stock (the “Mixed Election Stock Exchange Ratio”), plus (ii) the quotient (rounded to four decimal places) of $28.25 divided by the Morgan Stanley Common Stock Reference Price, multiplied by |
○ | one
minus the Cash Fraction. |
• | an amount of cash, without interest, equal to the amount (rounded to two decimal places) of such excess divided by the number of Stock Electing Shares (such fraction, the “Excess Cash Amount”) and |
• | a number of shares of Morgan Stanley Common Stock equal to the product (rounded to four decimal places) of (x) the Exchange Ratio and (y) a fraction, the numerator of which will be the Per Share Cash Election Consideration minus the Excess Cash
Amount and the denominator of which will be the Per Share Cash Election Consideration (such fraction, the “Stock Fraction”). |
Number of shares of Eaton Vance Common Stock outstanding as of closing | | | 114,637,999(1) |
Per
share cash amount | | | $28.25 |
Mixed Election Stock Exchange Ratio | | | 0.5833 |
Exchange
Ratio | | | 1.1633(2) |
Morgan Stanley Common Stock Reference Price | | | $48.71(3) |
(1) | Based on information in Eaton Vance’s latest 10-Q filed on September 4, 2020. |
(2) | Determined by adding the Mixed Election Stock Exchange Ratio (0.5833) and the quotient (rounded to four decimal places) of (x) the per share cash amount ($28.25) divided by (y) the assumed Morgan Stanley Common Stock Reference Price ($48.71). |
(3) | The closing price of Morgan Stanley Common Stock reported on the NYSE on October 7, 2020, the
last full trading day prior to media publications regarding the proposed Mergers, which for purposes of this calculation was assumed to be the volume-weighted average price of Morgan Stanley Common Stock for the period of ten consecutive trading days ending on the second full trading day prior to the Effective Time. |
Number
of Cash Electing Shares | | | 85,978,499 |
Number of Mixed Consideration Electing Shares | | | 11,463,800 |
Number
of Stock Electing Shares | | | 17,195,700 |
Number
of Cash Electing Shares | | | 85,978,499 |
Per Share Cash Election Consideration | | | $56.66(1) |
Cash
Election Amount | | | $4,871,878,378 (2) |
(1) | Determined by adding the per share cash amount of $28.25 and the product (rounded to two decimal places) of (x) the Mixed Election Stock Exchange Ratio (0.5833) multiplied
by (y) the assumed Morgan Stanley Common Stock Reference Price ($48.71). |
(2) | Determined by multiplying the number of Cash Electing Shares by the unrounded Per Share Cash Election Consideration. |
Number of shares of Eaton Vance Common Stock outstanding as of closing | | | 114,637,999(1) |
Per
share cash amount | | | $28.25 |
Number of Mixed Consideration Electing Shares | | | 11,463,800 |
Available
Cash Election Amount | | | $2,914,671,122(2) |
(1) | Based on information in Eaton Vance’s latest 10-Q filed on September 4, 2020. |
(2) | Determined
by calculating the difference between (i) the product of (x) the per share cash amount ($28.25) and (y) the total number of shares of Eaton Vance Common Stock issued and outstanding immediately prior to the Effective Time (114,637,999) minus (ii) the product of (x) the number of Mixed Consideration Electing Shares (11,463,800) and (y) the per share cash amount ($28.25). |
• | $28.25 in cash and |
• | 0.5833 of a share of Morgan Stanley Common Stock. |
• | $33.90 in cash, and |
• | 0.4673
shares of Morgan Stanley Common Stock. |
Per
Share Cash Election Consideration | | | $56.66(1) |
Cash Fraction | | | 0.5983(2) |
Cash
portion of consideration | | | $33.90(3) |
(1) | Represents the amount of cash (rounded to two decimal places) determined by adding the per share cash amount of $28.25 and the product of (x) the
Mixed Election Stock Exchange Ratio (0.5833) multiplied by the assumed closing Morgan Stanley Common Stock Reference Price ($48.71). |
(2) | Represents the Available Cash Election Amount ($2,914,671,122) divided by the Cash Election Amount ($4,871,878,378). |
(3) | Determined by multiplying the Per Share Cash Election Consideration by the Cash Fraction. |
Exchange
Ratio | | | 1.1633 |
One minus the Cash Fraction | | | 0.4017 |
Stock
portion of consideration | | | 0.4673(1) |
(1) | Determined by multiplying (x) the Exchange Ratio (1.1633) by (y) one minus the Cash Fraction (0.4017). |
Number of Cash Electing Shares | | | 17,195,700 |
Number
of Mixed Consideration Electing Shares | | | 11,463,800 |
Number of Stock Electing Shares | | | 85,978,499 |
Number
of Cash Electing Shares | | | 17,195,700 |
Per Share Cash Election Consideration | | | $56.66(1) |
Cash
Election Amount | | | $974,375,687(2) |
(1) | Determined by adding the per share cash amount of $28.25 and the product (rounded to two decimal places) of (x) the Mixed Election Stock Exchange Ratio (0.5833) multiplied
by (y) the assumed closing Morgan Stanley Common Stock Reference Price ($48.71). |
(2) | Determined by multiplying the number of Cash Electing Shares by the unrounded Per Share Cash Election Consideration. |
Number of shares of Eaton Vance Common Stock outstanding as of closing | | | 114,637,999(1) |
Per
share cash amount | | | $28.25 |
Number of Mixed Consideration Electing Shares | | | 11,463,800 |
Available
Cash Election Amount | | | $2,914,671,122(2) |
(1) | Based on information in Eaton Vance’s latest 10-Q filed on September 4, 2020. |
(2) | Determined
by calculating the difference between (i) the product of (x) the per share cash amount ($28.25) and (y) the total number of shares of Eaton Vance Common Stock issued and outstanding immediately prior to the effective time of the merger (114,637,999) minus (ii) the product of (x) the number of Mixed Consideration Electing Shares (11,463,800) and (y) the per share cash amount ($28.25). |
• | $28.25 in cash, and |
• | 0.5833 of a share of Morgan Stanley Common Stock. |
• | $22.57
in cash, and |
• | 0.7000 shares of Morgan Stanley Common Stock. |
Cash Election
Amount | | | $974,375,687 |
Available Cash Election Amount | | | $2,914,671,122 |
Cash
portion of consideration | | | $22.57(1) |
(1) | Represents the amount of cash (rounded to two decimal places) determined by calculating the amount by which the Available Cash Election Amount
exceeds the Cash Election Amount ($1,940,295,435) and dividing such number by the number of Stock Electing Shares (85,978,499). |
Exchange Ratio | | | 1.1633 |
Stock
Fraction | | | 0.6017(1) |
Stock portion of consideration | | | 0.7000(2) |
(1) | Represents (x) the Per Share Cash Election Consideration ($56.66) minus the cash portion of the consideration determined above ($22.57) divided by (y) the Per Share Cash Election Consideration ($56.66). |
(2) | Represents the product (rounded to four decimal places) determined by multiplying (x) the Exchange Ratio (1.1633) by (y) the Stock Fraction (0.6017). |
• | the Eaton Vance Stockholder Approval (which approval was obtained on October 7, 2020); |
• | absence
of (x) any applicable law or order preventing or making illegal the consummation of the Mergers or any of the other transactions contemplated by the Merger Agreement and (y) any litigation or similar legal action by any governmental authority (in any jurisdiction in which Morgan Stanley, Eaton Vance or any of their respective subsidiaries conducts material operations) seeking to prohibit or restrain the Mergers; |
• | effectiveness under the Securities Act of the registration statement for the shares of Morgan Stanley Common Stock being issued in the Mergers (of which this information statement/prospectus forms a part) and the absence of any stop order suspending that effectiveness or any pending proceedings for that purpose; and |
• | approval
for the listing on the NYSE of the shares of Morgan Stanley Common Stock to be issued in the Mergers, subject to official notice of issuance. |
• | the
accuracy of the representations and warranties made in the Merger Agreement by Eaton Vance as of the date of the Merger Agreement and as of the date of completion of the Mergers, subject to certain materiality thresholds; |
• | performance in all material respects by Eaton Vance of the obligations required to be performed by it at or prior to the Effective Time; |
• | the absence since the date of the Merger Agreement of any event, circumstance, development, change, occurrence or effect that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Eaton Vance (see “The Merger Agreement—Definition of ‘Material Adverse Effect’”
beginning on page 98 of this information statement/prospectus for the definition of Material Adverse Effect); |
• | the Client Consent Percentage will be at least 80% (see The Merger Agreement—Advisory Agreement Consents and Client Consent Percentage” beginning on page 95 of this information statement/prospectus for the definition of Client Consent Percentage); |
• | receipt of a certificate signed by an executive officer of Eaton Vance as to the satisfaction of the conditions described in the preceding four bullets; |
• | (i) (x) the expiration or termination of any applicable waiting period, or any extension thereof, under the HSR Act (in respect of which early termination was granted on November 10,
2020) and (y) certain governmental filings and/or approvals (as described under “The Merger—Regulatory Approvals Required for the Merger” beginning on page 80 of this information statement/prospectus) having been made, obtained or received (or the waiting periods with respect thereto having expired or been terminated), as applicable, and being in full force and effect, in each case without the imposition of a requirement that Morgan Stanley or any of its subsidiaries (including Eaton Vance or its subsidiaries) take any action or comply with any restriction that Morgan Stanley would not be required to take or comply with under the applicable provisions of the Merger Agreement (see “The Merger Agreement—Reasonable Best Efforts
Covenant” beginning on page 105 of this information statement/prospectus), and (ii) there being no applicable law or order in force and effect and there being no pending litigation or similar legal action by any governmental authority (in any jurisdiction in which Morgan Stanley, Eaton Vance or any of their respective subsidiaries conducts material operations) in each case that imposes a requirement that Morgan Stanley or any of its subsidiaries (including Eaton Vance or its subsidiaries) take any action or comply with any restriction that Morgan Stanley would not be required to take or comply with under the applicable provisions of the Merger
Agreement (see “The Merger Agreement—Reasonable Best Efforts Covenant” beginning on page 105 of this information statement/prospectus); and |
• | receipt by Morgan Stanley of an opinion of Davis Polk, counsel to Morgan Stanley, to the effect that the Mergers, taken together as an integrated transaction, will be treated for United States federal income tax purposes as a “reorganization” within the meaning of Section 368(a) of the Code, which opinion shall be dated the closing date; provided that if Davis Polk does not render such opinion for any reason, this condition will nonetheless be satisfied if a third party nationally recognized law or accounting firm as reasonably agreed by Morgan Stanley and Eaton Vance renders such opinion to Morgan Stanley. |
• | the accuracy of the representations and warranties made in the Merger Agreement by Morgan Stanley as of the date of the Merger Agreement and as of the date of completion of the Mergers, subject to certain materiality thresholds; |
• | performance
in all material respects by Morgan Stanley, Merger Sub 1 and Merger Sub 2 of the obligations required to be performed by them at or prior to the Effective Time; |
• | the absence since the date of the Merger Agreement of any event, circumstance, development, change, occurrence, or effect that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Morgan Stanley (see “The Merger Agreement—Definition of ‘Material Adverse Effect’” beginning on page 98 of this information statement/prospectus for the definition of Material Adverse Effect); |
• | receipt
of a certificate signed by an executive officer of Morgan Stanley as to the satisfaction of the conditions described in the preceding three bullets; |
• | (i) the expiration or termination of any applicable waiting period, or any extension thereof, under the HSR Act (in respect of which early termination was granted on November 10, 2020) and (ii) certain governmental filings and/or approvals (as described under “The Merger—Regulatory Approvals Required for the Merger” beginning on page 80 of this information statement/prospectus) having been made, obtained or received (or the waiting periods with respect thereto having expired or been terminated), as applicable; and |
• | receipt
by Eaton Vance of an opinion of WilmerHale, counsel to Eaton Vance, to the effect that the Mergers, taken together as an integrated transaction, will be treated for United States federal income tax purposes as a “reorganization” within the meaning of Section 368(a) of the Code, which opinion shall be dated the |
• | corporate
existence, good standing and qualification to do business; |
• | due authorization, execution and validity of the Merger Agreement and the applicable ancillary agreements; |
• | governmental consents necessary to complete the transactions contemplated by the Merger Agreement; |
• | absence of any conflict with or violation or breach of organizational documents, laws or regulations or agreements as a result of the execution, delivery or performance of the Merger Agreement, the ancillary agreements and completion of the Mergers and the
other transactions contemplated by the Merger Agreement; |
• | capitalization; |
• |
• | regulatory reports and filings and internal controls over financial reporting; |
• | financial statements; |
• | information
provided by the applicable party for inclusion in disclosure documents to be filed with the SEC in connection with the Mergers; |
• | conduct of business in the ordinary course of business consistent with past practice and absence of any event, change, effect, development or occurrence that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the applicable party; |
• | absence of undisclosed material liabilities; |
• | absence of pending or threatened legal proceedings and
investigations; |
• | compliance with laws, regulations, orders and permits; |
• | compliance matters related to the registered investment adviser, fund, broker-dealer and futures commodities merchant businesses and subsidiaries of the parties; |
• | material contracts (in the case of Eaton Vance); |
• | tax
matters; |
• | employees, employee benefit plans and labor matters (in the case of Eaton Vance); |
• | intellectual property and real property matters (in the case of Eaton Vance); |
• | environmental matters (in the case of Eaton Vance); |
• | certain stock ownership matters; |
• | absence of any undisclosed broker’s or finder’s fees payable in connection with the Mergers; |
• | receipt of opinions from financial advisors (in the case of Eaton Vance); and |
• | inapplicability
of anti-takeover statutes. |
• | any changes after the date of the Merger Agreement in general United States or global economic conditions, including changes in United States or global securities, credit, financial, debt or other capital markets; |
• | any changes after the date of the Merger Agreement in conditions generally affecting the industries in which that party or any of its subsidiaries materially engages; |
• | any reduction in the assets under management of
that party or any of its subsidiaries (but not any facts or occurrences giving rise to or contributing to such reduction that are not otherwise excluded from the definition of Material Adverse Effect); |
• | any decline, in and of itself, in the market price or trading volume of that party’s stock, any changes in credit ratings and any changes in any analysts’ recommendations or ratings with respect to that party or any of its subsidiaries (but not any facts or occurrences giving rise to or contributing to that decline that are not otherwise excluded from the definition of Material Adverse Effect); |
• | any
failure, in and of itself, by that party to meet any internal or published projections, forecasts, estimates or predictions in respect of revenues, earnings or other financial or operating metrics for any period (but not any facts or occurrences giving rise to or contributing to that failure that are not otherwise excluded from the definition of Material Adverse Effect); |
• | the execution and delivery of the Merger Agreement, the public announcement or the pendency of the Merger Agreement (except with respect to any representation or warranty that is intended to address the consequences of the execution and delivery of the Merger Agreement or the public announcement or pendency of the Merger Agreement); |
• | any
changes after the date of the Merger Agreement in any applicable law or generally accepted accounting principles (or authoritative interpretations thereof); |
• | any action or omission of a party to the Merger Agreement pursuant to the written consent of the other party to the Merger Agreement; or |
• | any acts of God, natural disasters, terrorism, armed hostilities, sabotage, war or any escalation or worsening of acts of war, epidemic, pandemic or disease outbreak (including COVID-19); |
• | amend its organizational documents; |
• | merge or consolidate with any other entity; |
• | acquire any interest in any corporation, partnership, other business organization or any division thereof or any assets, securities or property, other than (w) acquisitions of assets, securities or property in the ordinary
course of business consistent with past practice in an amount not to exceed $10,000,000 in the aggregate, (x) acquisitions of securities on behalf of clients of Eaton Vance or its subsidiaries under Eaton Vance’s investment portfolio consistent with Eaton Vance’s investment policy in effect as of the date of the Merger Agreement, (y) acquisitions of any interest in partnerships, joint ventures or similar entities in an amount not to exceed $10,000,000 in the aggregate for all such interests and (z) certain intercompany transactions; |
• | adopt or publicly propose a plan of complete or partial liquidation, dissolution, recapitalization, restructuring or other reorganization, or resolutions providing for or authorizing such a liquidation,
dissolution, recapitalization, restructuring or other reorganization; |
• | (i) split, combine or reclassify any securities, stock, shares, units, warrants, calls, options, profits interests or other similar rights issued by Eaton Vance (“Company Securities”), (ii) amend any term or alter any rights of any Company Securities, (iii) declare, set aside or pay or make any dividend or any other distribution (whether in cash, stock, property or any combination thereof) in respect of any Company Securities or any securities, stock, shares, units, warrants, calls, options or other similar rights issued by any subsidiaries of Eaton Vance (“Company Subsidiary Securities”) (in the case of this clause (iii), other than (A) in the
case of Eaton Vance, (x) the Special Dividend and any regular cash dividends in the ordinary course of business consistent with past practice (including with respect to record and payment dates) in an amount not to exceed $0.375 per share of Eaton Vance Common Stock per quarter (appropriately adjusted to reflect any stock dividends, subdivisions, splits, combinations or other similar events relating to Eaton Vance Common Stock) or (B) in the case of Eaton Vance’s wholly owned subsidiaries, any dividends or other distributions to Eaton Vance or any other wholly owned subsidiary thereof), (iv) make any election to be subject to any of the provisions of Title 3 Subtitle 8 of the Maryland General Corporation Law or (v) redeem, repurchase, cancel or otherwise acquire or offer to redeem, repurchase, or otherwise acquire |
• | issue, deliver or sell, or authorize the
issuance, delivery or sale of, any Company Securities or Company Subsidiary Securities, other than (i) issuances in connection with the exercise or settlement of Eaton Vance equity awards in accordance with the terms of the Eaton Vance stock plans, Eaton Vance subsidiary employee equity plans and the applicable award agreements as of the date of the Merger Agreement or (ii) the grant of any Eaton Vance equity awards to the extent permitted by the confidential disclosure schedules to the Merger Agreement; |
• | authorize, make or incur any capital expenditures or obligations or liabilities in connection therewith, subject to certain exceptions; |
• | sell, lease, license, sublicense,
transfer or otherwise dispose of, or fail to take any action necessary to maintain, enforce or protect, directly or indirectly, any of Eaton Vance’s subsidiaries or any of Eaton Vance’s or its subsidiaries’ assets, securities, interests, businesses or properties, other than (i) dispositions in the ordinary course of business with a purchase price not in excess of $5,000,000 in the aggregate, (ii) dispositions of securities in the ordinary course of business consistent with past practice under Eaton Vance’s investment portfolio consistent with Eaton Vance’s investment policy in effect as of the date of the Merger Agreement or (iii) certain intercompany transactions; |
• | sell,
assign, license, sublicense, abandon, allow to lapse, transfer or otherwise dispose of, create or incur any lien (other than liens permitted under the Merger Agreement) on or otherwise fail to take any action necessary to maintain, enforce or protect, directly or indirectly, any of Eaton Vance’s material owned intellectual property or licensed intellectual property, other than in the ordinary course of business consistent with past practice (i) pursuant to non-exclusive licenses or (ii) for the purpose of disposing of obsolete or worthless assets; |
• | incur, assume, suffer to exist or otherwise be liable with respect to, or guarantee or repurchase, or enter into any contract with respect to, any indebtedness for borrowed money, other
than additional borrowings under Eaton Vance’s credit agreement in the ordinary course of business; |
• | create or incur any lien (except for liens permitted under the Merger Agreement) on any material asset other than liens created or incurred under certain existing or otherwise permitted indebtedness under the Merger Agreement, and liens on assets subject to capital leases entered into in the ordinary course of business; |
• | (i) enter into any material contract (including (x) by amendment of any contract
that is not a material contract such that such contract becomes a material contract or (y) through acquisition of a subsidiary that is bound by a material contract) (in each case, other than in the ordinary course of business with respect to certain material contracts), (ii) terminate, renew, extend or amend in any material respect any material contract or waive any material right thereunder (other than in the ordinary course of business
with respect to certain material contracts); |
• | terminate, amend or modify any material governmental consent, approval, permit or other confirmation necessary for the operation of Eaton Vance’s or its subsidiaries’ businesses in a manner material and adverse to Eaton Vance and its subsidiaries, taken as a whole; |
• | except as required by Eaton Vance’s employee benefit plans in effect as of the date of the
Merger Agreement and except as otherwise set forth in the confidential disclosure schedules to the Merger Agreement, (i) grant any change in control, retention, severance or termination pay to (or amend any existing arrangement with) any current or former personnel, (ii) except in the ordinary course of business consistent with past practice (and without limiting any of the other restrictions contained in the Merger Agreement), enter into any employment, offer letter, term sheet, deferred compensation or other similar agreement (or any amendment to any such existing agreement) with any current or former personnel, (iii) establish, adopt, amend or enter into any material employee benefits plan, other than amendments that are required under a change in applicable law or by a collective bargaining agreement, (iv) grant any equity |
• | make any material change in Eaton Vance’s method of financial
accounting, except as required by reason of a change in United States generally accepted accounting principles or Regulation S-X under the Exchange Act; |
• | enter into any material new line of business; |
• | (i) make or change any material tax election, (ii) change any annual tax accounting period, (iii) adopt or change any material method of tax accounting, (iv) enter into any material closing agreement with respect to taxes (other than a closing agreement permitted by the Merger Agreement) or (v) settle or surrender (including by entering into a closing agreement) any tax claim, audit or assessment involving potential payments, or reductions in deferred tax assets, by Eaton
Vance and its subsidiaries in excess of $1,000,000; |
• | settle, compromise, or offer or propose to settle or compromise, any claim, action, suit, dispute, investigation, regulatory examination, arbitration, or other proceeding, whether pending or threatened, (i) involving or against Eaton Vance or its subsidiaries, other than in the ordinary course of business consistent with past practice (provided that any individual settlement or compromise or any series of related settlements or compromises involving payments by Eaton Vance and its subsidiaries in
excess of $3,000,000 individually or $15,000,000 in the aggregate (in each case, net of any amounts that may be paid under one or more existing insurance policies) or providing for any non-monetary relief will be deemed not to be in the ordinary course of business), (ii) that relates to the transactions contemplated by the Merger Agreement or (iii) initiated by a stockholder of Eaton Vance; |
• | (i) reduce or waive the fee rate payable to Eaton Vance or any of its subsidiaries under any investment advisory agreement that represents annual revenue of at least $25,000,000 to Eaton Vance and any of its subsidiaries for the 12-month period ended
on September 30, 2020 (a “Material Advisory Agreement”) or (ii) increase the amount or rate of expense reimbursement paid by Eaton Vance or any of its subsidiaries with respect to any Material Advisory Agreement by, in the case of the foregoing clauses (i) and (ii), in the aggregate, an amount that would cause the annual net revenue (calculated net of any such reduction in or waiver of fee rate and any such increase in the amount or rate of expense reimbursement) to Eaton Vance or any of its subsidiaries under such Material Advisory Agreement to be reduced by more than five percent (5%), in the aggregate, relative to such net revenue to Eaton Vance or any of its subsidiaries
attributable to such Material Advisory Agreement without giving effect to such reduction in or waiver of fee rate or increase in the amount or rate of such expense reimbursement (other than pursuant to the terms of contracts as in effect as of September 30, 2020) (such changes described in the foregoing clauses (i) and (ii), whether or not within such five percent (5%) exception, “Client Economic Term Changes”); provided that, Client Economic Term Changes will not include either (x) the renewal of a fee waiver, expense reimbursement agreement, or any other agreement pursuant to which there is an expense reimbursement with any person on substantially the same terms and conditions, and economic terms that are no less favorable to Eaton Vance and its Subsidiaries,
each as in effect on September 30, 2020 or (y) reimbursements to any client in respect of errors committed or omitted by Eaton Vance or any of its subsidiaries; |
• | with respect to any investment advisory agreement or agreement with a separately managed account sponsor that, in either case, is not a Material Advisory Agreement (a “Small Advisory Agreement”), make any Client Economic Term Change, if such change, individually or in the aggregate with Client Economic Term Changes made in respect of other Small Advisory Agreements, would reasonably be expected to have, measured as of the end of each month during the period after the date hereof to the Calculation Time, a cost to
Eaton Vance (whether in the form of reduced revenue to Eaton Vance or of increased expense reimbursement payments made by Eaton Vance) of more than 5% of the aggregate Revenue-Run Rate as of September 30, 2020 associated with all Small Advisory Agreements in the aggregate; |
• | except as required by the terms of an expense reimbursement agreement or any other agreement pursuant to which there is an expense reimbursement with any person or entity as in effect on September 30, 2020 (or the renewal thereof on substantially the same terms and conditions, and economic terms that are no less |
• | with
respect to any investment advisory agreement, amend such investment advisory agreement, other than, on or prior to the Calculation Time, (i) amendments to investment advisory agreements expressly permitted above or (ii) changes to conform such investment advisory agreement to (a) the terms of Eaton Vance’s (or its applicable subsidiary’s) applicable standard form of advisory contract as of the date of the Merger Agreement, (b) applicable law or (c) industry best practices or (iii) immaterial changes (clauses (ii) and (iii), “Permitted Client Non-Economic Term Changes”); or |
• | agree, resolve, authorize, commit, propose or offer to do any of the foregoing. |
• | amend its organizational documents in a manner that would be materially adverse to Eaton Vance’s stockholders; |
• | merge or consolidate with any other entity; |
• | acquire
any interest in any corporation, partnership, other business organization or any division thereof or any assets, securities or property (except in the ordinary course of business) that, individually or in the aggregate, would, or would reasonably be expected to, prevent, enjoin or delay beyond the End Date set forth in the Merger Agreement the receipt of the regulatory approvals that are a condition to the completion of the Mergers; |
• | adopt or propose a plan of complete or partial merger, liquidation, consolidation, recapitalization, restructuring, or other reorganization or dissolution with respect to Morgan Stanley, Merger Sub 1 or Merger Sub 2, or resolutions providing for such a merger, liquidation, consolidation, recapitalization, restructuring or other reorganization or dissolution with respect to Morgan Stanley,
Merger Sub 1 or Merger Sub 2; |
• | declare, set aside or pay or make any dividend or make any other distribution (whether in cash, stock, property or any combination thereof) in respect of any shares of Morgan Stanley Common Stock or capital stock of its subsidiaries or other securities, other than (A) in the case of Morgan Stanley, (x) regular cash dividends in the ordinary course of business consistent with past practice (including with respect to record and payment dates) or (y) subject to the consideration adjustment provisions in the Merger Agreement, stock dividends, (B) in the case of Morgan Stanley’s subsidiaries, any dividends or other
distributions to Morgan Stanley or any other subsidiary thereof or (C) dividends or distributions required pursuant to the terms of Morgan Stanley’s organizational documents or any contract to which Morgan Stanley or any of its subsidiaries is otherwise bound; or |
• | agree, resolve, authorize, commit or propose to do any of the foregoing. |
• | (i) engage in negotiations or discussions with any third party that, subject to Eaton Vance’s compliance with the solicitation restrictions described in the first paragraph of this section (“The Merger Agreement—No Solicitation” beginning on page 102 of this information statement/prospectus), has made after the date of the Merger Agreement, an unsolicited Company Acquisition Proposal that the Eaton Vance board of directors determined in good faith, after consultation with a financial advisor of nationally recognized reputation and outside legal counsel to Eaton Vance, constituted or was reasonably likely to lead to a Company Superior Proposal (as defined below), (ii) thereafter furnish to such
third party and its representatives non-public information relating to Eaton Vance or any of its subsidiaries pursuant to a confidentiality agreement between Eaton Vance and such third party with terms no less favorable to Eaton Vance than in the confidentiality agreement between Morgan Stanley and Eaton Vance, so long as all such non-public information (to the extent not previously provided or made available to Morgan Stanley) is provided or made available to Morgan Stanley prior to or substantially concurrently with the time it is provided or made available to such third party and (iii) following receipt of a Company Superior Proposal after the date of the Merger Agreement, make a Company Adverse Recommendation Change and/or terminate the Merger Agreement in order to cause Eaton Vance to enter into an alternative acquisition agreement with respect to such Company Superior Proposal
(a termination of the Merger Agreement in such circumstances, a “Company Superior Proposal Termination”); and |
• | make a Company Adverse Recommendation Change involving or relating to the occurrence of a Company Intervening Event (as defined below). |
• | Morgan Stanley to use reasonable best efforts to file with the SEC, within one business day of the closing date, an automatic shelf registration statement (the “Resale Registration Statement”) on Form S-3 permitting the public resale of all shares of Morgan Stanley stock issued pursuant to the Merger Agreement to the Voting Trust and/or the Voting Trustees (the “Registrable Securities”). If the Resale Registration Statement is not an Automatic Resale Registration Statement, Morgan Stanley to use reasonable best efforts to (i) cause the Resale Registration Statement to be declared effective by the SEC as
soon as practicable after the filing thereof and (ii) maintain the effectiveness of the Resale Registration Statement until the earlier of such time as (a) all Registrable Securities have been sold pursuant thereto and (b) all Registrable Securities may be sold pursuant to Rule 144 under the Securities Act; |
• | Morgan Stanley and Eaton Vance to cooperate with the other in taking, or causing to be taken, all actions necessary to delist the Eaton Vance Non-Voting Common Stock from NYSE and terminate its registration under the Exchange Act; provided that such delisting and termination will not be effective until the completion of the Mergers; |
• | Eaton Vance to promptly notify,
and keep Morgan Stanley informed, of any stockholder demands, litigations, arbitrations or other similar proceedings (including derivative claims) against it or the members |
• | subject to certain exceptions, Morgan Stanley and Eaton Vance to consult with each other before issuing any press release, making any public statement, scheduling a press conference or taking certain other actions, in each case with respect to the Merger Agreement or the transactions contemplated by the Merger Agreement; |
• | prior to the completion of the Mergers, Morgan Stanley and Eaton Vance to take all such steps as may be required (to the extent permitted under applicable law) to cause any dispositions of Eaton Vance stock
(including derivative securities with respect to Eaton Vance stock) or acquisitions of Morgan Stanley stock (including derivative securities with respect to Morgan Stanley stock) resulting from the transactions contemplated by the Merger Agreement by each individual who is subject to reporting requirements under Section 16(a) of the Exchange Act with respect to Eaton Vance or will become subject to such reporting requirements with respect to Morgan Stanley, to be exempt under Rule 16b-3 under the Exchange Act; |
• | Except with respect to the Special Dividend, Morgan Stanley and Eaton Vance to coordinate with each other in connection with the declaration of dividends with the intention that holders of shares of Morgan Stanley stock and Eaton Vance stock do not receive two dividends or fail to receive one dividend for any
single quarter in respect of shares of Eaton Vance stock, on the one hand, and shares of Morgan Stanley stock issuable in respect of such shares of Eaton Vance stock, on the other hand; |
• | prior to completion of the Mergers, Eaton Vance to provide to the trustee under the indentures governing Eaton Vance’s notes outstanding any notices, announcements, certificates or legal opinions required by such indentures in connection with the Mergers; and |
• | Morgan Stanley and Eaton Vance to notify the other
of certain events. |
• | by mutual written agreement of Morgan Stanley and Eaton Vance; |
• | by either Morgan
Stanley or Eaton Vance, if: |
○ | the Mergers have not been completed on or before the End Date; however, the right to terminate the Merger Agreement at the End Date will not be available to any party to the Merger Agreement whose breach of any provision of the Merger Agreement results in the failure of the Mergers to be completed by such time; |
○ | there is in effect any applicable law, order or injunction that permanently enjoins, prevents or prohibits the completion of the Mergers and, if such applicable law is an order or injunction,
such applicable order or injunction has become final and non-appealable; however, the right to terminate the Merger Agreement as described in this bullet will not be available to any party to the Merger Agreement which has not complied with its obligations under the Merger Agreement in respect of any such applicable law; |
○ | the Eaton Vance Stockholder Approval, which was obtained on October 7, 2020, had not been obtained by 5:00 p.m. on October 8, 2020; |
○ | there
has been a breach by the other party of any representation or warranty or failure to perform any covenant or agreement that would result in the failure of the other party to satisfy an applicable condition to the completion of the Mergers related to the accuracy of representations and warranties or performance of covenants, and such breach has not been cured within 45 days of notice thereof or |
○ | any required regulatory
consent (including with respect to the expiration or termination of any applicable waiting period, or any extension thereof, under the HSR Act (in respect of which early termination was granted on November 10, 2020)) is denied and such denial becomes final and non-appealable; however, the right to terminate the Merger Agreement as described in this bullet will not be available to any party to the Merger Agreement whose breach of any provision of the Merger Agreement results in the denial of such consent; or |
• | by Morgan Stanley, if: |
○ | prior
to the Eaton Vance Stockholder Approval, which was obtained on October 7, 2020, (i) the Eaton Vance board of directors made a Company Adverse Recommendation Change or (ii) there has been a willful and material breach by Eaton Vance of its obligations described under “The Merger Agreement—No Solicitation” beginning on page 102 of this information statement/prospectus, other than in the case where (w) such breach is a result of an isolated action by a representative of Eaton Vance (other than one of its directors or officers), (x) such breach was not caused by, or within the knowledge of, Eaton Vance, (y) Eaton Vance takes appropriate actions to remedy such breach promptly
upon discovery thereof and (z) Morgan Stanley is not harmed as a result thereof; or |
• | by Eaton Vance, if: |
○ | prior to the Eaton Vance Stockholder Approval, which was obtained on October 7, 2020, in order to enter into an alternative acquisition agreement with respect to a Company Superior Proposal, as described under “The Merger Agreement—No Solicitation” beginning on page 102 of this information statement/prospectus, provided
that prior to or concurrently with such termination, Eaton Vance pays, or causes to be paid, to Morgan Stanley, in immediately available funds a termination fee, as described below. |
• | the right of Eaton Vance stockholders and equity award holders to receive the applicable Merger Consideration and to receive the Special Dividend in respect of their shares of Eaton Vance stock and Eaton Vance equity awards, as applicable; |
• | the right of the Indemnified Persons to enforce the obligations described under “The Merger Agreement—Indemnification
and Insurance” beginning on page 106 of this information statement/prospectus; and |
• | the right of the holders of Registrable Securities to enforce the obligations described under “The Merger Agreement—Other Agreements” on page 108 of this information statement/prospectus. |
• | the gain is “effectively connected” with a U.S. trade or business of such non-U.S. holder (and, if required by an applicable income tax treaty, is also attributable to a permanent establishment or a fixed base in the United States maintained by such non-U.S. holder), in which case the non-U.S. holder generally will be subject to tax on such gain in the same manner as a U.S. holder and, if the non-U.S. holder is a foreign corporation, such corporation may be subject to branch profits tax at the rate
of 30% (or such lower rate as may be specified by an applicable income tax treaty); or |
• | the non-U.S. holder is a nonresident alien individual who is present in the United States for 183 days or more in the taxable year of the Mergers and certain other conditions are met, in which case the non-U.S. |
• | The
relevant price per share of Eaton Vance Common Stock is $66.98, which is the closing price per share of Eaton Vance Non-Voting Common stock as reported on the NYSE on November 30, 2020; |
• | The relevant share price of Eaton Vance Common Stock includes the economic value of the Special Dividend; |
• | The effective time is March 15, 2021, which is the assumed date of the closing of the Mergers solely for purposes of the disclosure in this section; |
• | The number and
value of shares of Eaton Vance restricted stock held by each such person that were accelerated upon the Eaton Vance Stockholder Approval; |
• | The number of outstanding unexercised stock options to purchase Eaton Vance Non-Voting Common Stock held by each such person that will be cancelled at the effective time of the Mergers and the estimated maximum payment to be received in connection with the cancellation of such stock options assuming such stock options remain outstanding at the effective time; |
• | The value of Eaton Vance deferred stock units held by each such person that will be deemed to have vested and converted into the right to receive Cash Consideration plus accumulated
dividends, including the Special Dividend; and |
• | The number and value of Eaton Vance restricted stock units grants after October 7, 2020 held by each such person that will be assumed by Morgan Stanley at the effective time of the Mergers. |
| | Number
of Shares of Eaton Vance Restricted Stock Accelerated | | | Value
of Accelerated Eaton Vance Restricted Stock ($)[(1)] | | | Number
of Outstanding and Unexercised Stock Options for Eaton Vance Non-Voting
Common Stock | | | Maximum Value of Outstanding
and Unexercised Stock Options for Eaton Vance Non-Voting Common
Stock ($)(2) | | | Number of Eaton Vance Deferred
Stock Units Deemed Vested | | | Value of Accelerated
Eaton Vance Deferred Stock Units ($)[(1)] | | | Number
of Eaton Vance Restricted Stock Units | | | Value of Eaton
Vance Restricted Stock Units to Be Assumed by Morgan Stanley ($)[(1)] | |
Executive
Officers | | | | | | | | | | | | | | | | | ||||||||
Thomas
E. Faust Jr. | | | 213,646 | | | $14,310,009 | | | 2,817,399 | | | $81,796,435.53 | | | | | | | 95,979 | | | $6,428,673.42 | ||
Brian
D. Langstraat | | | 224,630 | | | 15,045,717 | | | 1,059,918 | | | 26,486,758.49 | | | | | | | 81,086 | | | 5,431,140.28 | ||
Daniel
C. Cataldo | | | 17,528 | | | 1,174,025 | | | 83,328 | | | 2,232,573.56 | | | | | | | 8,019 | | | 537,112.62 | ||
Laurie
G. Hylton | | | 41,033 | | | 2,748,390 | | | 355,700 | | | 9,422,487.83 | | | | | | | — | | | — | ||
Frederick
S. Marius | | | 27,665 | | | 1,853,002 | | | 188,712 | | | 4,955,853.87 | | | | | | | 12,651 | | | 847,363.98 | ||
Julie
E. Rozen | | | 9,146 | | | 612,599 | | | — | | | — | | | | | | | 2,482 | | | 166,244.36 | ||
Matthew
J. Witkos | | | 75,619 | | | 5,064,961 | | | 764,367 | | | 20,072,968.16 | | | | | | | 30,384 | | | 2,035,120.32 | ||
Non-Employee
Directors | | | | | | | | | | | | | | | | | ||||||||
Anne
E. Berman | | | | | | | 4,045 | | | $101,448.60 | | | 8,504 | | | $569,597.92 | | | | | ||||
Leo
I. Higdon, Jr. | | | | | | | 41,110 | | | 1,371,887.28 | | | 8,504 | | | 569,597.92 | | | | | ||||
Paula
A. Johnson | | | | | | | — | | | — | | | 5,462 | | | 365,844.76 | | | | | ||||
Dorothy
E. Puhy | | | | | | | 18,868 | | | 618,944.74 | | | 11,807 | | | 790,832.86 | | | | | ||||
Winthrop
H. Smith, Jr. | | | | | | | 29,010 | | | 878,789.59 | | | 11,807 | | | 790,832.86 | | | | | ||||
Richard
A. Spillane, Jr. | | | | | | | 41,110 | | | 1,371,887.28 | | | 11,807 | | | 790,832.86 | | | | |
(1) | Value includes the economic value of the Special Dividend. |
(2) | The amounts in this column represent the maximum potential value of the outstanding and unexercised stock options to purchase Eaton Vance Non-Voting Common Stock held by each person who has served as a non-employee director or executive officer of Eaton Vance since the |
• | Floating Rate Non-Cumulative Preferred Stock, Series A,
$0.01 par value, which is referred to as the Series A Preferred Stock; |
• | 10% Non-Cumulative Non-Voting Perpetual Preferred Stock, Series C, $0.01 par value, which is referred to as the Series C Preferred Stock; |
• | Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series E, $0.01 par value, which is referred to as the Series E Preferred Stock; |
• | Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series F, $0.01 par value, which is referred to as the Series F Preferred Stock; |
• | Fixed-to-Floating
Rate Non-Cumulative Preferred Stock, Series H, $0.01 par value, which is referred to as the Series H Preferred Stock; |
• | Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series I, $0.01 par value, which is referred to as the Series I Preferred Stock; |
• | Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series J, $0.01 par value, which is referred to as the Series J Preferred Stock; |
• | Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series K, $0.01 par value, which is referred to as the Series K Preferred
Stock; |
• | 4.875% Non-Cumulative Preferred Stock, Series L, $0.01 par value, which is referred to as the Series L Preferred Stock; |
• | Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series M, $0.01 par value, which is referred to as the Series M Preferred Stock; and |
• | Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series N, $0.01 par value, which is referred to as the Series N Preferred Stock. |
• | Series A Preferred Stock: noncumulative cash dividends at a per
annum rate equal to the greater of (1) 4% and (2) three-month U.S. Dollar LIBOR on the related dividend determination date plus 0.70%. |
• | Series C Preferred Stock: noncumulative cash dividends at a per annum rate equal to 10%. |
• | Series E Preferred Stock: noncumulative cash dividends at a per annum rate equal to 7.125% with respect to each dividend period from and including September 30, 2013 to, but excluding, October 15, 2023 and at a rate per annum equal to the three-month U.S. dollar LIBOR on the related dividend determination date plus 4.32% with respect to each dividend
period from and including October 15, 2023. |
• | Series F Preferred Stock: noncumulative cash dividends at a per annum rate equal to 6.875% with respect to each dividend period from and including December 10, 2013 to, but excluding, January 15, 2024 and at a rate per annum equal to the three-month U.S. dollar LIBOR on the related dividend determination date plus 3.94% with respect to each dividend period from and including January 15, 2024. |
• | Series H Preferred Stock: noncumulative
cash dividends at a per annum rate equal to 5.45% with respect to each dividend period from and including April 29, 2014 to, but excluding, July 15, 2019 and at a rate per annum equal to the three-month U.S. dollar LIBOR on the related dividend determination date plus 3.61% with respect to each dividend period from and including July 15, 2019. |
• | Series I Preferred Stock: noncumulative cash dividends at a per annum rate equal to 6.375% with respect to each dividend period from and including September 18, 2014 to, but excluding, October 15, 2024 and at a rate per annum equal
to the three-month U.S. dollar LIBOR on the related dividend determination date plus 3.708% with respect to each dividend period from and including October 15, 2024. |
• | Series J Preferred Stock: noncumulative cash dividends at a per annum rate equal to 5.55% with respect to each dividend period from and including March 19, 2015 to, but excluding, July 15, 2020 and at a rate per annum equal to the three-month U.S. dollar LIBOR on the related dividend determination date plus 3.81% with respect to each dividend period from and including July 15, 2020. |
• | Series K Preferred Stock: noncumulative cash dividends at a per annum rate equal to 5.85% with respect to each dividend period from and including January 31, 2017 to, but excluding, April 15, 2027 and at a rate per annum equal to the three-month U.S. dollar LIBOR on the related dividend determination date plus 3.491% with respect to each dividend period from and including April 15, 2027. |
• | Series
L Preferred Stock: noncumulative cash dividends at a per annum rate equal to 4.875%. |
• | Series M Preferred Stock: noncumulative cash dividends at a per annum rate equal to 5.875% with respect to each dividend period from and including September 15, 2020 to, but excluding, September 15, 2026 and at a rate per annum equal to the three-month U.S. dollar LIBOR on the related dividend determination date plus 4.435% with respect to each dividend period from and including September 15, 2026. |
• | Series N Preferred Stock: noncumulative
cash dividends at a per annum rate equal to 5.30% with respect to each dividend period from and including September 15, 2020 to, but excluding, March 15, 2023 and at a rate per annum equal to the three-month U.S. dollar LIBOR on the related dividend determination date plus 3.16% with respect to each dividend period from and including March 15, 2023. |
• | declare or pay a dividend or distribution on Morgan Stanley common stock or any Morgan Stanley preferred stock that ranks junior to such series as to dividend rights
and as to rights on liquidation, dissolution or winding up, or |
• | redeem, purchase or otherwise acquire Morgan Stanley common stock or any Morgan Stanley preferred stock that ranks junior to such series as to dividend rights and as to rights on liquidation, dissolution or winding up. |
• | the
Series A Preferred Stock is redeemable at a redemption price of $25,000.00 per share plus accrued and unpaid dividends, regardless of whether dividends are actually declared, to but excluding the date of redemption; |
• | the Series C Preferred Stock is redeemable at a redemption price of $1,100.00 per share, plus accrued and unpaid dividends, regardless of whether dividends are actually declared, to but excluding the date of redemption; |
• | the Series E Preferred Stock is redeemable at a redemption price of $25,000.00 per share, plus any declared and unpaid dividends to but excluding the date fixed for redemption (i) in whole or in part on or after October 15,
2023 or (ii) in whole but not in part at any time within 90 days of certain changes to regulatory capital requirements; |
• | the Series F Preferred Stock is redeemable at a redemption price of $25,000.00 per share, plus any declared and unpaid dividends to but excluding the date fixed for redemption (i) in whole or in part on or after January 15, 2024 or (ii) in whole but not in part at any time within 90 days of certain changes to regulatory capital requirements; |
• | the Series H Preferred Stock is redeemable at a redemption price of $25,000.00 per share, plus any declared and unpaid dividends to but excluding the date
fixed for redemption (i) in whole or in part on or after July 15, 2019 or (ii) in whole but not in part at any time within 90 days of certain changes to regulatory capital requirements; |
• | the Series I Preferred Stock is redeemable at a redemption price of $25,000.00 per share, plus any declared and unpaid dividends to but excluding the date fixed for redemption (i) in whole or in part on or after October 15, 2024 or (ii) in whole but not in part at any time within 90 days of certain changes to regulatory capital requirements; |
• | the Series J Preferred Stock is redeemable
at a redemption price of $25,000.00 per share, plus any declared and unpaid dividends to but excluding the date fixed for redemption (i) in whole or in part on or after July 15, 2020 or (ii) in whole but not in part at any time within 90 days of certain changes to regulatory capital requirements; |
• | the Series K Preferred Stock is redeemable at a redemption price of $25,000.00 per share, plus any declared and unpaid dividends to but excluding the date fixed for redemption (i) in whole or in part on or after April 15, 2027 or (ii) in whole but not in part at any time within 90 days of certain changes to regulatory capital requirements; |
• | the
Series L Preferred Stock is redeemable at a redemption price of $25,000.00 per share, plus any declared and unpaid dividends to but excluding the date fixed for redemption (i) in whole or in part on or after January 15, 2025 or (ii) in whole but not in part at any time within 90 days of certain changes to regulatory capital requirements; |
• | the Series M Preferred Stock is redeemable at a redemption price of $1,000.00 per share, plus any declared and unpaid dividends to but excluding the date fixed for redemption (i) in whole or in part on or after September 15, 2026 or (ii) in whole but not in part at any time within 90 days of certain changes to regulatory capital requirements; and |
• | the
Series N Preferred Stock is redeemable at a redemption price of $100,000.00 per share, plus any declared and unpaid dividends to but excluding the date fixed for redemption (i) in whole or in part on or after October 2, 2025 or (ii) in whole but not in part at any time within 90 days of certain changes to regulatory capital requirements. |
• | the
Series A Preferred Stock will be entitled to receive a liquidating distribution in an amount equal to $25,000.00 per share, together with an amount equal to all dividends, if any, that have been declared but not paid with respect to such series prior to the date of payment of such distribution (but without any accumulation in respect of dividends that have not been declared prior to such payment date); |
• | the Series C Preferred Stock will be entitled to receive a liquidating distribution in an amount equal to $1,000.00 per share, together with an amount equal to all dividends, if any, that have been declared but not paid prior to the date of payment of such distribution (but without any accumulation in respect of dividends that have not been declared prior to such payment date); |
• | the
Series E Preferred Stock will be entitled to receive a liquidating distribution in an amount equal to $25,000.00 per share, together with an amount equal to all dividends, if any, that have been declared but not paid with respect to such series prior to the date of payment of such distribution (but without any accumulation in respect of dividends that have not been declared prior to such payment date); |
• | the Series F Preferred Stock will be entitled to receive a liquidating distribution in an amount equal to $25,000.00 per share, together with an amount equal to all dividends, if any, that have been declared but not paid with respect to such series prior to the date of payment of such distribution (but without any accumulation in respect of dividends that have not been declared prior to such payment date); |
• | the
Series H Preferred Stock will be entitled to receive a liquidating distribution in an amount equal to $25,000.00 per share, together with an amount equal to all dividends, if any, that have been declared but not paid with respect to such series prior to the date of payment of such distribution (but without any accumulation in respect of dividends that have not been declared prior to such payment date); |
• | the Series I Preferred Stock will be entitled to receive a liquidating distribution in an amount equal to $25,000.00 per share, together with an amount equal to all dividends, if any, that have been declared but not paid with respect to such series prior to the date of payment of such distribution (but without any accumulation in respect of dividends that have not been declared prior to such payment date); |
• | the
Series J Preferred Stock will be entitled to receive a liquidating distribution in an amount equal to $25,000.00 per share, together with an amount equal to all dividends, if any, that have been declared but not paid with respect to such series prior to the date of payment of such distribution (but without any accumulation in respect of dividends that have not been declared prior to such payment date); |
• | the Series K Preferred Stock will be entitled to receive a liquidating distribution in an amount equal to $25,000.00 per share, together with an amount equal to all dividends, if any, that have been declared but not paid with respect to such series prior to the date of payment of such distribution (but without any accumulation in respect of dividends that have not been declared prior to such payment date); |
• | the
Series L Preferred Stock will be entitled to receive a liquidating distribution in an amount equal to $25,000.00 per share, together with an amount equal to all dividends, if any, that have been declared but not paid with respect to such series prior to the date of payment of such distribution (but without any accumulation in respect of dividends that have not been declared prior to such payment date); |
• | the Series M Preferred Stock will be entitled to receive a liquidating distribution in an amount equal to $1,000.00 per share, together with an amount equal to all dividends, if any, that have been declared but not paid with respect to such series prior to the date of payment of such distribution (but without any accumulation in respect of dividends that have not been declared prior to such payment date); and |
• | the
Series N Preferred Stock will be entitled to receive a liquidating distribution in an amount equal to $100,000.00 per share, together with an amount equal to all dividends, if any, that have been declared but not paid with respect to such series prior to the date of payment of such distribution (but without any accumulation in respect of dividends that have not been declared prior to such payment date). |
• | amend or alter any provision of the Morgan Stanley certificate of incorporation or the certificates of designation of preferences and rights with respect to any series of the Existing Preferred Stock to authorize or create, or increase the authorized amount of, any class or series of stock ranking senior to any series of Existing Preferred Stock with respect to the payment of dividends or the distribution of assets upon liquidation, dissolution or winding up; |
• | amend,
alter or repeal any provision of the Morgan Stanley certificate of incorporation or the certificates of designation of preferences and rights with respect to any series of the Existing Preferred Stock if such amendment, alteration or repeal would cause a material and adverse effect with respect to the special rights, preferences, privileges and voting powers of any Existing Preferred Stock, whether by merger, consolidation or otherwise. For purposes of the preceding sentence any increase in the authorized amount of Morgan Stanley common stock or Morgan Stanley preferred stock or the creation and issuance of other series of Morgan Stanley common stock or Morgan Stanley preferred stock ranking on a parity basis with or junior to the Existing Preferred Stock as to dividends and the distribution of assets upon liquidation, dissolution or winding up will not be deemed to materially and
adversely affect the special rights, preferences, privileges and voting powers of any Existing Preferred Stock; or |
• | consummate any binding share exchange or reclassification involving any series of Existing Preferred Stock, or merger or consolidation of Morgan Stanley with another entity, unless in each case (x) the shares of Existing Preferred Stock remain outstanding or are converted into or exchanged for preference securities of the surviving or resulting entity or its ultimate parent, and (y) such shares remain outstanding or such preference securities, as the case may be, have such rights, preferences, privileges and voting powers, taken |
• | prior
to the stockholder becoming an interested stockholder, the board of directors approves the business combination or the transaction in which the stockholder became an interested stockholder; |
• | upon the consummation of the transaction in which the stockholder became an interested stockholder, the interested stockholder owns at least 85% of the voting stock of the corporation other than shares held by directors who are also officers and certain employee stock plans; or |
• | the business combination is approved by the board of directors and by the affirmative vote of 66 2/3% of the outstanding voting stock not owned by the interested stockholder at a meeting. |
| | Morgan Stanley Stockholder Rights | | | Eaton
Vance Stockholder Rights | |
Authorized Capital Stock | | | As of the date of this information statement/prospectus, Morgan Stanley is authorized to issue 3,530,000,000 shares, divided into two classes consisting of: (i) 3,500,000,000 shares of common stock, par value $0.01 per share, and (ii) 30,000,000 shares of preferred stock, par value $0.01 per share. The Morgan Stanley board of directors
is authorized to provide for the issuance of the Morgan Stanley preferred stock in one or more series. | | | As of the date of this information statement/prospectus, Eaton Vance is authorized to issue 192,000,000 shares, par value $.00390625 per share and having an aggregate par value of $750,000.00, divided into two classes consisting of: (i) 1,280,000 shares of voting common stock, par value $.00390625 per share, and (ii) 190,720,000 shares of non-voting common stock, par value $.00390625 per share. |
| | | | |||
| | | | Eaton
Vance Voting Common Stock and the Eaton Vance Non-Voting Common Stock are equal in all respects as to dividends, rights in liquidation and all other rights possessed by Eaton Vance Voting Common Stock, except with respect to voting. |
| | Morgan
Stanley Stockholder Rights | | | Eaton Vance Stockholder Rights | |
Voting Rights | | | The
Morgan Stanley charter provides that, except as otherwise may be provided in the Morgan Stanley charter, a certificate of designation for any outstanding series of Morgan Stanley preferred stock or by applicable law, (i) the holders of shares of Morgan Stanley Common Stock are entitled to one vote for each such share upon all questions presented to the stockholders, (ii) the holders of shares of Morgan Stanley Common Stock have the exclusive right to vote for the election of directors and for all other purposes and (iii) the holders of shares of Morgan Stanley Common Stock at all times vote as one class, together with the holders of any other class or series of Morgan Stanley stock accorded such general voting rights. The
Morgan Stanley certificate of designation for each outstanding series of Morgan Stanley preferred stock provides that holders of such preferred stock will not have any voting rights, except as required by applicable law and under certain circumstances set forth in the certificate of designation for each outstanding series of Morgan Stanley preferred stock, including that if dividends on any shares of such preferred stock have not been declared and paid for the equivalent of six or more dividend payments (whether or not consecutive), holders of such preferred stock may elect two additional directors to the Morgan Stanley board of directors, subject to certain limitations, to serve until full dividends have been paid for at least four regular dividend periods. For additional information on the rights of shares of Morgan Stanley preferred stock, see “Description of Morgan Stanley Capital Stock—Morgan Stanley Existing Preferred Stock” beginning on page 122
of this information statement/prospectus. | | | The Eaton Vance charter provides that the exclusive voting power for stockholders for all purposes is vested in the Eaton Vance Voting Common Stock. Each share of Eaton Vance Voting Common Stock has one vote. The Eaton
Vance Non-Voting Common Stock has no voting rights under any circumstances, including, without limitation, no ability to vote in the election of Eaton Vance’s board of directors. |
| | | | |||
Voting
Trust | | | Not applicable. | | | All the shares of Eaton Vance Voting Common Stock are deposited in a Voting Trust in exchange for Voting Trust Receipts. As of November 30, 2020 there were 25 holders of Voting Trust
Receipts representing all of the outstanding shares of Eaton Vance Voting Common Stock, and each holder of which is a Voting Trustee of the Voting Trust. Consistent with and subject |
| | Morgan
Stanley Stockholder Rights | | | Eaton Vance Stockholder Rights | |
| | | | to
the terms of the Voting Trust, all shares of Voting Common Stock are voted in the same manner as directed by the Voting Trustees. | ||
| | | | |||
Cumulative
Voting | | | The Morgan Stanley charter and the Morgan Stanley bylaws do not provide for cumulative voting. | | | The
Eaton Vance charter and bylaws do not provide for cumulative voting. |
| | | | |||
Quorum | | | The
Morgan Stanley bylaws provide that, except as otherwise provided by law or by the Morgan Stanley charter, the holders of a majority of the voting power of the outstanding shares of the Morgan Stanley stock entitled to vote generally in the election of directors, represented in person or by proxy, will constitute a quorum at a meeting of stockholders, except that when specified business is to be voted on by a class or series voting as a class, the holders of a majority of the voting power of the shares of such class or series will constitute a quorum for the transaction of such business. | | | The
Eaton Vance bylaws provide that, unless otherwise provided by statute or the Eaton Vance charter, the presence in person or by proxy of the holders of Eaton Vance Voting Common Stock entitled to cast a majority of all the votes entitled to be cast at the meeting constitutes a quorum for the transaction of business at any meeting of stockholders. |
| | | | |||
Stockholder
Rights Plans | | | While the DGCL does not include a statutory provision expressly validating stockholder rights plans, such plans have generally been upheld by court decisions applying the DGCL. | | | Section
2-201(c) of the MGCL expressly validates stockholder rights plans. |
| | | | |||
| | Morgan
Stanley currently has no stockholder rights plan. The Morgan Stanley board of directors retains the right to adopt a new plan at a future date. | | | Eaton Vance currently has no stockholder rights plan. The Eaton Vance board of directors retains the right to adopt a new plan at a future date. | |
| | | | |||
Rights
of Preferred Stock | | | The Morgan Stanley charter provides that the Morgan Stanley board of directors is authorized to fix the designation, powers, preferences and rights of the shares of each series of Morgan Stanley preferred stock and the qualifications, limitations and restrictions thereof. As of the date
of this information statement/prospectus, the following amounts of shares of Morgan Stanley preferred stock were outstanding: (i) 44,000 shares of Floating Rate Non-Cumulative Preferred Stock, Series A, (ii) 519,882 shares of 10% Non-Cumulative, Non-Voting Perpetual Preferred Stock, Series C, (iii) 34,500 shares of Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series E, (iv) 34,000 shares | | | The Eaton Vance charter does not authorize any shares of preferred stock. |
| | Morgan
Stanley Stockholder Rights | | | Eaton Vance Stockholder Rights | |
| | of
Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series F, (v) 52,000 shares of Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series H, (vi) 40,000 shares of Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series I, (vii) 60,000 shares of Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series J, (viii) 40,000 shares of Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series K; (ix) 20,000 shares of 4.875% Non-Cumulative Preferred Stock, Series L; (x) 400,000 shares of Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series M and (xi) 3,000 shares of Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series N. For additional information on the rights of shares of Morgan Stanley preferred stock, see “Description of Morgan Stanley Capital Stock—Morgan Stanley Existing Preferred Stock” beginning on page 122 of this information statement/prospectus. | | | ||
| | | | |||
Preemptive
Rights | | | Under Delaware law, stockholders of a corporation do not have preemptive rights to subscribe for or purchase any additional issue of stock or to any security convertible into such stock, unless such right is expressly included in the charter. | | | For
a Maryland corporation incorporated prior to October 1, 1995, such as Eaton Vance, the MGCL provides that stockholders have preemptive rights to the extent in existence before October 1, 1995, unless and until expressly changed or terminated by charter amendment. |
| | | | |||
| | The
Morgan Stanley charter does not provide holders of shares of Morgan Stanley stock with preemptive rights. | | | The Eaton Vance charter as in existence prior to October 1, 1995 expressly provided that no Eaton Vance stockholder has any preemptive right to subscribe for or purchase any stock or any other securities other than as the Eaton Vance board of directors may determine, and on such terms as the Eaton Vance board of directors may fix, in its sole discretion. | |
| | | | |||
| | | | The
Eaton Vance board of directors has not provided holders of shares of Eaton Vance Common Stock with preemptive rights. | ||
| | | | |||
Restrictions
on Transfer | | | The Morgan Stanley charter does not provide any restrictions on transfer of shares of Morgan Stanley stock. | | | The Eaton Vance charter prohibits transfers of shares of Eaton Vance Voting Common Stock, unless (1) the holder first offers to sell
the same to Eaton Vance at book value; or (2) in the event of the death of a holder of shares of Eaton Vance Voting Common Stock, or if a holder of shares of Eaton Vance Voting Common Stock who is an employee |
| | Morgan
Stanley Stockholder Rights | | | Eaton Vance Stockholder Rights | |
| | | | of
Eaton Vance or of a subsidiary of Eaton Vance ceases for any reason to be an employee thereof, such shares of Eaton Vance Voting Common Stock are to be offered to Eaton Vance for purchase by it at book value. | ||
| | | | |||
| | | | The
Voting Trust also contains restrictions on transfers of Voting Trust Receipts. The Voting Trust prohibits transfers of Voting Trust Receipts unless the Voting Trustees have consented to the transfer. In the event of the death of a holder of Voting Trust Receipts or if a holder of such Voting Trust Receipts is an employee of Eaton Vance or of a subsidiary of Eaton Vance and ceases for any reason to be such an employee, such Voting Trust Receipts are to be offered to Eaton Vance for purchase by it at book value in accordance with the Eaton Vance charter. | ||
| | | | |||
Limitations
on Ownership | | | So long as Morgan Stanley is a bank holding company, the BHC Act requires any “bank holding company,” as defined in BHC Act, to obtain the approval of the Federal Reserve Board prior to the acquisition of more than 5% of Morgan Stanley Common Stock. In addition, subject to certain exemptions, any person is required to obtain prior approval of the Federal Reserve Board before it may acquire 10% or more of Morgan Stanley Common Stock under the Change in Bank Control Act. A company holding 25% or more of Morgan Stanley Common Stock, controlling in any manner
the election of a majority of Morgan Stanley’s directors or that is otherwise determined by the Federal Reserve Board to directly or indirectly exercise a “controlling influence” over Morgan Stanley is subject to regulation as a bank holding company under BHC Act. | | | Eaton Vance is not a bank holding company and therefore the BHC Act does not impose these limitations on ownership of Eaton Vance Common Stock. |
| | | | |||
Number
of Directors | | | The Morgan Stanley bylaws provide that the number of directors will be fixed from time to time exclusively pursuant to a resolution adopted by the Morgan Stanley board of directors, but will consist of not less than three nor more than fifteen directors (exclusive of directors appointed by holders of preferred stock entitled to rights to appoint such directors). However, no decrease in the number of directors constituting the Morgan Stanley board of | | | The
Eaton Vance charter provides that the size of the Eaton Vance board of directors may be increased or decreased pursuant to the Eaton Vance bylaws, but shall never be less than the minimum number required by the MGCL. The Eaton Vance bylaws provide that Eaton Vance must have at least three directors; provided that, if there is no stock outstanding, the number of directors may be less than three but not less than one, and, if there is stock outstanding and so long |
| | Morgan
Stanley Stockholder Rights | | | Eaton Vance Stockholder Rights | |
| | directors
will shorten the term of any incumbent director. The Morgan Stanley board of directors currently has 14 members. | | | as there are less than three stockholders, the number of directors may be less than three but not less than the number of stockholders. A majority
of the entire board of directors may set the number of directors, provided that the number of directors may not be more than 25, or less than three directors. Any decrease in the number of directors may not affect the tenure of office of any director. | |
| | | | |||
| | | | The
Eaton Vance board of directors currently has 8 members. | ||
| | | | |||
Election
of Directors | | | The Morgan Stanley bylaws provide that, each director will be elected by the vote of the majority of the votes cast with respect to that director’s election at any meeting for the election of directors at which a quorum is present, provided that if, as of the tenth day preceding the date Morgan Stanley first publicly announces its notice of meeting for such meeting to Morgan Stanley stockholders, the number of nominees exceeds the number of directors to be elected (a “Contested Election”), the directors
will be elected by the vote of a plurality of the votes cast. A majority of votes cast will mean that the number of votes cast “for” a director’s election exceeds the number of votes cast “against” that director’s election (with “abstentions” and “broker nonvotes” not counted as a vote cast either “for” or “against” that director’s election). In the event an incumbent director fails to receive a majority of the votes cast in an election that is not a Contested Election, the nominating and governance committee of the Morgan Stanley board of directors, or such other committee designated by the Morgan Stanley board of directors, will make a recommendation to the Morgan Stanley board of directors as to whether to accept or reject the resignation of such incumbent director, or whether other action should be taken. The Morgan Stanley board of directors will act on the resignation, taking into account the committee’s recommendation,
and publicly disclose (by a press release and filing an appropriate disclosure with the SEC) its decision regarding the resignation and, if such resignation is rejected, the rationale behind the decision within 90 days following certification of the election results. | | | The Eaton Vance bylaws provide that the stockholders shall elect directors at each annual meeting of stockholders or special meeting held in lieu thereof. A majority of
all the votes cast at a meeting at which a quorum is present is sufficient to approve any matter which properly comes before the meeting. The Voting Trust is the sole holder of Eaton Vance Voting Common Stock entitled to elect directors. Under the terms of the Voting Trust, subject to certain enumerated exceptions for mergers and other extraordinary transactions, all actions and decisions by the Voting Trustees for all purposes, including voting the Eaton Vance Voting Common Stock deposited in the Voting Trust, is approved by a vote of at least a majority of the Voting Trustees. |
| | Morgan
Stanley Stockholder Rights | | | Eaton Vance Stockholder Rights | |
Terms of Directors | | | The
Morgan Stanley charter provides that the directors, other than those who may be elected by the holders of any series of preferred stock or any other series or class of stock as set forth in the Morgan Stanley charter, will be elected annually at each annual meeting of Morgan Stanley stockholders to hold office for a term expiring at the next annual meeting of stockholders, with each director to hold office until his or her successor shall have been duly elected and qualified. | | | Under the Eaton Vance bylaws,
directors elected at any annual or special meeting shall be elected to hold office until the next annual meeting and until their successors are elected and qualify. |
| | | | |||
Filling
Vacancies on the Board of Directors | | | The Morgan Stanley charter provides that vacancies resulting from death, resignation, retirement, disqualification, removal from office or other cause, and newly created directorships resulting from any increase in the authorized number of directors, may be filled only by the affirmative vote of a majority of the remaining directors, though less than a quorum of the Morgan Stanley board of directors. | | | Under
the Eaton Vance bylaws, the stockholders may fill a vacancy on the Eaton Vance board of directors resulting from the removal of a director. A majority of the remaining directors, whether or not sufficient to constitute a quorum, may fill a vacancy on the Eaton Vance board of directors resulting from any cause except an increase in the number of directors. A majority of the entire Eaton Vance board of directors may fill a vacancy which results from an increase in the number of directors. |
| | | | |||
| | | | A
director elected by the Eaton Vance board of directors to fill a vacancy serves until the next annual meeting of stockholders and until his successor is elected and qualifies. A director elected by the stockholders to fill a vacancy which results from the removal of a director serves for the balance of the term of the removed director. | ||
| | | | |||
Removal
of Directors | | | The Morgan Stanley charter provides that any director may be removed from office at any time, with or without cause. | | | The MGCL provides that the stockholders may remove
any director, with or without cause, by the affirmative vote of a majority of all the votes entitled to be cast for the election of directors. |
| | | | |||
Special
Meetings of Directors | | | The Morgan Stanley bylaws provide that special meetings of the Morgan Stanley board of directors may be called at the request of the chairman of the board, the chief executive officer, or a majority of the Morgan Stanley board of directors. The person or persons authorized to call special meetings of the Morgan Stanley board of directors may fix the place (if any) and time of the meetings. | | | The
Eaton Vance bylaws provide that special meetings of the Eaton Vance board of directors may be called at any time by the Eaton Vance board of directors, or its executive committee, or by the Eaton Vance chairman of the board, chief executive officer or president, or by a majority of the directors of the Eaton Vance board of directors or a majority of the members of the executive committee, |
| | Morgan
Stanley Stockholder Rights | | | Eaton Vance Stockholder Rights | |
| | | | or
by the Eaton Vance secretary pursuant to the direction of any of the foregoing. A special meeting of the Eaton Vance board of directors may be held at such time and at any place in or out of the State of Maryland as designated from time to time by the Eaton Vance board of directors, or, in the absence of such designation such meeting shall be held at such time and place as may be designated in the call for the meeting. | ||
| | | | |||
Director
Nominations by Stockholders | | | The Morgan Stanley bylaws provide that a stockholder must give advance written notice to Morgan Stanley of a director nomination. In order to make such a nomination, a stockholder must satisfy certain procedural requirements including, among others, providing timely notice of the nomination as well as the disclosure of certain information about both the nominating stockholder and the nominee. | | | The
Eaton Vance charter and bylaws do not require the giving of advance written notice to Eaton Vance of a director nomination by a stockholder holding shares of Eaton Vance Voting Common Stock. |
| | | | |||
| | To
be timely, a Morgan Stanley stockholder’s notice of nomination to be brought before an annual meeting of Morgan Stanley stockholders must be received by Morgan Stanley’s corporate secretary at the principal executive offices of Morgan Stanley not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the first anniversary of the preceding year’s annual meeting of Morgan Stanley stockholders; provided that, if the date of such annual meeting is advanced by more than 30 days or delayed by more than 90 days from such anniversary date, notice of nomination must be so delivered not earlier than the close of business on the 120th days prior to such annual meeting and not later than the close of business on the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made by Morgan Stanley. | | | ||
| | | | |||
| | To
be timely, a Morgan Stanley stockholder’s notice of nomination to be brought before a special meeting must be received by Morgan Stanley’s corporate secretary at the principal executive offices | | |
| | Morgan
Stanley Stockholder Rights | | | Eaton Vance Stockholder Rights | |
| | of
Morgan Stanley not earlier than the close of business on the 120th day prior to such special meeting and not later than the later of the close of business on the 90th day prior to such special meeting or the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the board of directors to be elected at such meeting. | | | ||
| | | | |||
| | To
be in proper form, the notice of nomination must set forth, among other things, as to each candidate nominated for election as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act. | | | ||
| | | | |||
| | The
Morgan Stanley bylaws also provide stockholders with the ability to include their director nominations in Morgan Stanley’s information statement. The requirements include, among others, a maximum number of nominees that can be included on the information statement, that the nominating stockholder must satisfy a minimum prior holding period of three years and minimum ownership interest of 3% of the outstanding Morgan Stanley stock entitled to vote in an election of the Morgan Stanley board of directors and a notice and other required information satisfying certain timeliness criteria. Any nominee who is included in Morgan Stanley’s proxy material for a particular annual meeting of stockholders but either (i) withdraws from or becomes ineligible or unavailable for election at such annual meeting or (ii) does not receive at least 25% of the votes cast in favor of such stockholder nominee’s
election, will be ineligible to be a stockholder nominee pursuant to this paragraph for the next two annual meetings. | | | The Eaton Vance bylaws do not provide stockholders holding shares of Eaton Vance Voting Common Stock with the ability to include director nominations in Eaton Vance’s proxy and information statement. | |
| | | | |||
Stockholder
Proposals (Other than Director Nominations) | | | The Morgan Stanley bylaws provide that a stockholder must give advance written notice to Morgan Stanley of any proposal | | | The
Eaton Vance bylaws do not require advance written notice to Eaton Vance of any proposal from a stockholder holding |
| | Morgan
Stanley Stockholder Rights | | | Eaton Vance Stockholder Rights | |
| | of
other business to be transacted at an annual meeting of the stockholder. In order to make such a proposal, a stockholder must satisfy certain procedural requirements including, among others, providing timely notice of the proposal as well as the disclosure of certain information about the nominating stockholder and the proposal. | | | shares of Eaton Vance Voting Common Stock of other business to be transacted at an annual meeting of stockholders. | |
| | | | |||
Stockholder
Action by Written Consent | | | The Morgan Stanley charter provides that, subject to the rights of the holders of any series of preferred stock or any other series or class of stock as set forth in the Morgan Stanley charter, any action required or permitted to be taken by the stockholders of Morgan Stanley must be effected at a duly called annual or special meeting of Morgan Stanley stockholders and may not be effected by any consent in writing in lieu of a meeting of such stockholders. | | | Under
the MGCL and Eaton Vance’s bylaws, Eaton Vance’s stockholders may only act by written consent if such written consent is unanimous. |
| | | | |||
Charter
Amendments | | | Under the DGCL, an amendment to a corporation’s charter generally requires the approval of the corporation’s board of directors and the holders of a majority of the outstanding stock entitled to vote thereon unless the charter requires a higher vote. In addition, if the proposed amendment would increase or decrease the aggregate number of authorized shares of a class of stock, increase or decrease the par value of the shares of such class or change the powers, preferences or special rights of the shares so as to affect them adversely, the holders of a majority
of the outstanding shares of such class shall be entitled to vote as a class upon the proposed amendment. | | | Under the MGCL, an amendment to a corporation’s charter generally requires the approval of the corporation’s board of directors and the holders of two-thirds of the outstanding stock entitled to vote thereon, unless the charter requires a higher vote, or the charter provides for a lower vote, which may not be less than the affirmative vote of stockholders entitled to cast at least majority of the votes entitled to be cast on the matter. |
| | | | |||
| | The
Morgan Stanley charter provides that, except as may be expressly provided in the Morgan Stanley charter, Morgan Stanley reserves the right at any time and from time to time to amend, alter, change or repeal any provision contained in the Morgan Stanley charter, and any other provisions authorized by the DGCL at the time in force may be added or inserted, in the manner now or hereafter prescribed herein or by applicable law; provided, however, that any amendment or repeal of certain articles in the Morgan Stanley | | | The Eaton Vance charter provides that Eaton Vance reserves the right from time to time to make any
amendments of its charter, including without limitation any amendments changing or altering the terms or contract rights, as expressly set forth in the Eaton Vance charter, of any of its outstanding stock by classification, reclassification or otherwise, but no such amendment which changes or alters such terms or contract rights of any of its outstanding stock shall be valid unless such amendment shall have been |
| | Morgan
Stanley Stockholder Rights | | | Eaton Vance Stockholder Rights | |
| | charter
related to director’s liability for breach of fiduciary duty and indemnification to directors, officers and others will not adversely affect any right or protection existing thereunder in respect of any act or omission occurring prior to such amendment or repeal. | | | authorized by the holders of not less than a majority of the total number of shares of Eaton Vance Voting Common Stock outstanding and entitled to vote thereon, by a vote at a meeting or in writing with or without a meeting. | |
| | | | |||
| | | | The
Voting Trust is the sole holder of shares of Eaton Vance Voting Common Stock deposited in the Voting Trust, and is the sole holder of shares entitled to vote on any matter submitted to the stockholders of Eaton Vance. Under the terms of the Voting Trust, all actions and decisions by the Voting Trustees for all purposes, including voting the Eaton Vance Voting Common Stock deposited in the Voting Trust, must be by a vote of at least a majority of the Voting Trustees; provided, that if there are fewer than three Voting Trustees, such vote must be unanimous for the Voting Trustees to act. In addition, any vote of the Voting Trustees to approve, among other actions, (1) the sale, mortgage or pledge of all or substantially all of the assets of Eaton Vance, (2) a change in the capital structure or the powers of Eaton Vance, or (3) a merger, consolidation, reorganization, or dissolution of Eaton Vance, requires the written consent of the holders of outstanding Voting Trust
Receipts representing at least a majority of the shares of common stock subject to the Voting Trust. | ||
| | | | |||
Bylaw
Amendments | | | Under the DGCL, bylaws may be adopted, amended or repealed by the stockholders entitled to vote, and by the board of directors if the corporation’s certificate of incorporation confers the power to adopt, amend or repeal the corporation’s bylaws upon the directors. | | | |
| | | | |||
| | The
Morgan Stanley charter and bylaws provide that the Morgan Stanley bylaws may be altered, amended or repealed, in whole or in part, or new Morgan Stanley bylaws may be adopted by the stockholders or by the Morgan Stanley board of directors at any meeting thereof; provided, however, that notice of such | | | The Eaton Vance bylaws
provide that any and all provisions of the Eaton Vance bylaws may be altered or repealed and new bylaws may be made and adopted at any annual meeting of the stockholders, or at any special meeting of the stockholders called for that purpose. In addition, the Eaton Vance board of directors has the |
| | Morgan
Stanley Stockholder Rights | | | Eaton Vance Stockholder Rights | |
| | alteration,
amendment, repeal or adoption of new Morgan Stanley bylaws is contained in the notice of such meeting of stockholders or in the notice of such meeting of the Morgan Stanley board of directors and, in the latter case, such notice is given not less than twenty-four hours prior to the meeting. | | | ||
| | | | |||
Special
Meetings of Stockholders | | | The Morgan Stanley bylaws provide that, subject to the rights of the holders of any series of Morgan Stanley preferred stock or any other series or class of stock as set forth in the Morgan Stanley charter, special meetings of the stockholders may be called at any time only by the corporate secretary of Morgan Stanley (i) at the direction of the Morgan Stanley board of directors pursuant to a resolution adopted by the Morgan Stanley board of directors or (ii) at
the written request or requests of holders of record owning at least 25% of the number of outstanding shares of Morgan Stanley capital stock entitled to vote on the matter or matters to be brought as of the most recent date for which such number is disclosed by Morgan Stanley in an annual or a quarterly report filed with the SEC under the Exchange Act before the proposed special meeting. Only such business will be conducted at a special meeting of stockholders as will have been brought before the meeting pursuant to Morgan Stanley’s notice of meeting. Nothing discussed above will prohibit the Morgan Stanley board of directors from submitting matters to the stockholders at any special meeting requested by stockholders. | | | The
Eaton Vance bylaws provide that special meetings of the Eaton Vance stockholders may be called at any time in the interval between annual meetings by the Eaton Vance board of directors or by its executive committee, or by the Eaton Vance chairman of the board or president, or by a majority of the Eaton Vance directors or a majority of the members of the Eaton Vance executive committee, or by the Eaton Vance secretary pursuant to the direction of any of the foregoing. In addition, special meetings of the stockholders may be called by the Eaton Vance secretary upon the written request of the holders of Eaton Vance Voting Common Stock entitled to cast at least 25% of all the votes entitled to be cast at such meeting. Such request shall state the purpose of such meeting and the matters proposed to be acted on at the special meeting. The Eaton Vance secretary shall inform such Eaton Vance
stockholders of the reasonably estimated cost of preparing and mailing a notice of the meeting, and upon payment to Eaton Vance of the costs of mailing, the Eaton Vance secretary shall give notice of the special meeting to each stockholder entitled to vote at such meeting and each other stockholder who is entitled by statute to notice of the meeting. No special meeting need be called upon the request of the holders of Eaton Vance Voting Common Stock entitled to cast less than a majority of all votes entitled to be cast at such meeting, to consider any matter which is substantially the same as a matter voted upon at any special meeting of the stockholders held during the preceding twelve months. |
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Notice
of Meetings of Stockholders | | | The Morgan Stanley bylaws provide that a notice of meeting, stating the place (if any), day and hour of the meeting, the means of remote communications, if any, | | | The
Eaton Vance bylaws provide that the Eaton Vance secretary shall give written notice or notice by electronic transmission of each meeting of stockholders not less |
| | Morgan
Stanley Stockholder Rights | | | Eaton Vance Stockholder Rights | |
| | by
which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and, in the case of special meetings, the purpose or purposes for which such special meeting is called, will be prepared and delivered by Morgan Stanley not less than ten days nor more than sixty days before the date of the meeting, either personally, or by mail, or, to the extent and in the manner permitted by applicable law, electronically, to each stockholder of record entitled to vote at such meeting. Such further notice shall be given as required by law. Any previously scheduled meeting of the Morgan Stanley stockholders (annual or special) may be postponed, rescheduled or canceled by the Morgan Stanley board of directors. | | | than
ten nor more than ninety days before the date of each stockholders’ meeting, to each stockholder entitled to vote at such meeting and each other stockholder who is entitled by statute to notice of the meeting. The notice must state the time and place of the meeting and, if the meeting is a special meeting or notice of the purpose is required by statute, the purpose of the meeting. Notice is given to a stockholder when it is personally delivered to the stockholder, left at the stockholder’s residence or usual place of business, transmitted by electronic transmission to the address at which the stockholder receives such transmissions, or mailed to the stockholder at the stockholder’s address as it appears on the records of Eaton Vance. If mailed, such notice shall be deemed to be given when deposited in the United States mail addressed to the stockholder at the stockholder’s address as it appears on the records of Eaton Vance, with postage prepaid. | |
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Proxies | | | The
Morgan Stanley bylaws provide that each stockholder may vote by proxy at all meetings of stockholders as may be permitted by law; provided that no proxy will be voted after three years from its date, unless the proxy provides for a longer period. Any proxy to be used at a meeting of stockholders must be filed with Morgan Stanley’s corporate secretary or his representative at or before the time of the meeting. | | | The Eaton Vance bylaws
provide that a stockholder may vote the shares of Eaton Vance Voting Common Stock owned of record by such stockholder either in person or by written proxy signed by the stockholder or by the stockholder’s duly authorized attorney in fact. Unless a proxy provides otherwise, it is not valid more than eleven months after its date. |
| | | | |||
Limitation
of Personal Liability of Directors | | | The Morgan Stanley charter provides that 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 for liability (1) for any breach of the director’s duty of loyalty to Morgan Stanley or its stockholders, (2) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (3) under Section 174 of the DGCL or (4) for any transaction from which the director derived an improper personal benefit. If the DGCL will be amended,
to authorize corporate action further eliminating or limiting the liability of directors, then a | | | The Eaton Vance charter provides for the elimination of the liability of its directors and officers to Eaton Vance or its stockholders for money damages to the maximum extent permitted by laws of Maryland, as the same exists or may hereafter be amended. The MGCL permits a Maryland corporation to limit the liability of its directors and officers to the corporation and its stockholders for money damages except to the extent that (1) it is proved that the person actually received an improper benefit or profit in money,
property or services for the amount of the benefit or profit or (2) a judgment or other final adjudication adverse to the person is entered in a proceeding based on a finding |
| | Morgan
Stanley Stockholder Rights | | | Eaton Vance Stockholder Rights | |
| | director
of Morgan Stanley, in addition to the circumstances in which he is not liable immediately prior to such amendment, will be free of liability to the fullest extent permitted by the DGCL, as so amended. | | | that the person’s action, or failure to act, was the result of active and deliberate dishonesty and was material to the cause of action adjudicated at the proceeding. | |
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Indemnification
of Directors and Officers | | | The Morgan Stanley charter and bylaws provide that each person who is or was a director or officer of Morgan Stanley will be indemnified by Morgan Stanley to the fullest extent permitted from time to time by the DGCL as the same exists or may hereafter be amended (but, if permitted by applicable law, in the case of any such amendment, only to the extent that such amendment permits Morgan Stanley to provide broader indemnification rights than said law permitted
Morgan Stanley to provide prior to such amendment) or any other applicable laws as presently or hereafter in effect. Morgan Stanley may, by action of the Morgan Stanley board of directors, provide indemnification to employees and agents (other than a director or officer) of Morgan Stanley, to directors, officers, employees or agents of a subsidiary, and to each person serving as a director, officer, partner, member, employee or agent of another corporation, partnership, limited liability company, joint venture, trust or other enterprise, at the request of Morgan Stanley, with the same scope and effect as the foregoing indemnification of directors and officers of Morgan Stanley. | | | The
Eaton Vance charter provides that Eaton Vance will, to the full extent permitted by the laws of Maryland as the same exists or may hereafter be amended, indemnify any person serving or who has served as a director or officer of Eaton Vance, or at its request as a director, officer, trustee, partner, employee, agent or other representative of another corporation, joint stock company, syndicate, association, firm, trust, partnership or other entity. |
| | | | |||
| | The
Morgan Stanley charter and bylaws provide that Morgan Stanley will be required to indemnify any person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Morgan Stanley board of directors or is a proceeding to enforce such person’s claim to indemnification pursuant to the rights granted by the Morgan Stanley charter or otherwise by Morgan Stanley. Morgan Stanley’s obligation to indemnify and to advance expenses to any person who was or is serving at its request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise will be reduced by | | | The
Eaton Vance charter provides that Eaton Vance will indemnify the persons entitled to indemnification against all liabilities and expenses, including without limitation attorneys’ fees and judgments, penalties, fines and amounts paid in settlement, reasonably incurred by such person in connection with any threatened, pending or completed action, suit or other proceeding, whether civil, criminal, administrative, investigative or legislative, in which such director or officer may be involved or with which such director or officer may be threatened by reason of serving or having served in such position, upon a determination made in accordance with applicable statutory standards by the Eaton Vance board of directors or by |
| | Morgan
Stanley Stockholder Rights | | | Eaton Vance Stockholder Rights | |
| | any
amount such person will collect as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust or other enterprise. | | | independent legal counsel (who may be regular counsel to Eaton Vance) or by the holders of not less than a majority of the total number of shares of Eaton Vance Voting Common Stock then outstanding. | |
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| | | | The
right of indemnification provided by the Eaton Vance charter is not exclusive of or otherwise affects any other rights to which a person may be entitled, shall inure to the benefit of such person’s heirs, executors, administrators and personal representatives, and shall continue as to a person who has ceased to serve in any such position. | ||
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| | The
Morgan Stanley bylaws provide that Morgan Stanley will pay the expenses incurred by such person in defending any such proceeding in advance of its final disposition upon receipt (unless Morgan Stanley upon authorization of the Morgan Stanley board of directors waives such requirement to the extent permitted by applicable law) of an undertaking by or on behalf of such person to repay such amount if it will ultimately be determined that such person is not entitled to be indemnified by Morgan Stanley as authorized in the Morgan Stanley bylaws or otherwise. | | | The
MGCL permits a Maryland corporation to advance reasonable expenses to a director or officer upon the corporation’s receipt of (1) a written affirmation by the director or officer of such person’s good faith belief that he or she has met the standard of conduct necessary for indemnification by the corporation and (2) a written undertaking by such person or on his or her behalf to repay the amount paid or reimbursed by the corporation if it shall ultimately be determined that the standard of conduct was not met. | |
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Forum
Selection | | | The Morgan Stanley charter and bylaws do not designate an exclusive forum for any actions brought against Morgan Stanley. | | | The Eaton Vance bylaws
provide that, unless Eaton Vance consents in writing to the selection of an alternative forum, and to the fullest extent permitted by law, the Circuit Court for Baltimore City, Maryland and the federal courts sitting in Baltimore City, Maryland shall be the sole and exclusive forum for any Internal Corporate Claim (as that term is defined in Section 1-101(p) of the Corporations and Associations Article of the Annotated Code of Maryland), including any Internal Corporate Claim arising out of or relating to the Merger Agreement and the actions or transactions contemplated thereby. If any action or proceeding is pending in the Circuit Court for Baltimore City, Maryland, any stockholder that is party to such action or proceeding shall cooperate in seeking to have the action or proceeding assigned to the Business & Technology |
| | Morgan
Stanley Stockholder Rights | | | Eaton Vance Stockholder Rights | |
| | | | Case
Management Program. None of the foregoing actions, claims or proceedings may be brought in any court sitting outside the State of Maryland unless Eaton Vance consents in writing to such court. | ||
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Dividends | | | Section
170 of the DGCL provides that the directors of a corporation may declare and pay dividends upon the shares of its capital stock either out of its surplus or, if there is no such surplus, out of its net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. If the capital of the corporation will have been diminished by depreciation in the value of its property, or by losses, or otherwise, to an amount less than the aggregate amount of the capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets, the directors of such corporation will not declare and pay out of such net profits any dividends upon any shares of any classes of its capital stock until the deficiency in the amount of capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets will have been repaired. | | | Under
Section 2-309 of the MGCL, a Maryland corporation may make distributions to its stockholders, including cash dividends, if authorized by the board of directors, subject to any restriction in its charter and the limitations in Section 2-311 of the MGCL. Section 2-311 of the MGCL prohibits a Maryland corporation from making any type of distribution if, after giving effect to the distribution: (1) the Maryland corporation would not be able to pay its debts as they become due in the usual course of business; or (2) the Maryland corporation’s total assets would be less than the sum of its total liabilities plus, unless its charter permits otherwise (the current Eaton Vance charter does not provide otherwise), the amount that would be needed, if the Maryland corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of stockholders whose preferential rights on dissolution are superior to those receiving the distribution.
The MGCL also permits a corporation that fails to satisfy the requirements in clause (2) of the foregoing sentence to make a distribution from (i) its net earnings for the fiscal year in which the distribution is made, (ii) its net earnings for the preceding fiscal year or (iii) the sum of its net earnings for the preceding eight fiscal quarters. |
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| | The
Morgan Stanley bylaws provide that the Morgan Stanley board of directors may from time to time declare, and Morgan Stanley may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law and the Morgan Stanley charter. | | | The Eaton Vance charter and bylaws contain no restrictions on the payment of dividends or the making of distributions to Eaton Vance stockholders. | |
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| | In
addition, the Federal Reserve Board is authorized to determine, under certain circumstances relating to the financial condition of a bank holding company, such as Morgan Stanley, that the payment | | | Eaton Vance is not a bank holding company and therefore is not subject to such potential restrictions on the payment of dividends or the making of distributions to Eaton Vance stockholders. |
| | Morgan
Stanley Stockholder Rights | | | Eaton Vance Stockholder Rights | |
| | of
dividends would be an unsafe or unsound practice and to prohibit payment thereof. | | | ||
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Appraisal
Rights or Dissenters’ Rights | | | Under the DGCL, stockholders of a Delaware corporation who have neither voted in favor of nor have consented in writing to certain mergers or consolidations to which the corporation is a party and who have otherwise met the requirements set forth in Section 262 of the DGCL are entitled to demand appraisal of the fair value of their shares pursuant to, and in compliance with procedures set forth in, Section 262 of the DGCL. However, Delaware law does not provide for appraisal rights if the shares of the corporation are listed on a national securities
exchange or held of record by more than 2,000 holders or the corporation will be the surviving corporation of the merger and approval of the merger does not require the vote of the stockholders of the surviving corporation under Section 251(f) of the DGCL. Notwithstanding the foregoing, stockholders of Delaware corporations are entitled to appraisal rights in the case of a merger or consolidation if the agreement of merger or consolidation requires stockholders to accept in exchange for its shares anything other than (w) shares or depository receipts of another corporation which at the date the merger or consolidation is completed will be either listed on a national securities exchange or held of record by more than 2,000 holders, (x) shares of stock or depositary receipts of the surviving corporation in the merger or consolidation, (y) cash in lieu of fractional shares or (z) any combination of the foregoing. | | | Under
the MGCL, stockholders of a Maryland corporation who have not voted in favor of the transaction and have complied with the other requirements of Section 3-202 of the MGCL have the right to demand and to receive payment of the fair value of their stock in the event of, among other transactions, a merger or consolidation. The right to fair value does not apply, among other exceptions if (1) the stock is listed on a national securities exchange (subject to a limited exception under Section 3-202(d) applicable where directors and executive officers are the beneficial owners, in the aggregate, of 5% or more of the outstanding voting stock); (2) the stock is that of the successor in a merger (unless the merger alters the contract rights of the stock or converts the stock in whole or in part into something other than stock, cash, scrip or other interests); (3) the stock is not entitled,
other than solely because of Section 3-106 or 3-106.1 of the MGCL, to be voted on the transaction or the stockholder did not own the stock on the record date for determining stockholders entitled to vote on the transaction. |
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| | Neither
the Morgan Stanley charter nor the Morgan Stanley by-laws address appraisal rights or dissenters’ rights. | | | Since the Voting Trust, as the sole holder of Eaton Vance Voting Common Stock, has voted in favor of the Mergers, it is not entitled to exercise appraisal rights in respect of the Mergers. The Eaton Vance Non-Voting Common Stock is listed on a national securities exchange and its holders are not entitled to vote on the Mergers and, therefore, are not entitled to exercise appraisal
rights in respect of the Mergers. | |
| | | |
| | Morgan
Stanley Stockholder Rights | | | Eaton Vance Stockholder Rights | |
Anti-Takeover Provisions | | | Section
203 of the DGCL prevents a corporation from entering into a Business Combination (as defined below) with an Interested Stockholder (as defined below) for a period of three years following the time an Interested Stockholder becomes such, unless (A) prior to such time the board of directors of the corporation has approved such Business Combination or the transaction in which an Interested Stockholder became such; (B) the transaction in which an Interested Stockholder became such resulted in such stockholder owning more than 85% of the corporation’s voting stock (subject to certain exclusions); or (C) at or subsequent to the time of the transaction in which an Interested Stockholder becomes such, the Business Combination is approved by the board of directors of the corporation and authorized by two-thirds of the outstanding voting stock at an annual or special meeting (and not by written consent), excluding the stock owned by the Interested Stockholder. Section
203 of the DGCL defines “Business Combination” as, inter alia, (a) merger or consolidation with an Interested Stockholder, (b) sale, exchange or other disposition to or with an Interested Stockholder of 10% or more of the aggregate market value of either the assets on a consolidated basis or the outstanding stock of the corporation and (c) any receipt by an Interested Stockholder of financial benefits (except proportionately as a stockholder) by or through the corporation other than those expressly permitted by the DGCL. Holding company mergers authorized by Section 251(g) of the DGCL are excluded from the definition of “Business Combination.” Section 203 of the DGCL defines “Interested Stockholder” as any person or an affiliate of any such person (other than the corporation
or any of its majority-owned subsidiaries) that beneficially (A) owns 15% or more of the outstanding voting stock of the corporation or (B) owned 15% or more of the outstanding voting stock of the corporation at any time within the previous three years, subject to certain exceptions. | | | Under the provisions of the Maryland Business Combination Act, certain “business combinations” (including a merger, consolidation, statutory share exchange or, in certain circumstances, an asset transfer or issuance or reclassification
of equity securities) between a Maryland corporation and an interested stockholder (defined generally as any person who beneficially owns, directly or indirectly, 10% or more of the voting power of the corporation’s outstanding voting stock or an affiliate or associate of the corporation who, at any time during the two-year period immediately prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then-outstanding stock of the corporation) or an affiliate of such an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. Thereafter, any such business combination must generally be recommended by the board of directors of the corporation and approved by the affirmative vote of at least (1) 80% of the votes entitled to be cast by holders of outstanding voting stock of the corporation and (2) two-thirds of the votes entitled to be cast
by holders of voting stock of the corporation, other than shares held by the interested stockholder with whom (or with whose affiliate) the business combination is to be effected or held by an affiliate or associate of the interested stockholder, unless, among other conditions, the corporation’s common stockholders receive a minimum price (as defined in the Maryland Business Combination Act) for their shares and the consideration is received in cash or in the same form as previously paid by the interested stockholder for its shares. A person is not an interested stockholder under the statute if the board of directors approved in advance the transaction by which the person otherwise would have become an interested stockholder. A corporation’s board of directors may provide that its approval is subject to compliance with any terms and conditions determined by the board of directors. |
| | Morgan
Stanley Stockholder Rights | | | Eaton Vance Stockholder Rights | |
| | Morgan
Stanley has not opted out of Section 203 of the DGCL. | | | Eaton Vance has not generally opted out of the Maryland Business Combination Act. | |
| | | | |||
| | | | Eaton
Vance’s board of directors has adopted a resolution exempting from the Maryland Business Combination Act any “business combination” contemplated by the Merger Agreement, including the Mergers and the other transactions contemplated by the Merger Agreement. Consequently, these provisions will not apply to Mergers and the other transactions contemplated by the Merger Agreement. | ||
| | | | |||
| | | | The
Eaton Vance bylaws contain a provision exempting from the Maryland Control Share Acquisition Act each and every acquisition of shares of Eaton Vance Voting Common Stock, and each and every acquisition of Voting Trust Receipts issued for or in connection with such shares, by any person or persons, with the result that the Maryland Control Share Acquisition Act does not apply to the shares of Eaton Vance Voting Common Stock and the voting rights of such shares. | ||
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Stockholder
Vote on Fundamental or Extraordinary Corporate Transactions | | | Under the DGCL, a sale, lease or exchange of all or substantially all of Morgan Stanley’s assets, an amendment to Morgan Stanley’s certificate of incorporation, a merger or consolidation of Morgan Stanley with another corporation or a dissolution of a corporation generally requires the affirmative vote of the Morgan Stanley board and, with limited exceptions, the affirmative vote of a majority of the aggregate voting power of
the outstanding stock entitled to vote on the transaction. The Morgan Stanley charter and bylaws do not contain any requirement for stockholder vote on fundamental or extraordinary corporate transactions. | | | Under
the MGCL, a Maryland corporation generally may not merge, convert, sell all or substantially all of its assets or engage in a statutory share exchange, amend its charter, or dissolve unless declared advisable by the board of directors and approved by the affirmative vote of stockholders entitled to cast at least two-thirds of the votes entitled to be cast on the matter. However, the MGCL permits a Maryland corporation to provide in its charter for approval of these matters by a lesser percentage, but not less than a majority of all of the votes entitled to be cast on the matter. The Eaton Vance charter provides for the approval of these matters by a majority of all the votes entitled to be cast on these matters. |
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| | | | See
“Charter Amendments” above for additional information regarding the voting requirements applicable to Eaton Vance. | ||
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Duties
of Directors | | | Under the DGCL, the standards of conduct for directors have developed through Delaware court case law. Generally, | | | Under the MGCL, Section 2-405.1(c) sets forth a statutory standard of conduct requiring each director, including each |
| | Morgan
Stanley Stockholder Rights | | | Eaton Vance Stockholder Rights | |
| | directors
of Delaware corporations are subject to a duty of loyalty and a duty of care. The duty of loyalty requires directors to refrain from self-dealing and to act in good faith and in a manner that directors reasonably believe to be in the best interests of the corporation and its stockholders, and the duty of care requires directors in managing the corporation’s affairs to use that level of care which ordinarily careful and prudent persons would use in similar circumstances. When directors act consistently with their duties of loyalty and care, their decisions generally are presumed to be valid under the business judgment rule. | | | committee
member, to act: (i) in good faith; (ii) in a manner that he or she reasonably believes to be in the best interests of the corporation; and (iii) with the care of an ordinarily prudent person in a like position under similar circumstances. Under Section 2-405.1(g) of the MGCL, an act of a director of a corporation is presumed to be in accordance with the standard of conduct set forth in MGCL § 2-405.1(c). |
• | Eaton Vance’s Annual Report on Form 10-K for the fiscal year ended October 31, 2019, filed on
December 20, 2019. |
• | Morgan Stanley’s Annual Report on Form 10-K for the year ended December 31, 2019, filed on February 27, 2020. |
• | Eaton Vance’s Current Reports on Form 8-K filed on November 15, 2019, November 26,
2019, January 15, 2020, February 26, 2020, March 6, 2020, May 20, 2020, August 26, 2020, October 8, 2020 and November 3,
2020 (other than the portions of those documents not deemed to be filed). |
• | Morgan Stanley’s Current Reports on Form 8-K filed on February 20, 2020, February 21, 2020, April 16, 2020, May 22, 2020, June 30,
2020, July 16, 2020, October 2, 2020, October 8, 2020 and October 15, 2020 (other than the portions of those documents not deemed to be filed). |
• | Morgan Stanley’s Definitive Proxy Statement on Schedule 14A for Morgan Stanley’s 2020 annual meeting, filed on April 3,
2020. |
• | Eaton Vance’s Quarterly Reports on Form 10-Q for the quarters ended January 31, 2020, filed on March 6, 2020, April 30, 2020, filed on June 5, 2020, and July 31, 2020, filed on September 4,
2020. |
• | Morgan Stanley’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020, filed on May 5, 2020, June 30, 2020, filed on August 4, 2020, and September 30, 2020, filed on November 3,
2020. |
• | Any description of shares of Morgan Stanley stock contained in a registration statement filed pursuant to the Exchange Act and any amendment or report filed for the purpose of updating such description. |
• | Any description of shares of Eaton Vance stock contained in a registration statement filed pursuant to the Exchange Act and any amendment or report filed for the purpose of updating such description. |
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ARTICLE
1 DEFINITIONS | ||||||
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2 CLOSING; MERGERS | ||||||
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3 ORGANIZATIONAL DOCUMENTS; DIRECTORS AND OFFICERS | ||||||
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4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY | ||||||
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5 REPRESENTATIONS AND WARRANTIES OF PARENT | ||||||
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6 COVENANTS OF THE COMPANY | ||||||
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7 COVENANTS OF PARENT | ||||||
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8 COVENANTS OF PARENT AND THE COMPANY | ||||||
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9 CONDITIONS TO THE MERGERS | ||||||
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10 TERMINATION | ||||||
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11 MISCELLANEOUS | ||||||
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Term | | | Section |
Affirmative
Consent Client | | | 6.05(a) |
Agreement | | | Preamble |
Alternate
Company Acquisition Agreement | | | 6.03(i) |
Anti-Money Laundering Laws | | | 4.14(a) |
Assumed
RSU Awards | | | 2.07(c) |
Automatic Shelf Registration Statement | | | 7.06 |
Available
Cash Election Amount | | | 2.04(a)(ii) |
Bankruptcy and Equity Exceptions | | | 4.02(a) |
Base
Date Certificate | | | 8.12 |
BD Compliance Policies | | | 4.18(e) |
Cash
Electing Company Share | | | 2.04(a)(ii) |
Cash Election | | | 2.04(a)(ii) |
Cash
Election Amount | | | 2.04(a)(ii) |
Cash Fraction | | | 2.04(a)(ii) |
Certificate | | | 2.06(a) |
Client
Economic Term Changes | | | 6.01(q) |
Closing | | | 2.01 |
Closing
Date | | | 2.01 |
Collection Expenses | | | 10.03(e) |
Company | | | Preamble |
Company
Acquisition Proposal | | | 10.03(a) |
Company Adverse Recommendation Change | | | 6.03(a) |
Company
Approval Time | | | 6.03(b) |
Company Board Recommendation | | | 4.02(b) |
Company
Confidentiality Agreement | | | 6.02(a) |
Company Credit Agreement Payoff Amount | | | 8.11(a) |
Company
Governmental Authorizations | | | 4.03 |
Company Indemnified Parties | | | 7.03(a) |
Company
Intervening Event | | | 6.03(g) |
Company Organizational Documents | | | 4.01 |
Term | | | Section |
Company
Permits | | | 4.13 |
Company Registered IP | | | 4.24(a) |
Company
Regulatory Agreement | | | 4.14(h) |
Company SEC Documents | | | 4.07(b) |
Company
Securities | | | 4.05(a) |
Company Share | | | 2.04(a) |
Company
Stock Option | | | 2.07(a) |
Company Stockholder Approval | | | 4.02(a) |
Company
Stockholder Approval Deadline | | | 6.04 |
Company Subsidiary Securities | | | 4.06(b) |
Company
Superior Proposal | | | 6.03(f) |
Company Superior Proposal Termination | | | 6.03(b) |
Company
Termination Fee | | | 10.03(a) |
Continuation Period | | | 7.04(a) |
Continuing
Personnel | | | 7.04(a) |
Disagreement Notice | | | 8.12 |
Disputed
Items | | | 8.12 |
DTCC Notification | | | 8.01(g) |
Effective
Time | | | 2.02(a) |
Election Deadline | | | 2.05(c) |
e-mail | | | 11.01 |
End
Date | | | 10.01(b)(i) |
Exchange Agent | | | 2.06(a) |
Exchange
Fund | | | 2.06(a) |
Exchange Ratio | | | 2.04(a)(iii) |
Excluded
Shares | | | 2.04(a) |
Exempt CTA/CPO Entities | | | 4.19 |
First
Articles of Merger | | | 2.02(a) |
First Merger | | | Recitals |
Form
of Election | | | 2.05(b) |
Hook Stock Shares | | | 2.04(b)(ii) |
| | 8.11(b) | |
Independent
Expert | | | 8.12 |
Information Statement/Prospectus | | | 8.02 |
internal
controls | | | 4.07(g) |
Lease | | | 4.25 |
Mailing
Date | | | 2.05(b) |
Mergers | | | Recitals |
Merger
Sub 1 | | | Preamble |
Merger Sub 2 | | | Preamble |
Merger
Subs | | | Preamble |
Mixed Consideration | | | 2.04(a)(i) |
Mixed
Consideration Electing Share | | | 2.04(a)(i) |
Mixed Election | | | 2.04(a)(i) |
Mixed
Election Stock Exchange Ratio | | | 2.04(a)(i) |
Negative Consent Notice | | | 6.05(a) |
Non-Electing
Company Share | | | 2.05(b) |
Other Regulatory Notifications | | | 8.01(h) |
Parent | | | Preamble |
Parent
Confidentiality Agreement | | | 6.02(a) |
Parent Director Preferred RSU Awards | | | 5.05(a) |
Term | | | Section |
Parent
Equity Awards | | | 5.05(a) |
Parent Governmental Authorizations | | | 5.03 |
Parent
Organizational Documents | | | 5.01 |
Parent Permits | | | 5.13 |
Parent
Preferred Stock | | | 5.05(a) |
Parent Qualified Plan | | | 7.04(e) |
Parent
Regulatory Agreement | | | 5.14(g) |
Parent PSU Awards | | | 5.05(a) |
Parent
RSU Awards | | | 5.05(a) |
Parent SEC Documents | | | 5.07(b) |
Parent
Securities | | | 5.05(a) |
Parent Stock Options | | | 5.05(a) |
Parent
Subsidiary Securities | | | 5.06(b) |
Per Share Cash Amount | | | 2.04(a)(i) |
Per
Share Cash Election Consideration | | | 2.04(a)(ii) |
Premium Cap | | | 7.03(b) |
principal
executive officer | | | 4.07(f) |
principal financial officer | | | 4.07(f) |
Private
Fund Negative Consent Notice | | | 6.05(b) |
Prospective Company RSU Awards | | | 2.07(b) |
Public
Fund Board Approval | | | 6.05(c)(i) |
Public Fund Shareholder Approval | | | 6.05(c)(i) |
QPAM
Exemption | | | 4.14(e) |
Registrable Securities | | | 7.06 |
Registration
Statement | | | 8.02 |
Regulation S-K | | | 4.11 |
Regulation
S-X | | | 6.01(m) |
Release | | | 8.02 |
Remedial
Action | | | 8.01(c) |
Representatives | | | 6.03(a) |
Resale
Registration Statement | | | 7.06 |
Sanctions | | | 4.14(b) |
S-8
Registration Statement | | | 2.07(h) |
SDAT | | | 2.02(a) |
Second
Articles of Merger | | | 2.03(a) |
Second Merger | | | Recitals |
Second
Merger Effective Time | | | 2.03(a) |
Small Advisory Agreement | | | 6.01(r) |
Solicitation
Commencement Date | | | 6.04 |
Special Dividend | | | 6.08 |
Special
Dividend Per Share Amount | | | 6.08 |
Stock Electing Company Share | | | 2.04(a)(iii) |
Stock
Election | | | 2.04(a)(iii) |
Surviving Company | | | 2.02(b) |
Surviving
Corporation | | | 2.02(b) |
Transaction Litigation | | | 8.06 |
Uncertificated
Shares | | | 2.06(a) |
Voting Trust | | | Recitals |
| | Recitals | |
Willful Breach | | | 10.02 |
If to the Company, to: | ||||||
| | | | |||
| | Eaton
Vance Corp. | ||||
| | Two International Place | ||||
| | |||||
| | Attn: | | | Frederick
S. Marius, Vice President, Secretary and Chief Legal Officer | |
| | Email: | | | ||
| | | | |||
with
copies to (which shall not constitute notice): | ||||||
| | | | |||
| | Wilmer
Cutler Pickering Hale and Dorr LLP | ||||
| | 60 State Street | ||||
| | |||||
| | Attn: | | | Joseph
B. Conahan, Esq. | |
| | Email: | | | ||
| | | | |||
| | Wilmer
Cutler Pickering Hale and Dorr LLP | ||||
| | 2600 El Camino Real, Suite 400 | ||||
| | |||||
| | Attn: | | | Eric
P. Hanson, Esq. | |
| | Email: | | | ||
| | | | |||
and | ||||||
| | | | |||
| | DLA
Piper LLP (US) | ||||
| | The Marbury Building 6225 Smith Avenue | ||||
| | |||||
| | Attn: | | | Robert
W. Smith, Jr., Esq. | |
| | | | Penny J. Minna, Esq. | ||
| | Email: | | | ||
| | | | |||
| | | | |||
If
to Parent, Merger Sub 1 or Merger Sub 2 and, post-closing, the Surviving Company, to: | ||||||
| | | | |||
| | Morgan
Stanley | ||||
| | 1585 Broadway Avenue | ||||
| | |||||
| | Attention: | | | Eric
F. Grossman, Chief Legal Officer | |
| | Email: | | | ||
| | | | |||
with
a copy to (which shall not constitute notice): | ||||||
| | | | |||
| | Davis,
Polk & Wardwell LLP | ||||
| | 450 Lexington Ave. | ||||
| | |||||
| | Attn: | | | Marc
O. Williams, Esq. | |
| | | | Brian Wolfe, Esq. | ||
| | Email: | | | ||
| | | |
| | MORGAN
STANLEY | |||||||
| | | | | | ||||
| | By: | | | |||||
| | | | Name: | | | |||
| | | | Title: | | | Managing
Director |
| | MIRROR
MERGER SUB 1, INC. | |||||||
| | ||||||||
| | By:
| | | |||||
| | | | Name:
| | | |||
| | | | Title: | | | Managing
Director | ||
| | ||||||||
| | MIRROR
MERGER SUB 2, LLC | |||||||
| | ||||||||
| | By:
| | | |||||
| | | | Name:
| | | |||
| | | | Title: | | | Title:Managing
Director |
| | EATON
VANCE CORP. | |||||||
| | ||||||||
| | By:
| | | |||||
| | | | Name:
| | | |||
| | | | Title: | | | Chairman,
Chief Executive |
(a) | prior to the effective time of the First Merger (as defined below), subject to applicable law, the Company shall declare and pay a special cash dividend (the “Special Dividend”) in an amount per Share equal to $4.25 (the “Special Dividend Per Share Amount”) payable to holders of record of the Non-Voting Shares and the holders of voting common stock, par value $0.00390625 per share of the Company (the “Voting Shares” and, collectively with the Non-Voting Shares, the “Shares”)) and as of immediately prior to the effective time of the First Merger; |
(b) | Merger
Sub 1 will be merged with and into the Company (the “First Merger”) and then the Company will be merged with and into Merger Sub 2 (the “Second Merger” and together with the First Merger, the “Mergers” and, collectively with the other transactions contemplated by the Agreement, the “Transaction”), as a result of which the Company will become a wholly owned subsidiary of Parent; and |
(c) | each issued and outstanding Share immediately prior to the effective time of the First Merger (other than (i) Shares held by Parent, Merger Sub 1, Merger
Sub 2 or by the Company as treasury stock (other than shares held by Parent that are Fiduciary Shares (as defined in the Agreement)), (ii) Shares held by any subsidiary of the Company and (iii) Shares for which dissenters’ or appraisal rights are sought (the Shares referred to in clauses (i), (ii) and (iii), together with any other Shares held by affiliates of the Company or Parent, “Excluded Shares”)) will be converted into the right to receive, at the election of the holder and subject to certain proration procedures set forth in the Agreement (as to which we express no view or opinion): (1) $28.25 in cash (the “Per Share Cash Amount”) and 0.5833 (the “Mixed Election Stock Exchange Ratio”) shares
of common stock, par value $0.01 per share, of Parent (the “Parent Common Stock”) (the “Per Share Mixed Election Consideration”), (2) an amount of cash equal to the sum of (x) the Per Share Cash Amount plus (y) the product of the Mixed Election Stock Exchange Ratio multiplied by the Parent Common Stock Reference Price (as described below) (the “Per Share Cash Election Consideration”) or (3) a number of shares of Parent Common Stock equal to (x) the Mixed Election Stock Exchange Ratio plus (y) the quotient of the Per Share Cash Amount divided by the Parent Common Stock Reference Price (the “Per Share Stock Election Consideration”). |
| | Very
truly yours, | |
| | ||
| |
1. | reviewed a draft dated October 7, 2020 of the Merger Agreement; |
2. | reviewed certain publicly available business and financial information relating to the Company and Parent that we deemed to be relevant, including certain publicly available research analyst estimates with respect to the future financial performance of the Company and Parent; |
3. | reviewed
certain information relating to the historical, current and future operations, financial condition and prospects of the Company made available to us by the Company and approved for our use by the Company and the Board, including financial projections (and adjustments thereto) prepared by the management of the Company relating to the Company for the fiscal years ending 2020 through 2025 (the “Company Forecasts”); |
4. | spoken
with certain members of the management of the Company and certain of its representatives and advisors regarding the business, operations, financial condition and prospects of the Company and Parent, the Transaction, the Special Dividend and related matters; |
5. | compared the financial and operating performance of the Company and Parent with that of other public companies that we deemed to be relevant; |
6. | considered
publicly available financial terms of certain transactions that we deemed to be relevant; |
7. | reviewed the current and historical market prices and trading volume for certain of the Company’s and Parent’s publicly traded securities, and the current and historical market prices and trading volume of the publicly traded securities of certain other companies that we deemed to be relevant; and |
8. | conducted such other financial studies, analyses and inquiries and considered such other information and factors as we deemed appropriate. |
Item 20. | Indemnification of Directors and Officers |
Item 21. | Exhibits and Financial Statement Schedules |
Exhibit Number | | | Description |
| | Agreement
and Plan of Merger, dated as of October 7, 2020, among Morgan Stanley, Mirror Merger Sub 1, Inc., Mirror Merger Sub 2, LLC and Eaton Vance Corp. (included as Annex A to the information statement/prospectus that forms a part of this Registration Statement).* | |
| | Opinion
of Davis Polk & Wardwell LLP regarding validity of the shares of Morgan Stanley stock being registered hereunder. | |
8.1 | | | Form of Tax Opinion of Davis Polk & Wardwell LLP.** |
8.2 | | | Form
of Tax Opinion of Wilmer Cutler Pickering Hale and Dorr LLP.** |
| | Letter of Awareness from Deloitte & Touche LLP concerning interim financial information. | |
| | Consent
of Deloitte & Touche LLP, Independent Registered Public Accounting Firm of Morgan Stanley. | |
| | Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm of Eaton Vance Corp. | |
| | Consent
of Davis Polk & Wardwell LLP (included in the opinion filed as Exhibit 5.1 to the registration statement). |
Exhibit Number | | | Description |
23.4 | | | Consent
of Davis Polk & Wardwell LLP (included in the opinion filed as Exhibit 8.1 to the registration statement).** |
23.5 | | | Consent of Wilmer Cutler Pickering Hale and Dorr LLP (included in the opinion filed as Exhibit 8.2 to the registration statement).** |
| | Power
of Attorney (included in the signature page to the registration statement). | |
| | Consent of Centerview Partners LLC. | |
| | Consent
of Houlihan Lokey Capital, Inc. | |
99.3 | | | Form of Election** |
* | The
annexes, schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Morgan Stanley agrees to furnish supplementally a copy of such schedules and exhibits, or any section thereof, to the SEC upon request. |
** | To be filed by amendment. |
Item 22. | Undertakings |
(1) | 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 the 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 the 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 Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement. |
(iii) | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. |
(2) | 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. |
(3) | 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) | That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, if the
registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness; provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such document immediately prior to such date of first use. |
(5) | That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such |
(i) | Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
(ii) | Any
free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
(iii) | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
(iv) | Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
(b) | The undersigned
registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’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 the 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. |
(1) | The
undersigned registrant hereby undertakes as follows: that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. |
(2) | The registrant undertakes that every prospectus: (i) that is filed pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet the requirements
of Section 10(a)(3) of the Securities Act of 1933 and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes 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. |
(d) | The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the information statement/prospectus pursuant to Item 4, 10(b), 11
or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. |
(e) | The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. |
(f) | Insofar
as indemnification for liabilities under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is therefore unenforceable. In the event a claim of indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in a successful defense of
any action, suit or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the 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 Securities Act of 1933 and will be governed by the final adjudication of such issue. |
| | MORGAN
STANLEY | ||||
| | |||||
| | By: | | | /s/
James P. Gorman | |
| | | | Name:
James P. Gorman | ||
| | | | Title: Chairman and Chief Executive Officer |
/s/ James P. Gorman | | | |
Chairman, Chief Executive Officer and Director | | | Executive Vice President and Chief Financial Officer |
| | ||
/s/ Elizabeth Corley | | | /s/
Alistair Darling |
Elizabeth Corley, Director | | | Alistair Darling, Director |
| | ||
/s/
Thomas H. Glocer | | | /s/ Robert H. Herz |
Thomas H. Glocer, Director | | | Robert
H. Herz, Director |
| | ||
/s/ Nobuyuki Hirano | | | |
Nobuyuki Hirano, Director | | | Shelley B. Leibowitz, Director |
| | ||
/s/
Stephen J. Luczo | | | /s/ Jami Miscik |
Stephen J. Luczo, Director | | | Jami
Miscik, Director |
| | ||
/s/ Dennis M. Nally | | | |
Dennis M. Nally, Director | | | Takeshi Ogasawara, Director |
| | ||
/s/
Hutham S. Olayan | | | /s/ Mary L. Schapiro |
Hutham S. Olayan, Director | | | Mary
L. Schapiro, Director |
| | ||
| | ||
Perry M. Traquina, Director | | | Rayford Wilkins, Jr., Director |
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 1/19/21 Morgan Stanley S-4/A 9:4.2M Broadridge Fin’l So… Inc |