Final Terms dated 26 April 2010
Series Number : D1106
Tranche : 3 ISIN: XS0497792241
Common Code: 049779224
Morgan Stanley B.V.
Issue of 18,709,450 Certificates (“Tranche 3”) to be consolidated with 60,000,000 Certificates (“Tranche 1”) and 40,000,000 Certificates (“Tranche 2”) and form a single series of 118,709,450 Certificates linked to the Shares of Guaranty Trust Bank Plc
Guaranteed by Morgan Stanley
under the Program for the Issuance of Certificates and Warrants
PART A – CONTRACTUAL TERMS
THE SECURITIES AND THE GUARANTEE IN RESPECT THEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, AND THE SECURITIES MAY INCLUDE BEARER SECURITIES THAT ARE SUBJECT TO U.S. TAX LAW REQUIREMENTS. NEITHER THE ISSUER NOR THE GUARANTOR IS REGISTERED, OR WILL REGISTER, UNDER THE INVESTMENT COMPANY ACT.
INTERESTS IN THIS SECURITY MAY ONLY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED (1) IN ACCORDANCE WITH RULE 144A UNDER THE SECURITIES ACT ( RULE 144A ) TO A PERSON WHO TAKES DELIVERY IN THE FORM OF AN INTEREST IN A RESTRICTED GLOBAL SECURITY THAT THE HOLDER AND ANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVE IS A QUALIFIED INSTITUTIONAL BUYER (A QIB ) WITHIN THE MEANING OF RULE 144A THAT IS ALSO A QUALIFIED PURCHASER (A QP ) AS DEFINED IN SECTION 2(a)(51) OF THE INVESTMENT COMPANY ACT AND THE RULES THEREUNDER PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ONE OR MORE QIBS EACH OF WHICH IS A QP WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, AND IN A NOMINAL AMOUNT OR PURCHASE PRICE FOR EACH ACCOUNT OF NOT LESS THAN U.S.$100,000 OR (2) TO A PERSON THAT IS NOT A U.S. PERSON (WITHIN THE MEANING OF REGULATION S) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, AND, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND ANY OTHER APPLICABLE JURISDICTION.
D1106 1 THE SECURITIES ARE SENIOR UNSECURED OBLIGATIONS OF MORGAN STANLEY, AND ALL PAYMENTS ON THE SECURITIES, INCLUDING THE REPAYMENT OF PRINCIPAL, ARE SUBJECT TO THE CREDIT RISK OF MORGAN STANLEY. THE SECURITIES ARE NOT BANK DEPOSITS AND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY, NOR ARE THEY OBLIGATIONS OF, OR GUARANTEED BY, A BANK.
SEE “SUBSCRIPTION AND SALE AND TRANSFER RESTRICTIONS” IN THE BASE PROSPECTUS. IN PURCHASING THE SECURITIES, PURCHASERS WILL BE DEEMED TO REPRESENT AND WARRANT THAT THEY ARE NEITHER LOCATED IN THE UNITED STATES NOR A U.S. PERSON AND THAT THEY ARE NOT PURCHASING FOR, OR FOR THE ACCOUNT OR BENEFIT OF, ANY SUCH PERSON.
This document constitutes Final Terms relating to the issue of Securities described herein. Terms used herein shall be deemed to be defined as such for the purposes of the Conditions set forth in the Base Prospectus dated 8 April 2009 and 7 April 2010 for the purposes of the Prospectus Directive (Directive 2003/71/EC) (the “ Prospectus Directive ”). This document constitutes the Final Terms of the Securities described herein for the purposes of Article 5.4 of the Prospectus Directive and must be read in conjunction with such Base Prospectus. Full information on the Issuer and the offer of the Securities is only available on the basis of the combination of these Final Terms and the Base Prospectus. The Base Prospectus is available for viewing at The Base Prospectus is available for viewing at Deutsche Bank AG, London Branch, Winchester House, 1 Great Winchester Street, London EC2N 2DB, being the London office of the Fiscal Agent and also at the principal executive offices of Morgan Stanley and the registered office of the Issuer.
Information Concerning Investment Risk
Securityholders and prospective purchasers of Securities should ensure that they understand the nature of the Securities and the extent of their exposure to risk and that they consider the suitability of the Securities as an investment in the light of their own circumstances and financial condition. An investment in the Securities entails risks not associated with investments in a conventional debt security, such as described in section entitled “Risk Factors Relating to the Securities” on pages 109 to 115 of the Base Prospectus. The performance of the Shares will affect the nature and value of the investment return on the Securities. Securityholders and prospective purchasers of Securities should conduct their own investigations and, in deciding whether or not to purchase Securities, prospective purchasers should form their own views of the merits of an investment related to the Shares based upon such investigations and not in reliance on any information given in these Final Terms or, if applicable, any listing document prepared in connection with the listing of the Securities.
Given the highly specialised nature of these Securities, the Issuer, the Guarantor and the Distribution Agent consider that they are only suitable for sophisticated investors who are able to determine for themselves the risk of an investment linked to the Shares and who are able to bear the loss of any amount invested. Consequently, if you are not such an investor you should not consider purchasing these Securities without taking detailed advice from a specialised professional adviser. Emerging Markets Risk: Fluctuations in the trading prices of the Underlying Shares will affect the value of the Certificates. Changes may result over time from the interaction of
D1106 2 many factors directly or indirectly affecting economic and political conditions in the related countries / member nations, including economic and political developments in other countries. Of particular importance to potential risk are: (i) rates of inflation; (ii) interest rate levels; (iii) balance of payments; and (iv) the extent of governmental surpluses or deficits in the relevant country. All of these factors are, in turn, sensitive to the monetary, fiscal and trade policies pursued by the related countries, the governments of the related countries and member nations (if any), and other countries important to international trade and finance. Government intervention could materially and adversely affect the value of the Certificates. Governments may use a variety of techniques, such as intervention by their central bank or imposition of regulatory controls or taxes, to affect the trading of the Underlying Shares. Thus, a special risk in purchasing the Certificates is that their trading value and amount payable could be affected by the actions of governments, fluctuations in response to other market forces and the movement of currencies across borders. The Underlying Shares are all emerging markets stocks that may be more volatile than the stocks in more developed markets.
Prospective purchasers should note the United States Taxation set out on page 193 of the Base Prospectus. Prospective purchasers are hereby notified that sellers of the Securities may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A.
Each purchaser of the Securities will be deemed to have accepted the representations, agreement and acknowledgement in respect of Unrestricted Securities pursuant to Rule 144A as set out under the heading “Transfer Restrictions” on pages 209 to 210 of the Base Prospectus.
1. (i) Issuer: Morgan Stanley B.V.
(ii) Guarantor: Morgan Stanley
2. (i) Series Number: D1106
(ii) Tranche Number: 3
3. Type: Share Certificates
4. (i) Issue Date: 22 March 2010 for Tranche 1
1 April 2010 for Tranche 2
26 April 2010 for Tranche 3
(ii) Pricing Date: 15 March 2010
5. Expiration Date: 15 March 2011
6. Specified Currency: USD
7. Aggregate number of Securities: 118,709,450
D1106 3 (i) Series: 118,709,450
(ii) Tranche: 18,709,450
8. Nominal Amount per Security: Not Applicable
9. Issue Price: USD 0.1288 per Certificate
PROVISIONS RELATING TO THE UNDERLYING AND ADJUSTMENTS
10. Underlying: Each Security is linked to 1 ordinary share of the Share Issuer
(i) Share Issuer: Guaranty Trust Bank Plc
(ii) Bloomberg Ticker: GUARANTY NL
11. Exchange: Lagos Stock Exchange
12. Related Exchange: All Exchanges
13. Exchange Business Day: As defined in the Conditions
PROVISIONS RELATING TO DISTRIBUTION AMOUNT (IF ANY) PAYABLE
14. Distribution Provisions: Applicable
(i) Distribution Not Applicable Commencement Date:
(ii) Distribution Valuation The Ex-Dividend Date in respect of such Eligible Date(s) (the “Coupon Dividend Record Date”):
(iii) Distribution Payment One Business Day after such Eligible Dividend is Date(s) (the “Coupon paid by Share Issuer. Payment Date”):
(iv) Distribution Amount(s) Net Yield, subject to any Relevant Reduction (the “Coupon Amount”): The Distribution Amount shall be paid in the Specified Currency at the applicable spot foreign exchange rate as determined by the Determination Agent .
Securityholder who is the beneficial owner of the Securities as of the relevant Record Date shall be entitled to the Distribution Amount and shall be notified of such a later date if the Distribution
D1106 4 Payment Date is postponed.
(v) Minimum Distribution Not Applicable Amount:
(vi) Maximum Distribution Not Applicable Amount:
(v) Other terms relating to the For the purpose of Net Yield, the Eligible Dividend payment of Distribution means all declared regular cash dividend and return Amounts: of capital on the Shares for which the Ex-Dividend Date falls during the Reference Period.
PROVISIONS RELATING TO EQUITY LINKED CERTIFICATES
15. Additional Outperformance Not Applicable Weighting:
16. Net Yield Weighting: 100%
17. Outperformance Weighting: Not Applicable
18. Reference Period: The period from and including the Pricing Date to but excluding the Valuation Date.
19. Extraordinary Dividend: Not Applicable
20. Relevant Reduction: Applicable
PROVISIONS RELATING TO EXERCISE AND TERMINATION
21. Exercise Style: American style Securities
22. Deemed Exercise: Applicable
23. Call/Put: Not Applicable
24. The Commencement Date of the Not Applicable Exercise Period:
25. Exercise Business Day: Includes a Scheduled Trading Day and an Exchange Business Day
26. Latest Exercise Time: 10:00 a.m. London time
27. Minimum Exercise Amount: Not Applicable
28. Maximum Exercise Amount: Not Applicable
29. Permitted Multiple: Not Applicable
D1106 5 30. Cash Settlement Amount of each An amount calculated by the Determination Agent Security: equal to 98.39%* the Reference Value as of the Valuation Time on the Valuation Date.
(i) Reference Value: The official closing price of the Underlying Shares on the Valuation Date, subject to Relevant (ii) Cash Settlement Payment Reduction. Date: (i) 18 March 2011, or if later, (ii) the 5 th Business Day following the Valuation Date, or if later, (iii) the last occurring Distribution Payment Date.
(iii) Hedging Realisation Not Applicable Price:
(iv) Minimum Cash Not Applicable Settlement Amount:
(v) Maximum Cash Not Applicable Settlement Amount:
(vi) Valuation Date: The Exercise Date, subject to the provisions of Condition 9 ( Adjustment Provisions )
(vii) Valuation Time: As set out in the Conditions
(viii) Averaging Dates: Not Applicable
(ix) Break Fee: Not Applicable
(x) Other terms relating to the Pursuant and without limitation to Condition 5.3, if payment of Cash a Distribution Amount has been paid in respect of Settlement Amount: which the Share Issuer fails to pay the relevant Eligible Distribution in full the Issuer may deduct the Relevant Proportion (as defined in Condition 5.3) of such Distribution Amount from the Cash Settlement Amount.
31. Issuer's Call Option: Applicable
(i) Optional Termination As set out in the Conditions Date (Call):
(ii) Issuer Call Notice Period: 5 Business Days
(iii) Optional Termination As specified in the definition of Optional Amount (Call): Termination Amount (Call) in the Conditions, save that section (i) of such definition shall be replaced as follows:
D1106 6 "(i) the Valuation Date (the " Optional Termination Valuation Date ") shall be the 5th Business Day proceeding the Optional Termination Date (Call) as set out in the Issuer's notice to the Securityholders in accordance with Condition 6.11 (Termination at the option of the Issuer ) is deemed given in accordance with Condition 20 ( Notices ), or if such day is not an Exercise Business Day, the immediately following Exercise Business Day; and"
(iv) Other terms relating to the As set out in the Conditions Issuer's Call Option:
32. Additional Disruption Event: Change in Law, Hedging Disruption, Increased Cost of Hedging, Loss of Stock Borrow
33. Early Termination Amount (if As set out in the Conditions different from Condition 2 (Interpretation )):
34. Other terms relating to early None termination:
GENERAL PROVISIONS APPLICABLE TO THE SECURITIES
35. Form of Securities: Registered Securities:
Restricted Global Security, exchangeable for Individual Registered Instruments only in circumstances specified in the Restricted Global Security.
The Securities are not exchangeable for Bearer Securities.
36. Status of the Guarantee: As set out in the Conditions
37. Additional Financial Centre(s): Lagos and London
38. Talons for future Coupons or No Receipts to be attached to Definitive Securities (and dates on which such Talons mature):
D1106 7 39. Renominalisation and Not Applicable reconventioning provisions:
40. Consolidation provisions: The provisions in Condition 19 ( Further Issues ) apply
41. Clearance System: Euroclear
42. Determination Agent: Morgan Stanley & Co. International plc
43. Additional US Federal Tax Not Applicable Considerations:
44. Other final terms: Not Applicable
DISTRIBUTION
45. Method of distribution: Non-syndicated
46. (i) If syndicated, names and Not Applicable addresses of Distribution Agents and underwriting commitments
(ii) Date of Subscription Not Applicable Agreement:
(iii) Stabilising Manager(s) (if Not Applicable any):
47. If non-syndicated, name and Morgan Stanley & Co. Incorporated address of Distribution Agent:
48. Whether TEFRA D or TEFRA C Not Applicable rules applicable or TEFRA rules applicable in the case of Bearer Securities:
49. Total commission and concession: Not Applicable. The reasons for the offer and use of proceeds are for making profit and/or hedging risks.
50. Additional selling restrictions: Securities are being offered in reliance on the exemption from registration under Rule 144A of the Securities Act to persons that are both (1) qualified institutional buyers (as defined in Rule 144A under the Securities Act) and (2) qualified purchasers (as defined under Section 3(c)(7) of the Investment Company Act of 1940).
D1106 8 LISTING AND ADMISSION TO TRADING APPLICATION
These Final Terms comprise the final terms required to list and have admitted to trading the issue of Securities described herein pursuant to the Program for the Issuance of Warrants and Certificates by Morgan Stanley B.V.
D1106 9 RESPONSIBILITY
The Issuer accepts responsibility for the information contained in these Final Terms.
D1106 10 PART B – OTHER INFORMATION
1. LISTING
(i) Listing: Irish Stock Exchange
(ii) Admission to trading: Application has been made for the Securities to be admitted to trading on or after the Issue Date with effect from the date of application.
(iii) Estimate of total expenses Not Applicable. The reasons for the offer and use relating to admission to of proceeds are for making profit and/or hedging trading: risks.
2. RATINGS
Credit ratings assigned to the None Issuer or its debt securities:
3. OPERATIONAL INFORMATION
Any clearing system(s) other than Not Applicable Euroclear Bank S.A./N.V., Clearstream Banking, société anonyme and The Depository Trust Company and the relevant identification number(s):
Delivery to the Dealer: Delivery free of payment
Names and addresses of additional None Paying Agent(s) (if any):
D1106 11