AMENDED AND RESTATED SHAREHOLDER AGREEMENT

 

 

AMENDED AND RESTATED SHAREHOLDER AGREEMENT

 

by and between

 

MORGAN STANLEY

 

and

 

MSCI INC.

 

Dated as of July 21, 2008

 

 

AMENDED AND RESTATED SHAREHOLDER AGREEMENT

THIS SHAREHOLDER AGREEMENT (“ Agreement ”) is entered into as of July 21, 2008 by and between MSCI Inc., a Delaware corporation (“ MSCI ”), and Morgan Stanley, a Delaware corporation (“ Morgan Stanley ”) and amends and restates the Shareholders Agreement dated as of November 20, 2007 between the parties.

RECITALS

WHEREAS, Morgan Stanley beneficially owns all of the issued and outstanding MSCI Class B Common Stock, par value $0.01 per share (“ Class B Common Stock ”), and Morgan Stanley holds a majority of the total voting power of the outstanding common stock of MSCI; and

WHEREAS, the parties desire to enter into this Agreement to set forth their agreement regarding (i) Morgan Stanley’s rights to purchase additional shares of Class B Common Stock upon any issuance of capital stock of MSCI to any person in order to allow Morgan Stanley to prevent a Morgan Stanley Vote Ownership Reduction, (ii) Morgan Stanley’s right to designate representatives to the Board of Directors of MSCI, (iii) certain registration rights with respect to Class B Common Stock (and any other securities issued in respect thereof or in exchange therefor) and (iv) certain representations, warranties, covenants and agreements applicable to MSCI so long as it is a subsidiary of Morgan Stanley.

AGREEMENTS

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Morgan Stanley and MSCI, for themselves, their successors and assigns, hereby agree as follows:

ARTICLE 1

Definitions

Section 1.01 .  Definitions.   As used in this Agreement, the following terms will have the following meanings, applicable both to the singular and the plural forms of the terms described:

“ Affiliate ” means, with respect to any Person, any Person controlling, controlled by or under common control with such Person.  For purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power to vote a majority of the securities having voting power for the election of directors (or other Persons acting in

 

 

similar capacities) of such Person or otherwise to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

“ Agreement ” has the meaning ascribed thereto in the preamble hereto, as such agreement may be amended and supplemented from time to time in accordance with its terms.

“ Applicable Stock ” means at any time the MSCI Stock owned by the Morgan Stanley Entities.

“ Blackout Period ” has the meaning ascribed thereto in Section 3.01(a)(iv).

“ Class A Common Stock ” has the meaning ascribed thereto in the recitals to this Agreement.

“ Class B Common Stock ” has the meaning ascribed thereto in the recitals to this Agreement.

“ Class B Common Stock Option ” has the meaning ascribed thereto in Section 2.01.

“ Class B Common Stock Issuance Notice ” has the meaning ascribed thereto in Section 2.02.

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Damages ” has the meaning ascribed thereto in Section 3.07.

“ Demand Holder ” has the meaning ascribed thereto in Section 3.01(a).

“ Demand Piggyback ” has the meaning ascribed thereto in Section 3.02(c).

“ Demand Registration ” has the meaning ascribed thereto in Section 3.01(a).

“ e-mail ” has the meaning ascribed thereto in Section 5.06.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, or any successor statute.

“ Holder ” means Morgan Stanley and any Transferee.

“ Indemnified Party ” has the meaning ascribed thereto in Section 3.07(c).

“ Indemnifying Party ” has the meaning ascribed thereto in Section 3.07(c).

“ Issuance Event ” has the meaning ascribed thereto in Section 2.02.

“ Issuance Event Date ” has the meaning ascribed thereto in Section 2.02.

“ Issuance Notice ” has the meaning ascribed thereto in Section 2.02.

“ Market Price ” of any shares of Class A Common Stock on any date means (i) the average of the last sale price of such shares on each of the five trading days immediately preceding such date on the New York Stock Exchange or, if such shares are not quoted thereon, on the principal national securities exchange on which such shares are traded or (ii) if such sale prices are unavailable or such shares are not so traded, the value of such shares on such date determined in accordance with agreed-upon procedures reasonably satisfactory to MSCI and Morgan Stanley.

“ Maximum Offering Size ” means the largest number of shares that can be sold in an offering of Registrable Securities without having an adverse effect on such offering, including the price at which such Registrable Securities can be sold, as determined by a nationally recognized investment banking firm selected, in the case of a Demand Registration, by a Demand Holder and reasonably acceptable to MSCI and, in the case of a Piggyback Registration, selected by MSCI.  In the case of an underwritten offering, such investment banking firm shall also serve as the lead underwriter or managing underwriter.

“ Morgan Stanley ” has the meaning ascribed thereto in the preamble hereto.

“ Morgan Stanley Entities ” means Morgan Stanley and its Subsidiaries (excluding MSCI Entities) and “ Morgan Stanley Entity ” means any of the Morgan Stanley Entities.

“ Morgan Stanley Vote Ownership Reduction ” means any decrease at any time in the Vote Ownership Percentage of Morgan Stanley to less than 50.1%.

“ MSCI ” has the meaning ascribed thereto in the preamble hereto.

“ MSCI Entities ” means MSCI and its Subsidiaries and “ MSCI Entity ” shall mean any of the MSCI Entities.

“ MSCI Piggyback ” has the meaning ascribed thereto in Section 3.02(b).

“ MSCI Stock ” means the Class A Common Stock, the Class B Common Stock and any other security of MSCI treated as stock for purposes of Sections 355 and 1504 of the Code.

“ Other Holders ” has the meaning ascribed thereto in Section 3.02(b).

“ Other Securities ” has the meaning ascribed thereto in Section 3.02.

 “ Person ” means any individual, partnership, limited liability company, joint venture, corporation, trust, unincorporated organization, government (and any department or agency thereof) or other entity.

“ Piggyback Registration ” has the meaning ascribed thereto in Section 3.02.

“ Registrable Securities ” means Class B Common Stock and any stock or other securities into which or for which such Class B Common Stock may hereafter be changed, converted or exchanged and any other shares or securities issued to Holders of such Class B Common Stock (or such shares or other securities into which or for which such shares are so changed, converted or exchanged) upon any reclassification, share combination, share subdivision, share dividend, share exchange, merger, consolidation or similar transaction or event.  As to any particular Registrable Securities, such Registrable Securities shall cease to be Registrable Securities when (i) a registration statement with respect to the sale by the Holder thereof shall have been declared effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement, (ii) they shall have been sold to the public in accordance with Rule 144, (iii) they shall have been otherwise transferred, new certificates for them not bearing a legend restricting further transfer shall have been delivered by MSCI and subsequent disposition of them shall not require registration or qualification of them under the Securities Act or any state securities or blue sky law then in effect or (iv) they shall have ceased to be outstanding.

“ Registration Expenses ” means any and all expenses incident to performance of or compliance with any registration of securities pursuant to Article 3, including, without limitation, (i) the fees, disbursements and expenses of MSCI’s counsel and accountants and the reasonable fees and expenses of one counsel selected by the Holders; (ii) all expenses, including filing fees, in connection with the preparation, printing and filing of the registration statement, any preliminary prospectus or final prospectus, any other offering document and amendments and supplements thereto and the mailing and delivering of copies thereof to any underwriters and dealers; (iii) the cost of printing or producing any agreements among underwriters, underwriting agreements, and blue sky or legal investment memoranda, any selling agreements and any other documents in connection with the offering, sale or delivery of the securities to be disposed of; (iv) all expenses in connection with the qualification of the securities to be disposed of for offering and sale under state securities laws, including the fees and disbursements of counsel for the underwriters or the Holders of securities in connection with such qualification and in connection with any blue sky and legal investment services; (v) the filing fees incident to securing any required review by the National Association of Securities Dealers, Inc. of the terms of the sale of the

 

 

securities to be disposed of; (vi) transfer agents’ and registrars’ fees and expenses and the fees and expenses of any other agent or trustee appointed in connection with such offering; (vii) all security engraving and security printing expenses; (viii) all fees and expenses payable in connection with the listing of the securities on any securities exchange or automated interdealer quotation system or the rating of such securities; (ix) any other fees and disbursements of underwriters customarily paid by the issuers of securities, but excluding underwriting discounts and commissions and transfer taxes, if any; and (x) other reasonable out-of-pocket expenses of Holders other than legal fees and expenses referred to in clause (i) above; provided , that , the internal administrative costs of each Holder and MSCI shall not be considered “Registration Expenses”.

 “ Rule 144 ” means Rule 144 (or any successor rule to similar effect) promulgated under the Securities Act.

“ Rule 415 Offering ” means an offering on a delayed or continuous basis pursuant to Rule 415 (or any successor rule to similar effect) promulgated under the Securities Act.

“ SEC ” means the United States Securities and Exchange Commission.

“ Securities Act ” means the Securities Act of 1933, as amended, or any successor statute.

“ Selling Holder ” has the meaning ascribed thereto in Section 3.04(e).

“ Subsidiary ” means, as to any Person, any corporation, association, partnership, joint venture or other business entity of which more than 50% of the voting capital stock or other voting ownership interests is owned or controlled directly or indirectly by such Person or by one or more of the Subsidiaries of such Person or by a combination thereof.

“ Tax ” means any tax, governmental fee or other like assessment or charge of any kind whatsoever (including, but not limited to, withholding on amounts paid to or by any Person), together with any interest, penalty, addition to tax or additional amount imposed by any governmental authority responsible for the imposition of any such tax (domestic or foreign), and any liability for any of the foregoing as transferee.

“ Transferee ” has the meaning ascribed thereto in Section 3.09.

“ Vote Ownership Percentage ” means, at any time, the fraction, expressed as a percentage and rounded to the next lowest thousandth of a percent, whose numerator is the aggregate voting power (as determined under Section 355 of the Code) of the Applicable Stock and whose denominator is the aggregate voting power (as determined under Section 355 of the Code) of the then outstanding shares of MSCI Stock.

Section 1.02 .  Internal References.   Unless the context indicates otherwise, references to Articles, Sections and paragraphs shall refer to the corresponding articles, sections and paragraphs in this Agreement, and references to the parties shall mean the parties to this Agreement.

ARTICLE 2

Option

Section 2.01 .  Class B Common Stock Option.   MSCI hereby grants to Morgan Stanley, on the terms and conditions set forth herein, a continuing right (the “ Class B Common Stock Option ”) to purchase from MSCI, at the times set forth herein, such number of shares of Class B Common Stock as is necessary to allow Morgan Stanley Entities to prevent a Morgan Stanley Vote Ownership Reduction.  The Class B Common Stock Option shall be assignable, in whole or in part and from time to time, by Morgan Stanley to any Morgan Stanley Entity.  The exercise price for the shares of Class B Common Stock purchased pursuant to the Class B Common Stock Option shall be the Market Price of the Class A Common Stock as of the date of first delivery of notice of exercise of the Class B Common Stock Option by Morgan Stanley (or its permitted assignee hereunder) to MSCI.

Section 2.02 .  Notice.   At least 20 business days prior to (xi) any issuance of any shares of MSCI Stock and (xii) each date on which an event could occur that, in the absence of an exercise of the Class B Common Stock Option, would result in a reduction in the Vote Ownership Percentage, MSCI will notify Morgan Stanley in writing (an “ Issuance Notice ”) of any plans it has to issue such shares or the date on which such event could first occur.  Each Issuance Notice must specify the date on which MSCI intends to issue such additional shares or on which such event could first occur (such issuance or event being referred to herein as an “ Issuance Event ” and the date of such issuance or event as an “ Issuance Event Date ”), the number of shares MSCI intends to issue or may issue and the other terms and conditions of such Issuance Event.

Section 2.03 .  Option Exercise And Payment.   The Class B Common Stock Option may be exercised by Morgan Stanley (or any Morgan Stanley Entity to which all or any part of the Class B Common Stock Option has been assigned) only for such number of shares as are necessary to prevent a Morgan Stanley Vote Ownership Reduction.  The Class B Common Stock Option may be exercised (to the extent then exercisable in accordance with its terms) at any time after receipt of an applicable Issuance Notice and prior to the applicable Issuance Event Date by the delivery to MSCI of a written notice to such effect specifying (i) the number of shares of Class B Common Stock to be purchased by Morgan Stanley, or any Morgan Stanley Entity, and (ii) a calculation of the exercise price for such shares.  Upon any such exercise of the Class B Common Stock Option, MSCI will, immediately prior to the issuance or event in connection with an Issuance

 

 

Event, deliver to Morgan Stanley (or any Morgan Stanley Entity designated by Morgan Stanley), against payment therefor, certificates (issued in the name of Morgan Stanley or its permitted assignee hereunder, or as directed by Morgan Stanley) representing the shares of Class B Common Stock (as the case may be) being purchased upon such exercise.  Payment for such shares shall be made by wire transfer or intrabank transfer to such account as shall be specified by MSCI, for the full purchase price for such shares.

Section 2.04 .  Termination Of Option.   The Class B Common Stock Option shall terminate upon the occurrence of a Morgan Stanley Vote Ownership Reduction, other than a Morgan Stanley Vote Ownership Reduction resulting from any Issuance Event in violation of this Agreement.  Such Option, or any portion thereof assigned to any Morgan Stanley Entity other than Morgan Stanley, also shall terminate in the event that the Person to whom such Option, or such portion thereof has been transferred, ceases to be a Morgan Stanley Entity for any reason whatsoever.

ARTICLE 3

Registration Rights

Section 3.01 .  Demand Registration - Registrable Securities.  (a) Upon written notice provided at any time from any Holder of Registrable Securities requesting that MSCI effect the registration under the Securities Act of any or all of the Registrable Securities held by such Holder (a “ Demand Holder ”), which notice shall specify the intended method or methods of disposition of such Registrable Securities, MSCI shall use its reasonable best efforts to effect the registration under the Securities Act and applicable state securities laws of such Registrable Securities for disposition in accordance with the intended method or methods of disposition stated in such request (including in a Rule 415 Offering, if MSCI is then eligible to register such Registrable Securities on Form S-3 (or a successor form) for such offering) (a “ Demand Registration ”); provided, that :

(b)        Notwithstanding any other provision of this Agreement to the contrary, a Demand Registration shall not be deemed to have been effected if no Registrable Securities are sold under the registration statement (and, therefore, not requested for purposes of paragraph (a) above).

(c)        In the event that a Demand Registration shall involve, in whole or in part, an underwritten offering, the Demand Holder shall have the right to designate an underwriter or underwriters as the lead or managing underwriters of such underwritten offering reasonably acceptable to MSCI (and MSCI hereby acknowledges that Morgan Stanley & Co. Incorporated is reasonably acceptable) and, in connection with each Demand Registration, the Demand Holder may select one counsel to represent all Holders participating in such offering.

(d)        MSCI shall have the right to cause the registration of additional equity securities for sale for the account of any Person (including, without limitation, MSCI and any existing or former directors, officers or employees of the MSCI Entities) in any Demand Registration; provided, that , if the Demand Holder is advised in writing (with a copy to MSCI) that the inclusion of such additional equity securities in such registration would be likely to exceed the Maximum Offering Size, the registration of such additional equity securities or part thereof shall not be permitted.

(e)        The Demand Holder may require that any such additional equity securities described in Section 3.01(d) be included on the same conditions as the Registrable Securities of the Demand Holder to be included therein.

(f)        If the Demand Holder believes that the aggregate number of Registrable Securities requested to be included in a Demand Registration would be likely to exceed the Maximum Offering Size, the Demand Holder may request a determination of the Maximum Offering Size.  In the event that the Maximum Offering Size is determined to be less than the aggregate number of Registrable Securities requested to be included in such offering, the number of Registrable Securities to be included in the registration statement shall be reduced to the Maximum Offering Size and the number of Registrable Securities in excess of the amount requested by the Demand Holder, if any, shall be allocated pro rata among the other Holders requesting to be included in such offering on the basis of the relative number of Registrable Securities then held by each such Holder; provided, that , any number in excess of a Holder’s request may be reallocated among the remaining requesting Holders in a like manner.

Section 3.02 .  Piggyback Registration.   In the event that MSCI at any time proposes to register any of its Common Stock, any other of its equity securities or securities convertible into or exchangeable for its equity securities (collectively, including Common Stock, “ Other Securities ”) under the Securities Act, whether or not for sale for its own account, in a manner that would permit registration of Registrable Securities for sale for cash to the public under the Securities Act, it shall at each such time give, at least 30 days prior to the anticipated filing date of the registration statement relating to such registration, written notice to each Holder of Registrable Securities of its intention to do so and of the rights of such Holder under this Section 3.02.  Subject to the terms and conditions hereof, such notice shall offer each such Holder the opportunity to include in such registration statement such number of Registrable Securities as such Holder may request (a “ Piggyback Registration ”).  Upon the written request of any such Holder made within 15 days after the receipt of MSCI’s notice (which request shall specify the number of Registrable Securities intended to be disposed of and the intended method of disposition thereof), MSCI shall use its reasonable best efforts to effect, in connection with the registration of the Other Securities, the registration under the Securities Act of all Registrable Securities which MSCI has been so requested to register, to the extent required to permit the Piggyback Registration; provided, that :

(a)        if, at any time after giving such written notice of its intention to register any Other Securities and prior to the effective date of the registration statement filed in connection with such registration, MSCI shall determine for any reason not to register the Other Securities, MSCI may, at its election, give written notice of such determination to such Holders and thereupon MSCI shall be relieved of its obligation to register such Registrable Securities in connection with the registration of such Other Securities; provided, that , such determination by

 

 

MSCI shall not prejudice the rights of the Holders of Registrable Securities to immediately request a Demand Registration in accordance with Section 3.01;

(b)        if the registration referred to in the first sentence of this Section 3.02 is to be an underwritten registration on behalf of MSCI (an “ MSCI Piggyback ”) and MSCI is advised in writing that the inclusion of all or a part of such Registrable Securities in such registration would be likely to exceed the Maximum Offering Size, MSCI shall include in such registration: (i) first , all Other Securities MSCI proposes to sell for its own account and (ii) second , the number of securities (including Registrable Securities) that such underwriters advise can be so sold without adversely affecting such offering, allocated pro rata among the holders, other than MSCI, of Other Securities (the “ Other Holders ”) and the Holders of Registrable Securities on the basis of the number of securities requested in accordance with this Section 3.02 to be included therein by each Other Holder and each Holder of Registrable Securities; provided, that , in the event that the Maximum Offering Size is less than all of such Registrable Securities requested to be included in such offering, any Morgan Stanley Entity may withdraw its request for a Piggyback Registration and 90 days subsequent to the effective date of the registration statement for the registration of such Other Securities request a Demand Registration in accordance with Section 3.01;

(c)        if the registration referred to in the first sentence of this Section 3.02 is to be an underwritten secondary registration on behalf of Other Holders (a “ Demand Piggyback ”) and MSCI is advised in writing that the inclusion of such additional securities in such registration would be likely to exceed the Maximum Offering Size, MSCI shall include in such registration the number of additional securities (including Registrable Securities) that such underwriters advise can be so sold without adversely affecting such offering, allocated pro rata among the Other Holders and the Holders of Registrable Securities on the basis of the number of securities (including Registrable Securities) requested in accordance with this Section 3.02 to be included therein by each Other Holder and each Holder of Registrable Securities; provided, th