SPH Notice – Morgan Stanley and its Subsidiaries
1
Disclosure of beginning to have substantial holding
Section 276, Financial Markets Conduct Act 2013
To NZX Limited
and
To TOURISM HOLDINGS LTD (THL)
Date this disclosure made: 19 December 2022
Date on which substantial holding began: 14 December 2022
Substantial product holder(s) giving disclosure
Full name(s): Morgan Stanley and its Subsidiaries listed in Annexure A
Summary of substantial holding
Class of quoted voting products: Ordinary Shares
Summary for Morgan Stanley and its Subsidiaries listed in Annexure A
For this disclosure,—
(a) total number held in class: 12,506,609
(b) total in class: 214,013,477
(c) total percentage held in class: 5.844%
2
Details of relevant interests –
Details For Nature of Relevant Interest
For that Relevant Interest
Relevant Agreement Document /
Comments
(a)
Number
held in
class
(b)
Percentage
held in
class
(c) Current registered
holder(s)
(d)
Registered
holder(s)
once
transfers
are
registered
Morgan Stanley & Co.
International plc
Shares held or in respect of which
the holder may exercise right to
rehypothecate pursuant to the
agreement(s).
10,700,650
5.000%
HSBC Nominees (New
Zealand) Limited
Unknown
The relevant agreement document(s)
(Overseas Securities Lender's Agreement)
are attached in Annexure E (11 pages).
Shares held or in respect of which
the holder may exercise right to
rehypothecate pursuant to the
agreement(s).
1,349,065 0.630%
HSBC Custody Nominees
(Australia) Limited
Unknown
The relevant agreement document(s)
(Prime Brokerage Agreement) are attached
in Annexure B (80 pages).
Holder of securities subject to an
obligation to return under a
Securities Lending Agreement.
180,948 0.085%
HSBC Nominees (New
Zealand) Limited
Unknown
The relevant agreement document(s) (2010
Global Master Securities Lending
Agreement) are attached in Annexure D (40
pages).
Shares held or in respect of which
the holder may exercise control
over disposal in the ordinary
course of sales and trading
businesses.
1 0.000%
HSBC Custody Nominees
(Australia) Limited
Unknown
The relevant agreements need not be
attached under regulation 139.
Derivative relevant interest over
quoted underlying.
272,996 0.128% Unknown Unknown
Swap Agreement: The relevant agreement
document(s) (2002 ISDA Master
Agreement) are attached in Annexure C (41
pages).
Please refer to Table 2 for details on
derivative relevant interest.
Morgan Stanley Australia
Securities Limited
Shares held or in respect of which
the holder may exercise control
over disposal in the ordinary
course of sales and trading
businesses.
595 0.000%
Morgan Stanley Australia
Securities (Nominee) Pty
Limited
Unknown
The relevant agreements need not be
attached under regulation 139.
Morgan Stanley Capital
Services LLC
Derivative relevant interest over
quoted underlying.
2,354 0.001% Unknown Unknown
Swap Agreement: The relevant agreement
document(s) (1992 ISDA Master Agreement
& 2002 ISDA Master Agreement) are
attached in Annexure C (65 pages).
Please refer to Table 2 for details on
derivative relevant interest.
3
For a derivative relevant interest, also –
Details for (a) Type of Derivative
(b) Details of Derivative
Notional Value of the
Derivative
Settlement
Type
Expiry Date of
the Derivative
Morgan Stanley & Co. International plc
Swap Agreement 921,533.22
Cash
10/31/2024
Swap Agreement 81,408.78 10/31/2024
Swap Agreement 2,918.75 10/31/2024
Swap Agreement 1,443.71 10/31/2024
Morgan Stanley Capital Services LLC
Swap Agreement 7,261.92 4/12/2024
Swap Agreement 1,390.69 8/08/2024
Details of transactions and events giving rise to substantial holding
Details of the transactions or other events requiring disclosure: set out in the table below
Date of
Transactio
n
Holder of Relevant Interest Transaction Nature
Considerat
ion
Class and number of
securities
8/18/2022 Morgan Stanley Capital Services LLC Buy N/A 116 Swaps
8/19/2022 Morgan Stanley Capital Services LLC Buy N/A 365 Swaps
8/22/2022 Morgan Stanley & Co. International plc Borrow N/A 116 Ordinary Shares
8/24/2022 Morgan Stanley & Co. International plc Borrow N/A 701 Ordinary Shares
8/31/2022 Morgan Stanley Capital Services LLC Buy N/A 921 Swaps
9/1/2022 Morgan Stanley & Co. International plc Buy 617.32 230 Ordinary Shares
9/1/2022 Morgan Stanley Capital Services LLC Buy N/A 84 Swaps
9/2/2022 Morgan Stanley & Co. International plc Borrow N/A 921 Ordinary Shares
9/2/2022 Morgan Stanley & Co. International plc Buy 519.45 194 Ordinary Shares
9/2/2022 Morgan Stanley Capital Services LLC Buy N/A 16 Swaps
9/5/2022 Morgan Stanley & Co. International plc Buy 370.71 139 Ordinary Shares
9/6/2022 Morgan Stanley & Co. International plc Buy 310.06 115 Ordinary Shares
9/8/2022 Morgan Stanley & Co. International plc Buy 231.16 86 Ordinary Shares
9/12/2022 Morgan Stanley & Co. International plc Buy 170.25 64 Ordinary Shares
9/15/2022 Morgan Stanley & Co. International plc Buy 1,665.35 614 Ordinary Shares
9/19/2022 Morgan Stanley & Co. International plc
Increase in shares held or in respect of which the holder may exercise
right to rehypothecate pursuant to the agreement(s)
N/A 191 Ordinary Shares
4
9/22/2022 Morgan Stanley & Co. International plc Buy 408.1 154 Ordinary Shares
9/27/2022 Morgan Stanley & Co. International plc
Increase in shares held or in respect of which the holder may exercise
right to rehypothecate pursuant to the agreement(s)
N/A 154 Ordinary Shares
9/30/2022 Morgan Stanley & Co. International plc Buy N/A 207,500 Swaps
9/30/2022 Morgan Stanley & Co. International plc Buy N/A 42,500 Swaps
10/4/2022 Morgan Stanley & Co. International plc Borrow N/A 250,000 Ordinary Shares
10/7/2022 Morgan Stanley & Co. International plc Borrow N/A 50,000 Ordinary Shares
10/7/2022 Morgan Stanley & Co. International plc Buy N/A 139,369 Swaps
10/7/2022 Morgan Stanley & Co. International plc Buy N/A 250,000 Swaps
10/10/2022 Morgan Stanley & Co. International plc Borrow N/A 250,000 Ordinary Shares
10/10/2022 Morgan Stanley & Co. International plc Buy 8,737.70 3,177 Ordinary Shares
10/17/2022 Morgan Stanley Capital Services LLC Buy N/A 303 Swaps
10/18/2022 Morgan Stanley & Co. International plc Buy 265.16 86 Ordinary Shares
10/19/2022 Morgan Stanley & Co. International plc Buy 200.85 64 Ordinary Shares
10/21/2022 Morgan Stanley & Co. International plc Collateral Received N/A 124,312 Ordinary Shares
10/31/2022 Morgan Stanley & Co. International plc Buy 12,148.98 3,424 Ordinary Shares
10/31/2022 Morgan Stanley & Co. International plc Buy 161,101.71 43,659 Ordinary Shares
10/31/2022 Morgan Stanley & Co. International plc Buy N/A 262 Swaps
11/1/2022 Morgan Stanley & Co. International plc Buy 173.85 48 Ordinary Shares
11/1/2022 Morgan Stanley & Co. International plc Buy 46,637.34 12,718 Ordinary Shares
11/2/2022 Morgan Stanley & Co. International plc Buy 9,393.30 2,646 Ordinary Shares
11/3/2022 Morgan Stanley & Co. International plc Buy 19,145.82 5,448 Ordinary Shares
11/8/2022 Morgan Stanley & Co. International plc
Increase in shares held or in respect of which the holder may exercise
right to rehypothecate pursuant to the agreement(s)
N/A 2,988 Ordinary Shares
11/9/2022 Morgan Stanley & Co. International plc Buy 13,915.72 3,851 Ordinary Shares
11/9/2022 Morgan Stanley & Co. International plc Collateral Received N/A 1,494 Ordinary Shares
11/10/2022 Morgan Stanley & Co. International plc Buy 5,605.20 1,557 Ordinary Shares
11/10/2022 Morgan Stanley & Co. International plc Collateral Received N/A 1,012 Ordinary Shares
11/16/2022 Morgan Stanley & Co. International plc Buy 26,383.55 7,472 Ordinary Shares
11/17/2022 Morgan Stanley & Co. International plc Buy 10,883.43 3,114 Ordinary Shares
11/18/2022 Morgan Stanley & Co. International plc Buy 10,992.42 3,114 Ordinary Shares
11/22/2022 Morgan Stanley & Co. International plc Borrow N/A 46,114 Ordinary Shares
11/22/2022 Morgan Stanley & Co. International plc Buy 5,968.94 1,682 Ordinary Shares
11/22/2022 Morgan Stanley & Co. International plc
Increase in shares held or in respect of which the holder may exercise
right to rehypothecate pursuant to the agreement(s)
N/A 1,004 Ordinary Shares
11/23/2022 Morgan Stanley & Co. International plc Buy 1,384.44 387 Ordinary Shares
11/25/2022 Morgan Stanley & Co. International plc Buy 1,678.37 466 Ordinary Shares
11/28/2022 Morgan Stanley Capital Services LLC Buy N/A 2,354 Swaps
11/28/2022 Morgan Stanley Capital Services LLC Buy N/A 296 Swaps
5
12/2/2022 Morgan Stanley & Co. International plc
Increase in shares held or in respect of which the holder may exercise
right to rehypothecate pursuant to the agreement(s)
N/A 723,360 Ordinary Shares
12/5/2022 Morgan Stanley & Co. International plc Buy 291.79 79 Ordinary Shares
12/5/2022 Morgan Stanley & Co. International plc Buy 2,672.95 724 Ordinary Shares
12/5/2022 Morgan Stanley & Co. International plc Buy N/A 179 Swaps
12/5/2022 Morgan Stanley & Co. International plc Buy N/A 545 Swaps
12/5/2022 Morgan Stanley & Co. International plc Buy N/A 8 Swaps
12/5/2022 Morgan Stanley Australia Securities Limited Buy
1,074.92
(AUD)
308 Ordinary Shares
12/5/2022 Morgan Stanley Australia Securities Limited Buy
3,010.00
(AUD)
860 Ordinary Shares
12/6/2022 Morgan Stanley & Co. International plc Buy N/A 251 Swaps
12/7/2022 Morgan Stanley & Co. International plc Buy N/A 213 Swaps
12/7/2022 Morgan Stanley & Co. International plc
Increase in shares held or in respect of which the holder may exercise
right to rehypothecate pursuant to the agreement(s)
N/A 625,705 Ordinary Shares
12/9/2022 Morgan Stanley & Co. International plc Buy 1,127.53 330 Ordinary Shares
12/9/2022 Morgan Stanley Australia Securities Limited Buy
1,929.92
(AUD)
592 Ordinary Shares
12/12/2022 Morgan Stanley & Co. International plc Buy 15,588.25 4,525 Ordinary Shares
12/12/2022 Morgan Stanley & Co. International plc Buy 16,499.22 4,774 Ordinary Shares
12/12/2022 Morgan Stanley Capital Services LLC Buy N/A 145 Swaps
12/13/2022 Morgan Stanley & Co. International plc Buy 75,747.60 21,041 Ordinary Shares
12/13/2022 Morgan Stanley Australia Securities Limited Buy 233.10 (AUD) 70 Ordinary Shares
12/13/2022 Morgan Stanley Australia Securities Limited Buy 250.50 (AUD) 75 Ordinary Shares
12/13/2022 Morgan Stanley Capital Services LLC Buy N/A 371 Swaps
12/14/2022 Morgan Stanley & Co. International plc Buy 457.85 129 Ordinary Shares
12/14/2022 Morgan Stanley & Co. International plc Buy 17,750.00 5,000 Ordinary Shares
12/14/2022 Morgan Stanley & Co. International plc
Increase in shares held or in respect of which the holder may exercise
right to rehypothecate pursuant to the agreement(s)
N/A 10,700,650 Ordinary Shares
Additional information
Address(es) of substantial product holder(s):
Morgan Stanley - 1585 Broadway, New York, NY 10036, United States
Morgan Stanley & Co. International Plc - 25 Cabot Square, Canary Wharf, London E14 4QA, United Kingdom
Morgan Stanley Australia Securities Limited - Level 39, Chifley Tower 2 Chifley Square, Sydney, NSW 2000, Australia
Morgan Stanley Capital Services LLC - 1585 Broadway, New York, NY 10036, United States
6
Contact details: Ashish Koltharkar, Phone: +91 22 6514-3501, E-mail: apdoi@morganstanley.com
Nature of connection between substantial product holders:
Each of the entities (as listed in Annexure A) in the Morgan Stanley group is a body corporate that each upstream entity controls and therefore has
the relevant interests that the above entities collectively have.
Name of any other person believed to have given, or believed to be required to give, a disclosure under the Financial Markets
Conduct Act 2013 in relation to the financial products to which this disclosure relates: Not Applicable
Certification
I, Ashish Koltharkar, certify that, to the best of my knowledge and belief, the information contained in this disclosure is correct and that I am duly
authorized to make this disclosure by all persons for whom it is made.
7
Annexure A
List of Morgan Stanley and its subsidiaries that have a relevant interest or deemed to have a relevant interest in the shares.
Entities
└─┬─Morgan Stanley
├─┬─Morgan Stanley Capital Management, LLC
│ └─┬─Morgan Stanley Domestic Holdings, Inc.
│ ├───Morgan Stanley Capital Services LLC
├─┬─Morgan Stanley International Holdings Inc.
│ ├─┬─Morgan Stanley (Australia) Securities Holdings Pty Limited
│ │ └─┬─Morgan Stanley Australia Securities Limited
│ ├─┬─Morgan Stanley International Limited
│ │ ├─┬─Morgan Stanley Investments (UK)
│ │ │ ├─┬─Morgan Stanley & Co. International plc
Annexure
INTERNATIONAL PRIME
BROKERAGE AGREEMENT
CONTENTS
SECTIONS
A. PRIME BROKERAGE TERMS ..................................................................................................................... 1
B. SETTLEMENT FACILITY ............................................................................................................................ 4
C. FOREIGN EXCHANGE TRANSACTIONS ................................................................................................. 7
D. EXECUTION TERMS .................................................................................................................................... 7
E. EXCHANGE-TRADED DERIVATIVES TRANSACTIONS ..................................................................... 8
F. REPRESENTATIONS AND ACKNOWLEDGEMENTS ............................................................................ 8
G. OBLIGATIONS ............................................................................................................................................ 12
H. EVENTS OF DEFAULT .............................................................................................................................. 15
I. USE OF INVESTMENTS ............................................................................................................................ 16
J. SECURITY .................................................................................................................................................... 16
K. EARLY TERMINATION, NETTING AND SET OFF............................................................................... 19
L. LIMITATION OF LIABILITY .................................................................................................................... 22
M. MISCELLANEOUS ...................................................................................................................................... 22
N. ASSIGNMENT AND TERMINATION ...................................................................................................... 24
O. GOVERNING LAW AND JURISDICTION ............................................................................................... 26
P. GUARANTEE AND INDEMNITY ............................................................................................................. 26
INTERPRETATION AND DEFINITIONS ........................................................................................................... 28
SCHEDULES
I. ELECTRONIC SERVICES
II. TERMS RELATING TO EXCHANGE-TRADED DERIVATIVES
PART A – DEALING
PART B – MASTER NETTING AGREEMENT
PART C – EURONEXT.LIFFE REQUIRED TERMS
PART D – LONDON METAL EXCHANGE
III. REQUIRED TERMS FOR STOCK EXCHANGES
IV. HONG KONG TRANSACTIONS
V. CASH PAYMENTS AND SECURITIES TRANSFERS AUTHORISATION
Page 1
THIS INTERNATIONAL PRIME BROKERAGE AGREEMENT is made on
between:
(1) Morgan Stanley & Co. International plc (“MSI plc”) for itself and as agent and trustee for and
on behalf of the other Morgan Stanley Companies (as defined herein); and
(2)[Insert name of client] (the “Client”)
IT IS AGREED AS FOLLOWS:
REGULATORY INFORMATION
REGULATORY STATUS
MSI plc (FCA registration number 165935) is regulated
by the FCA and regulated and authorized by the PRA.
Its principal address in the U.K. is 25 Cabot Square,
Canary Wharf, London E14 4QA.
None of the other Morgan Stanley Companies party to
this Agreement are regulated in the U.K. by the FCA but
may be regulated by other bodies or in their home
jurisdiction. Accordingly, the designated investment
business (as defined in the FCA Rules and PRA Rules)
conducted with or provided to the Client, or on its behalf,
by such Morgan Stanley Companies is not covered by
the rules and regulations made for the protection of
investors in the U.K.. MSI plc will provide the Client on
request with details of the regulatory status of such
companies.
CLIENT CATEGORISATION
MSI plc will treat the Client’s Agent as their client for
UK regulatory purposes in accordance with the FCA
Conduct of Business Sourcebook and will treat the Agent
as a per se professional client. If the Client does not
appoint an Agent MSI plc will treat the Client as its
client for UK regulatory purposes and will treat the
Client as a per se professional client. The Client or the
Agent may also request in writing that MSI plc
categorise the Agent or the Client, as applicable, as a
client benefiting from a higher degree of protection. The
Client agrees that it is responsible for updating Morgan
Stanley about any change in circumstances that could
affect the aforementioned categorisation.
A. PRIME BROKERAGE TERMS
A.1. Custody and Settlement
A.1.1. Custody: The Client appoints MSI plc as
custodian and MSI plc accepts such
appointment pursuant to the terms of this
Agreement. Where MSI plc holds the Client's
Investments in custody in the Prime Brokerage
Account it shall hold such investments as
trustee. MSI plc's duties as trustee shall be
subject to the terms of this Agreement. MSI
plc is not acting as trustee in relation to any
other service or activity relating to this
Agreement.
A.1.2. Settlement
(i) MSI plc will settle Transactions involving the
purchase of securities executed through the
Client’s Executing Broker and will provide
custody of Investments, each in accordance
with this Agreement. MSI plc reserves the
right to refuse to settle any Transaction, and
will notify the Client promptly of any such
refusal. MSI plc will use reasonable
endeavours to notify the Client promptly in
advance where reasonably practical. MSI plc
shall be deemed to have agreed to settle a
Transaction only upon actual settlement by it
of the Transaction.
(ii) MSI plc shall effect settlement of and payment
for securities in accordance with the laws,
regulations and market practices in the
jurisdiction in which the Transaction occurs.
In some securities markets deliveries of
securities and related payments are not
customarily made simultaneously, and may be
made through different mechanisms or
systems. The Client agrees that in such
circumstances unless, after consultation with
MSI plc, the Client or the Client’s investment
manager expressly instructs MSI plc only to
make delivery against payment, MSI plc may
make and accept payments on the settlement of
securities in accordance with such market
practices. MSI plc shall not be obliged to settle
a Transaction if the Client or the Client’s
investment manager instructs that it be settled
on a delivery versus payment basis and MSI
plc considers that such method of settlement is
not practicable. The Client shall bear the risk
that (a) the recipient of such securities may fail
to make payment, or return such securities, or
hold them on trust for the Client, and (b) the
recipient of payment may fail to deliver the
securities (or may deliver invalid, fraudulent,
forged or stolen certificates) or to return such
payment.
(iii) MSI plc has no control over the execution of
Transactions executed with an Executing
Broker (other than itself or a Morgan Stanley
Company) or introduced to it by another broker
(other than a Morgan Stanley Company) for
clearing (each a "Broker") and, save for its
obligations in relation to clearing and
settlement set out herein, it is not responsible
for any matter arising from, nor does it owe
any duties to the Client in respect of, the
execution of those Transactions. The Client’s
broker is not the agent of Morgan Stanley for
Page 2
any purpose. Where the Broker is an overseas
entity then the services of such Broker may
not be regulated under the FSMA.
A.2. Sub-custodians and Registration
A.2.1. Sub-custodians: The Client authorises MSI plc
to appoint any persons (including any
Associated Firm) to act as sub-custodians of
the Client’s Investments, including documents
of title or certificates evidencing title to such
Investments. Commensurate with the
requirements of the FCA Rules MSI plc will
exercise reasonable skill, care and diligence in
the selection and monitoring of sub-custodians,
shall be responsible to the Client for the
duration of the sub-custody agreement for
satisfying itself as to the ongoing suitability of
the sub-custodian to provide custodial services
to the Client, shall maintain an appropriate
level of supervision over the sub-custodian and
make appropriate enquiries periodically to
confirm that the obligations of the sub-
custodian continue to be competently
discharged. The level of assessment conducted
with regard to the selection and monitoring of
an Affiliate appointed as sub-custodian will be
at least as rigorous as that performed on any
non-affiliated company. MSI plc will be
responsible for the acts of any sub-custodian
which is an Affiliate (and therefore for losses
to the Client arising as a result of such acts) to
the same extent (and subject to the limitations
contained in paragraph L.1) as it is liable under
this Agreement for its own acts including any
act or omission, fraud, negligence or wilful
default.
Where MSI plc has appointed a sub-custodian
which is not an Affiliate, it will not be liable
for any act or omission, or for the insolvency,
of such sub-custodian or for any loss arising
therefrom unless, and except to the extent that,
any loss suffered by the Client is directly
caused by a breach of MSI plc’s obligations in
relation to the selection and monitoring of sub-
custodians set out in this paragraph A.2.1. but
subject at all times to the limitation on liability
for consequential loss set out in paragraph
L.1.2.
Following written request by the Client to MSI
plc, MSI plc will provide the Client with
information detailing the identity of sub-
custodians appointed by Morgan Stanley to
hold Investments in the relevant jurisdictions at
the time of the request.
A.2.2. Registration of Investments:
(i)MSI plc will arrange for any Investments that
are in registered form to be registered in
accordance with the FCA Rules. This may
mean they are registered (i) in the name of a
nominee company controlled by MSI plc, (ii)
in the Client’s name, (iii) in the name of a sub-
custodian or its nominee, (iv) in the name of a
nominee controlled by an Exchange or
Clearing House, (v) with MSI plc’s consent, in
such other name as the Client may direct in
writing (in which event, the Client accepts that
the consequences of so doing will be entirely at
the Client’s own risk), or (vi) in the name of an
Associated Firm or its nominee.
(ii)The Client agrees that MSI plc may register or
record the Client’s Investments in the name of
a third party or in MSI plc’s name where the
Investment is subject to the law or market
practice of a jurisdiction outside the UK and
MSI plc has reasonably determined that it is in
the Client’s best interests, or it is not feasible to
do otherwise and i) if registering in the name
of a third party, MSI plc is prevented from
registering the Investment in the Client’s name
or the name of a nominee company, and ii) if
registering in MSI plc’s name, MSI plc is
prevented from registering the Investments in
the Client’s name, the name of a nominee
company or in the name of the third party. As a
consequence, in the case of registration in the
name of MSI plc or a third party, the Client’s
Investments may not be segregated from MSI
plc’s or the third party’s Investments and in the
event of their default the Client’s Investments
may not be as well protected.
A.2.3. Identification of Investments:
(i) MSI plc will (subject to paragraph A.2.2.(ii))
identify, record and hold all the Client’s
Investments held with MSI plc in such a
manner that (a) the identity and location of
those Investments can be ascertained at any
time, and (b) those Investments are readily
identifiable as Investments belonging to a
customer of MSI plc and are separately
identifiable from any Investments of MSI plc.
Nothing in the preceding sentence shall prevent
all or any part of the Client’s Investments being
co-mingled with Investments of the same
description of other customers of MSI plc and
MSI plc will not be obliged to ensure that the
Client’s Investments will be separately
distinguishable from Investments belonging to
other customers of MSI plc.
(ii) MSI plc will require that where a Financial
Instrument is recorded in an account with a
sub-custodian, that sub-custodian will make it
clear in the title of the account that the
Investment belongs to one or more customers
of MSI plc.
Page 3
A.2.4. Holding of Investments Overseas: MSI plc
may, where it considers it appropriate, arrange
for the Client’s Investments, including
Financial Instruments, to be held overseas.
There may be different settlement, legal and
regulatory requirements in overseas
jurisdictions from those applying in the U.K.,
together with different practices for the separate
identification of the Client’s Investments.
Where the nature of the Investments or services
requires MSI plc to do so it may hold
Investments with a third party in a country
outside the EEA which does not regulate the
holding and safekeeping of Investments.
Where this is necessary to provide the services
the Client has requested under this Agreement,
the Client requests MSI plc to deposit its
Investments with such third parties. Where the
Client’s Investments are held in a jurisdiction
outside the UK by a third party on MSI plc’s
behalf, the Client’s Investments may be held in
an omnibus account by the third party and there
is a risk that the Client’s Investments could be
withdrawn or used to meet obligations of other
persons, or that the balance of assets held by
the third party does not reconcile with the
quantity which the third party is required to
hold, and the Client may not in such
circumstances receive its full entitlement of
Investments. In some jurisdictions it may not
be possible to identify separately the
Investments which a third party holds for
clients from those which it holds for itself or
for MSI plc, and there is a risk that your
Investments could be withdrawn or used to
meet the obligations of the third party, or lost
altogether if the third party becomes insolvent.
A.2.5. Pooling of Investments: Where the Client’s
Investments are pooled with those of one or
more customers, individual customer
entitlements may not be identifiable by
separate certificates, other physical documents
of title or equivalent electronic record and in
the event of an unreconcilable shortfall after
the default of a custodian, customers may share
in that shortfall pro-rata. It also means that
where corporate events (such as partial
redemptions) affect some but not all of the
Investments held in a pooled account MSI plc
shall allocate the Investments so affected to
particular customers in such fair and equitable
manner as MSI plc considers appropriate
(including without limitation pro rata allocation
or an impartial lottery).
A.2.6. Custody Statements in Electronic Form:
MSI plc will provide the Client with
information relating to the Client's Investments
held by MSI plc or an Associated Firm by
sending the Client periodic statements which
may be sent in electronic form. These will be
sent no less often than every 6 months and
assets will be valued in accordance with
general market practice or, by agreement, in
accordance with the Client’s instructions.
A.2.7 The Client’s Investments may be subject to a
lien or right of set-off in favour of any sub-
custodian, depositary, nominee or agent in
respect of charges relating to their
administration and safekeeping.
A.2.8 The Client agrees that MSI plc may, in its sole
discretion, decide to (i) liquidate any unclaimed
Investments at market value, and pay away the
proceeds, or (ii) pay away any such unclaimed
Investments, in either case to a registered
charity of our choice if MSI plc has held the
relevant Investment for at least twelve years; in
the twelve years preceding the divestment of
that Investment MSI plc has not received
instructions relating to any Investment from the
Client or on its behalf; and MSI plc has been
unable to contact the Client having taken
reasonable steps in accordance with the FCA
Rules to trace the Client and return the
Investment, in which case MSI plc shall cease
to treat such assets as custody assets. In such
circumstances, MSI plc (or a member of its
group) will unconditionally undertake to pay
the Client a sum equal to the value of the
Investment at the time it was liquidated or paid
away in the event that the Client seeks to claim
the Investment in future.
A.3. Rights and Obligations in Respect of
Investments
A.3.1. Corporate Actions:
(i)Where MSI plc is notified that a Corporate
Action may be exercised in relation to an
Investment credited to a Prime Brokerage
Account and registered in the name of an
Associated Firm, a sub-custodian appointed by
MSI plc or its or such sub-custodian’s
nominee, it will use reasonable efforts to notify
the Client as soon as practicable of such
Corporate Action.
(ii)If the Client wishes to exercise a right relating
to a Corporate Action in relation to an
Investment credited to a Prime Brokerage
Account, it must notify MSI plc in writing or
electronically of its election as soon as
possible, but in any event no later than the
expiry of Morgan Stanley’s deadline for
submissions of elections relating to that
Corporate Action as advised to the Client by
MSI plc or, where no deadline is advised, no
later than 10 Notice Business Days prior to the
final date for submission by MSI plc of such
elections (or such shorter period as may be
agreed in writing). MSI plc will use
reasonable efforts to exercise such right, but
only (a) on such terms as the Client has
notified to MSI plc in writing and as are
acceptable to MSI plc, and (b) where the Client
has provided MSI plc or any other person (as
the case may be) with any funds required to
exercise such right.
(iii)MSI plc will use reasonable efforts to send the
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Client Corporate Action Information. This will
have been sent to MSI plc from a sub-
custodian or agent bank for forwarding to
shareholders whose shares are held in custody
by MSI plc. No representation or warranty,
express or implied, is or will be made by MSI
plc in relation to the accuracy or completeness
of the Corporate Action Information or any
other written or oral information made
available to the Client or its advisers in
connection with the proposed Corporate Action
and no responsibility or liability is or will be
accepted by Morgan Stanley in relation to it.
The Client should make its own investigation
of the proposed Corporate Action and all
information provided.
(iv)The distribution of the Corporate Action
Information in certain jurisdictions and/or the
Client’s ability to participate in a Corporate
Action may be restricted by law or regulation
in the jurisdiction in which the Client resides or
conducts business or by the issuer of the
relevant Investment. Any request for MSI plc
to exercise or participate on behalf of the
Client in the proposed Corporate Action shall
be a representation to Morgan Stanley that the
Client is entitled to so exercise or participate
and that any and all restrictions or
qualifications (including but not limited to any
restrictions relating to the receipt of Corporate
Action Information) have been complied with.
By accepting and executing such request on
behalf of the Client, MSI plc is not making any
representation or warranty about the Client’s
eligibility to so exercise or participate in any
such action.
A.3.2. Calls on Partly Paid Investments: Where
Morgan Stanley or any third party holding
Investments on behalf of Morgan Stanley is
legally liable to meet any payment due or to
become due in respect of those Investments,
the Client will provide Morgan Stanley or such
other person (as the case may be) with funds to
meet such payments on the due date therefor,
or Morgan Stanley or such person may make
such payment and the Client will reimburse
Morgan Stanley or such person forthwith upon
demand. Where the Client provides the
necessary funds in time to do so, MSI plc shall
use reasonable endeavours to satisfy the call.
A.3.3. Collection of Income: Where Investments
credited to a Prime Brokerage Account are
registered in the name of an Associated Firm, a
sub-custodian appointed by MSI plc or that of
its or such sub-custodian’s nominee, MSI plc
will credit to that Prime Brokerage Account
any Income actually received by it to which the
Client is entitled as soon as reasonably
practicable (after deduction of any taxes or
duties payable).
A.3.4. Reversal of Account Entries: In some
jurisdictions the delivery of Investments or
crediting of cash to an account may be reversed
in certain circumstances. Accordingly, any
delivery of Investments or crediting of cash to
an Account will be subject to reversal if, in
accordance with local laws and practice, the
delivery of Investments or cash giving rise to
the credit is reversed. Account entries may
also be reversed to reflect any failed or delayed
(or partially failed or delayed) settlements to or
from the Client’s Account. MSI plc will use
reasonable endeavours to notify the Client in
advance if it becomes aware that any Account
entry may be reversed and will notify the
Client promptly if any Account entry is
reversed.
A.3.5. Voting Rights: In its capacity as custodian
and prime broker for the Client, MSI plc may
receive notification of voting rights to be
exercised with respect to certain of the Client’s
Investments. For those Investments where MSI
plc expressly agrees with the Client that it will
do so, MSI plc will use reasonable efforts to
notify the Client as soon as reasonably
practicable following receipt of notification of
such voting rights. MSI plc will only exercise
voting rights in respect of the Client’s
Investments where expressly agreed with the
Client. Any request for Morgan Stanley to
exercise voting rights shall be a continuing
representation that the Client is entitled to
exercise such voting rights and that any and all
restrictions specified by the issuer or which
exist under applicable law or regulation have
been duly complied with.
A.3.6 Reporting Obligations: The Client shall be
solely responsible for compliance with any
notification or other requirements of any
jurisdiction relating to or affecting the Client’s
ownership of the Investments and Morgan
Stanley assumes no liability for non-
compliance with such requirements.
A.3.7 Proceedings: Morgan Stanley shall not be
obliged to institute legal proceedings, file a
claim or proof of claim in any insolvency
proceedings or take any action with respect to
collection of Income or to recover any cash or
Investments.
A.4. Client money
A.4.1 When the Client transfers money to MSI plc,
the money will not be client money for the
purposes of the FCA Rules as title to such
money will pass to MSI plc.
A.4.2 Without prejudice to the foregoing, in relation
to Exchange-Traded Derivatives Transactions
entered into by the Client, MSI plc may
transfer cash from the Client’s Prime
Brokerage Account to the Client’s Account for
Exchange-Traded Derivatives Transactions as
may be required to meet any Margin payment
due from the Client in relation to the
Exchange-Traded Derivatives Transactions.
While such cash is credited to the Client’s
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Exchange-Traded Derivatives Account MSI plc
will treat it as client money and hold it subject
to the FCA Rules relating to client money.
However, when cash is transferred or
retransferred to the Client’s Prime Brokerage
Account it will be held as collateral and full
title to such cash will be transferred to MSI plc,
and as a result such cash will not be client
money for the purposes of the FCA Rules
relating to client money.
A.4.4. [Where the Client holds money with Morgan
Stanley Bank International Limited
(“MSBIL”), the money will be held by MSBIL
as banker and not trustee. As a result, the
money will not be held in accordance with the
client money rules. In particular, MSBIL shall
not segregate the Client’s money from MSI
plc’s money or its own money and will not be
liable to account to the Client for any profits
made by its use as banker of such funds. If
MSBIL fails, the Client Money Rules
regarding distributions will not apply to the
money MSBIL holds for the Client and so the
Client will not be entitled to share in any
distribution under the Client Money Rules.][To
be included unless Compliance confirm it can
be removed]
A.5. The Loan
A.5.1. Extension of the Loan: MSI plc may, in its
sole discretion, be prepared to lend the Client
money on the terms set out in this Agreement.
A.5.2. Terms of the Loan:
(i) Limit on Loan Available: The aggregate
amount of the Loan available from time to time
will not exceed such amount as MSI plc may in
its sole discretion determine from time to time.
(ii) Purpose of the Loan: The proceeds of the
Loan will not be used in any way, directly or
indirectly, for any purpose which is unlawful
under any applicable law nor for the making,
instigation or conducting of a takeover of, or
tender offer for, any person or any other action
which, when completed, will have the effect of
acquiring control of any such person, or for the
purchase of shares in the Client, whether such
transaction is effected by the Client, any
subsidiary of it, or any entity or individual that
controls or is under common control with it.
A.5.3. Interest: Interest will accrue daily on the Loan
at the rate and on the basis set out in the Fee
Schedule.
A.5.4. Repayment of the Loan: The Loan, or any
part thereof, is repayable by the Client on
demand by MSI plc (which may mean the
Client repaying the Loan the same day). When
making such demand, MSI plc will notify the
Client of the total amount due and the date for
payment. The Client will pay such amount to
MSI plc (or on its instructions) on or before
that date.
B. SETTLEMENT FACILITY
B.1. Settlement Facility
B.1.1. Availability: Normally, any securities to be
transferred by the Client must be available for
transfer in a Prime Brokerage Account or be
provided by the Client to MSI plc in good time
to enable MSI plc to settle the relevant transfer.
However, MSI plc may make a Settlement
Facility available to the Client by utilising
either (i) securities MSI plc has in inventory or
(ii) securities MSI plc has borrowed from a
lender. The Client will, at the time it requests
that MSI plc make a Settlement Facility
available to it, inform MSI plc of the type and
amount of securities it wishes MSI plc to
source and/or make available on its behalf. If
MSI plc is able to make a Settlement Facility
available to the Client, MSI plc will inform the
Client of the amount of those securities that
MSI plc is able to borrow from a lender and/or
make available from its inventory in
accordance with this paragraph B.1.1. (the
“Settlement Securities”). Except to the extent
that there is sufficient available Margin, the
Settlement Facility will only be made available
to the Client on the transfer to MSI plc of such
additional Margin as MSI plc requires in
connection with the Client’s Liabilities under
the Settlement Facility.
Any Settlement Facility for Hong Kong
Settlement Securities will be made available to
the Client by MSI plc by lending the securities
to the Client under the OSLA. The Client shall
not be required to issue a Borrowing Request
(as defined in the OSLA) in respect of such
loan.
Upon the Client’s request, MSI plc may agree
to transfer Hong Kong securities to the Client
(or to its order) in respect of an actual or
possible future settlement obligation of the
Client’s and such transfer shall be regarded as a
Settlement Facility for the purposes of this
paragraph. If MSI plc agrees so to transfer
Hong Kong securities, MSI plc shall remain the
legal and beneficial owner of such securities
and MSI plc shall hold the securities in an
account in its name until such transfer.
B.2. Terms of Settlement Facility:
(i) Availability: Where MSI plc has informed the
Client that it is able to make a Settlement
Facility available for particular Settlement
Securities, it will use reasonable endeavours to
ensure that the Settlement Securities will be
available for Settlement. The Client
acknowledges that in certain circumstances, for
example where the lender from whom MSI plc
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has sourced the securities fails to deliver such
securities, MSI plc may not be able to make the
securities available for Settlement.The
provisions of this paragraph B.2(i) shall not
apply in relation to Australian Settlement
Securities.
(ii) Purpose: Where MSI plc makes available to
the Client a Settlement Facility, the Settlement
Securities will be used for the sole purpose of
effecting a Settlement and may be delivered by
MSI plc either (i) directly to the third party
purchaser; or (ii) to the Client prior to onward
delivery to the third party purchaser. Where
the Settlement relates to Hong Kong Settlement
Securities MSI plc may deliver the securities
directly to the Client (or to its order) in
accordance with the OSLA and such delivery
shall constitute performance by MSI plc of a
Settlement. Where MSI plc effects any
Settlement, the Client undertakes to deliver
Equivalent Securities to MSI plc in accordance
with paragraph B.2.(v).
(iii) Cancellation: MSI plc may cease to make
available to the Client the Settlement Facility
in whole or in part at any time and will notify
the Client as soon as reasonably practicable of
any such cancellation. Notwithstanding the
foregoing (but subject to the other terms of this
Agreement), MSI plc will not cease to make
available to the Client the Settlement Facility
in relation to any Australian Settlement
Securities where MSI plc has already
confirmed to the Client that it will make such
Australian Settlement Securities available to
the Client for settlement.
(iv) Fees and other Payments: In respect of any
Settlement Facility, the Client will pay MSI plc
such fee, based on the outstanding amount of
Settlement Securities from time to time made
available under that facility, being an amount,
or a rate, or otherwise, as MSI plc determines
and calculates and notifies to the Client. In
addition, the Client will indemnify MSI plc on
demand in respect of any payments or
liabilities incurred by MSI plc, including any
tax (other than tax on Morgan Stanley’s net
income) or duty for which MSI plc is liable to
account, in connection with any borrowing of
securities entered into by it to enable it to effect
such Settlement Facility or otherwise making
the Settlement Facility available to the Client.
(v) Delivery of Equivalent Securities: The Client
will be required to deliver to MSI plc
Equivalent Securities to those used for
Settlement on the Client’s behalf and MSI plc
may, at any time, require the Client to deliver
any such Equivalent Securities by giving it
Notice of not less than the standard settlement
time for such securities on the exchange or in
the clearing or settlement organisation through
which such securities were originally delivered.
The Client must deliver, or procure the delivery
of, Equivalent Securities or make any relevant
payment to MSI plc in accordance with this
paragraph (or as MSI plc may instruct). Where
the Client is required to deliver securities
equivalent to Hong Kong Settlement Securities,
it shall effect that delivery by delivering
Equivalent Securities (as defined in the OSLA)
in accordance with the OSLA and such
delivery shall constitute performance of its
obligations under this paragraph. If the Client
fails to deliver Equivalent Securities to MSI plc
in accordance with this paragraph B.2.(v), in
addition to MSI plc’s rights under the general
law and this Agreement and, in the case of
Hong Kong Settlement Securities, the OSLA,
where MSI plc incurs, or is required to account
to or reimburse any third party for interest,
overdraft or similar costs and expenses or for
losses, damages, expenses or costs suffered by
such third party the Client agrees to pay on
demand and indemnify MSI plc with respect to
all such losses, damages, costs and expenses
which arise from such failure. In addition, MSI
plc may without prejudice to its other rights
exercise a “buy-in” against the Client. In the
event of a “buy-in” being exercised against the
Client, the Client will account to MSI plc for
the total costs and expenses reasonably
incurred by MSI plc as a result of such “buy-
in”.
(vi) Manufactured Payments: Where any
Income is paid on any Settlement Securities
which are the subject of a Settlement Facility,
the Client will pay to MSI plc, on the payment
date of any such Income, an amount of money
equal to the same, together with an amount
equal to any deduction, withholding or
payment for or on account of any tax together
with an amount equal to any tax credit
associated with any such Income, unless MSI
plc has agreed that an appropriate tax voucher
may be provided in lieu of any such amount.
(vii) Corporate Actions: Where, prior to delivery
of any Equivalent Securities to MSI plc any
rights relating to a Corporate Action, including
those requiring election, arise in respect of any
Settlement Securities the subject of a
Settlement Facility, then the Client will deliver
to MSI plc Equivalent Securities in such form
as MSI plc has notified to the Client in relation
to the exercise of any such right.
(viii) Representations:
On each occasion that the Client requests a
Settlement Facility, the Client represents,
warrants and acknowledges that:
(a) it is solely responsible for ensuring that
any short sale effected, or to be effected, by it
that may give rise to a Settlement will be one
that it is legally entitled to effect under the laws
and regulations of the relevant market. In
particular, MSI plc will have no responsibility
or liability for ensuring, or advising the Client,
whether any such short sale complies with any
Page 7
laws or regulations to which the Client, or any
such sale, may be subject;
(b) the purpose for which it requires the
Settlement Facility will be a lawful purpose
under the laws and regulations of the relevant
market; and
(c) the purpose of requesting a Settlement
Facility in respect of securities issued and
traded in the United States ("US Equity
Securities") will be to settle a short sale, to
cover a failure to receive securities required to
be delivered to the Client or any similar
situation otherwise permitted under Regulation
T as promulgated by the Board of Governors of
the Federal Reserve System of the U.S.. To the
extent that the Client is authorised under
applicable law to re-lend the US Equity
Securities it will obtain an undertaking from its
borrower in form and substance equivalent to
the representations and warranties given by it
herein.
B.3. [This paragraph is deleted.]
B.4. South African Securities: Where, in relation
to the Settlement Facility, MSI plc lends to the
Client any South African Securities, the Client
agrees to deliver Equivalent Securities within a
period of twelve months from the date on
which MSI plc settled the relevant
transfer. Where a Morgan Stanley Company
makes use of the Client's Investments, pursuant
to paragraph I.1, and where such investments
are South African Securities, MSI plc will
deliver or procure the delivery by the relevant
Morgan Stanley Company of Equivalent
Investments, in accordance with paragraph I.2,
within a period of twelve months from the date
on which such South African Securities became
the property of the relevant Morgan Stanley
Company.
B.5
Australian Settlement Securities: Where
MSI plc has informed the Client that it is able
to make a Settlement Facility available for
particular Australian Settlement Securities,
MSI plc commits to procure the delivery of
such Settlement Securities for Settlement,
subject to the terms of this Agreement.
B.6. Confirmations: The Client elects to receive
notification or confirmation with respect to the
Settlement Facility by electronic means rather
than by post or by facsimile.
C. FOREIGN EXCHANGE TRANSACTIONS
The provisions of this Section C will apply to FX
Transactions entered into with Morgan Stanley under the
terms of this Agreement.
C.1. Payments
All payments to be made upon the maturity of a FX
Transaction will be made on the maturity date of such
contract or, if such date is not a Currency Business Day,
on the next Currency Business Day (the “Currency
Settlement Date”).
C.2. Payment Netting
If on any Currency Settlement Date more than one
delivery of a particular currency is to be made between
the Client and the same Morgan Stanley Company in
respect of a FX Transaction, then each such party will
aggregate the amounts of such currency deliverable by it
and only the difference between those aggregate amounts
will be delivered, by the party owing the larger aggregate
amount to the other party, and, if the aggregate amounts
are equal, no delivery of that currency will be made.
C.3. Pre-advice
The party making any payment on the maturity of a FX
Transaction will advise the party receiving payment of
the bank from which such payment is to be made.
D. EXECUTION TERMS
The provisions of this Section D will only apply to (i)
cash settled trades in Investments, (ii) Exchange-Traded
Derivative Transactions and (iii) FX Transactions
entered into under the terms of this Agreement.
D.1. Dealing Rules and Regulations
(i) Morgan Stanley shall be entitled to carry out all
Transactions pursuant to this Agreement in
accordance with the constitution, by-laws,
rules, regulations orders, directives,
announcements and/or customs of the relevant
market, self-regulating organisation, Exchange
and/or Clearing House and applicable laws
whether imposed on Morgan Stanley or the
Client and shall be entitled to take or refrain
from taking any reasonable action it considers
fit in order to ensure compliance with the same.
All such actions will be binding upon the
Client.
(ii) If there is a conflict between (a) this
Agreement and (b) any by-law, rule, regulation
and/or law, the latter will prevail.
D.2. No Obligation to Deal
Morgan Stanley will be under no obligation to execute or
otherwise enter into any particular Transaction, or to
accept any order. Morgan Stanley need not give any
reasons for declining to do so. If Morgan Stanley
declines an order for execution it will make reasonable
efforts to notify the Client promptly, but will not be
liable for any failure to notify.
Page 8
D.3. Best Execution
Morgan Stanley has developed the Order Execution
Policy with respect to the execution of client orders. The
Client consents to the execution of its orders in
accordance with such Order Execution Policy. The Client
consents to receiving future information with respect to
the Order Execution Policy and related documentation
via electronic communication or the Morgan Stanley
website.
D.4. Delegation
Morgan Stanley may delegate to any person (including
any member of the Morgan Stanley group of companies)
all or any part of a Transaction or service or may
introduce the Client’s Transaction to another person for
execution, in each case subject to such conditions as
Morgan Stanley may impose.
D.5. Aggregation and Averaging
D.5.1. Aggregation: Morgan Stanley may, in
accordance with the FCA Rules, aggregate the
Client’s orders with its own (in-house) orders,
orders of its Associated Firms and other
customer orders. Such aggregation may operate
on some occasions to the advantage, and on
other occasions to the disadvantage, of the
Client.
D.5.2. Averaging: Any order taken from the Client
for execution by Morgan Stanley may be
executed over a period up to and including five
business days unless (i) the order is
immediately executed or (ii) the Client agrees
otherwise (either generally in writing or
specifically when such order is placed).
Morgan Stanley may report to the Client an
average price for the series of Transactions so
executed instead of the actual price of the
Transaction. Morgan Stanley and its
employees or officers will not be liable for any
loss arising from any such order being
executed over a shorter period (whether more
or less than one Exchange Business Day) as
they shall determine in their absolute
discretion.
D.6. Principal or Agent
D.6.1. In accepting any order or executing
Transactions (including programme trades),
Morgan Stanley may act as agent, or principal,
or a combination of both agent and principal
unless it is unambiguously clear from the terms
of the order (and Morgan Stanley accepts those
terms) or the rules of an Exchange that Morgan
Stanley will act in a specific capacity. If the
rules of an Exchange require Morgan Stanley
to act as agent on an Exchange where Morgan
Stanley cannot deal as principal then, for that
transaction the Client undertakes to sign and
deliver to Morgan Stanley any further
documents as Morgan Stanley may require.
D.6.2. In respect of programme trades, Morgan
Stanley and/or an Associated Firm may execute
an own account transaction in any Investment
included in a programme trade.
D.7. Equity Securities
With respect to Transactions in equity securities:
(i)The Client’s objectives may be achieved by
Morgan Stanley acting as agent and having the
ability to access its internal sources of
liquidity. In such a case the Client’s order may
not be executed on an Exchange’s central
trading system. Such trades will be reported as
appropriate.
(ii)Morgan Stanley’s internal sources of liquidity
include, without limitation, crossing against
client order flow, client facilitation, market
making or a proprietary trading strategy. In
such circumstances Morgan Stanley may be
trading as both the Client’s agent and as
principal on Morgan Stanley’s own behalf.
D.8. Non-Readily Realisable Securities
Where Morgan Stanley acts as principal in executing a
Transaction in an Investment which is not a packaged
product or a readily realisable security (within the
meaning of the FCA Rules), the unit price of the
Transaction shall be either (a) the market price for the
Investment then available on the Exchange on which
such Investment is generally traded or (b) if no such
price is available, such price as determined by Morgan
Stanley on a reasonable efforts basis. Any reference in a
contract or confirmation note to a market price shall be
construed accordingly.
D.9. Limit Orders
Any limit order taken from the Client in respect of an
Investment in which Morgan Stanley acts as market
maker or otherwise as principal will be on the basis that:
(i)such order will not be executed unless and until
the Investment concerned reaches the same or
a higher price than that specified in the order
(in the case of a sell order) or the same or a
lower price than that specified in the order (in
the case of a buy order) with a view to
purchasing or selling (as the case may be) in
the Investment concerned in the amount of the
order; and
(ii) until such execution Morgan Stanley may buy
the Investment (where the order was to buy) at
a price equal to or lower than that stated in the
order or sell it (where the order was to sell) at a
price equal to or higher than that so stated, such
purchase or sale being from or to any third
party and for its own account or for that of any
Associated Firm.
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D.10. Contingent Liability Transactions
The Client may enter into transactions with or through
Morgan Stanley that may commit the Client to further
payment or liability (“contingent liability transactions”).
These may include written options where the Client will
be obliged to make payment or delivery if the option is
exercised against it, or contracts for differences such as
swaps where the Client will be required to make variable
payments depending on the performance of an index or
other factor specified in the contract.
D.11. Collective Investment Schemes
The services provided hereunder may include execution
of transactions in unregulated collective investment
schemes.
E.EXCHANGE-TRADED DERIVATIVES
TRANSACTIONS
Additional terms applicable to Exchange-Traded
Derivatives Transactions are set out in the Schedule
entitled Terms Relating to Exchange-Traded Derivatives
at the back of this Agreement. These terms are in
addition to the other provisions of this Agreement.
F. REPRESENTATIONS AND
ACKNOWLEDGEMENTS
F.1. Representations etc.
F.1.1. By signing this Agreement the Client
represents and warrants to Morgan Stanley
that:
(i)Status: the Client is duly organised and
existing under the laws of the jurisdiction of its
organisation and, if relevant under such laws,
in good standing;
(ii) Powers: the Client and any person designated
by the Client has, and will at all times have, the
power to enter into and deliver this Agreement
and any other documentation relating to this
Agreement, to enter into each Transaction or
contract entered into pursuant thereto and to
perform its or their obligations thereunder;
(iii) Obligations Binding: the Client’s obligations
under this Agreement and each Transaction or
contract entered into pursuant thereto constitute
the Client’s legal, valid and binding
obligations, enforceable in accordance with
their terms (subject to applicable bankruptcy,
insolvency, reorganisation, moratorium and
similar laws relating to or affecting creditors'
rights generally and to general equitable
principles);
(iv) Consents: the Client and any person
appointed by it to advise it or deal on its behalf
has obtained and will maintain in effect all
necessary authorisations, consents or
approvals, exemptions, licences and
notifications (including, without limitation, any
required by any regulatory body) in connection
with the entry into this Agreement and any
Transactions and will comply with the terms of
the same and with all applicable law;
(v) No Violation or Conflict: the execution,
delivery and performance of this Agreement
does not and will not conflict with any law
applicable to the Client, any provision of its
constitutional documents, any order or
judgment of any court or other agency of
government applicable to it or any of its assets
or any provision of any agreement binding on
or affecting it or any of its assets;
(vi) Acting as Principal: the Client is acting as
principal, and not as agent, nominee, fiduciary
(except where the Client has notified Morgan
Stanley that it is the trustee of a trust) or
otherwise in entering into and performing any
actions under this Agreement;
(vii) Ownership of Assets: except where the Client
is the trustee of a trust, the Client beneficially
owns all assets held by Morgan Stanley in the
Accounts, free of all encumbrances and/or
adverse interests (other than those arising
pursuant to the Customer Documents);
(viii) No Event of Default: no Event of Default has
occurred or is continuing and no such event
would occur as a result of the Client entering
into or performing its obligations under this
Agreement or any Transaction hereunder;
(ix)Litigation: no litigation, arbitration or
administrative proceeding or claim is in
progress, pending or, to the Client’s
knowledge, threatened which could by itself or
together with any other such proceedings or
claims affect the legality, validity or
enforceability of this Agreement or any
Transaction or affect the Client’s ability to
perform its obligations under this Agreement
or any Transaction;
(x)ERISA: neither the Client nor any Agent
acting on behalf of the Client is (a) an
employee benefit plan (an “ERISA Plan”), as
defined in Section 3 (3) of ERISA, subject to
Title I of ERISA or Section 4975 of the U.S.
Internal Revenue Code of 1986, as amended,
(b) a person acting on behalf of an ERISA Plan
or using the assets of an ERISA Plan, or (c) a
person the assets of whom constitute assets of
an ERISA Plan. In the event that the Client is
in breach of any aspect of this representation or
becomes aware that with the passing of time,
giving of notice, or expiry of any applicable
grace period it will breach this representation
the Client will notify MSI plc immediately;
Page 10
(xi)Title: at any time the Client delivers, or is
treated as delivering, to Morgan Stanley any
securities or Equivalent Securities, it will have
the full and unqualified right to make such
delivery; and
(xii) Additional Representation where Client is
Trustee: where the Client enters into this
Agreement in the capacity of trustee of a trust,
it:
(a) has been properly appointed as trustee of
the trust, is empowered under the trust deed to
enter into and deliver this Agreement and any
other documentation relating to this
Agreement, to enter into each Transaction or
contract entered into pursuant thereto and to
perform its or their obligations thereunder and
is entitled to deal with all relevant trust assets
and that it has complied with all internal
management procedures of the trust and any
other applicable procedural requirements;
(b) is absolutely entitled to pass full legal
and beneficial ownership of all assets provided
by it under this Agreement and each
Transaction free of all encumbrances and/or
adverse interests (other than those arising
pursuant to the Customer Documents);
(c) is not in breach of the trust and has the
right to be indemnified out of the assets of the
trust for all obligations under this Agreement
and each Transaction;
(d) has not lost and will not do anything or
omit to do anything which may jeopardise or
cause it to lose or in any way compromise its
right to be indemnified in full out of the trust
assets in respect of its obligations under this
Agreement and each Transaction;
(e) it has an express right of indemnity from
the assets of the trust in respect of Transactions
entered into which are in breach of any aspect
of the relevant terms of trust; and
(f) is not acting in breach of its fiduciary
duties in entering into this Agreement or any
Transaction.
(xiii) The Client is not: (a) a United States person;
(b) a foreign person controlled by U.S.
persons; or (c) a foreign person acting on
behalf or in conjunction with U.S. persons, as
such terms are defined or used in Regulation X
issued by the Board of Governors of the
Federal Reserve System under the Securities
Exchange Act of 1934 (as amended) of the
United States of America.
F.1.2. Compliance with Investment Restrictions:
The Client represents and warrants that it, and
its Agents, where applicable, will comply in all
respects with any and all investment
restrictions, as amended, supplemented,
updated or otherwise modified from time to
time set forth in (a) any document, including,
without limitation, any prospectus, statement of
additional information, investment
management agreement or (b) any law,
regulation or guideline; in each case, governing
the investment by the Client of its assets.
F.1.3. Relationship Between the Parties: In
entering into this Agreement, entering into and
performing any Transactions and receiving any
services pursuant to this Agreement the Client
represents, warrants and acknowledges that:
(i)Assessment and Understanding: it fully
understands (on its own behalf or through
independent professional advice), is capable of
assessing the merits of, and accepts the
purposes, terms, conditions and risks of, and is
capable of assuming, and assumes the risks of,
this Agreement and any Transactions and
services contemplated by this Agreement;
(ii)Responsibilities: it has made its own
independent decision as to whether this
Agreement and such Transactions and services
are appropriate or proper for it based on its own
judgement and upon advice from such advisers
as it has deemed appropriate.
(iii)Morgan Stanley not a Fiduciary: Morgan
Stanley is not acting as the Client’s fiduciary or
adviser. Neither the relationship between
Morgan Stanley and the Client nor the services
Morgan Stanley provides nor any other matter
will give rise to any fiduciary or equitable
duties on Morgan Stanley’s part. Morgan
Stanley will not be responsible for determining
whether a Transaction or service is suitable or
appropriate for the Client; for determining
whether a Transaction or service is consistent
with the Client’s investment objectives or
investment restrictions and is appropriate in
light of the Client’s financial circumstances; for
determining the appropriate frequency of
Transactions executed on the Client’s behalf;
for determining whether a Transaction has been
authorised by the Client; or for disclosing the
risks involved in entering into a Transaction, in
each case, even if such matters would have
been apparent on analysis of the Client’s
positions or trading history or if such analysis
might have revealed cause for concern;
(iv) Senior Management: the Client’s senior
management will be involved, where
appropriate, in reviewing and approving this
Agreement and services related to this
Agreement and has approved the entry by the
Client into Transactions of the type
contemplated by this Agreement; and
(v) No Reliance: it is not relying on any
communication (written or oral) from Morgan
Stanley as being investment, tax, legal or other
advice or as a recommendation to enter into
this Agreement or any Transaction or to receive
Page 11
any service. No such communication will be
deemed as any opinion, representation,
assurance or guarantee as to the expected
results or the tax or other consequences of
entering into this Agreement or any
Transaction or the receipt of any such service.
F.1.4 MSI plc Representation: By signing this
Agreement, MSI plc represents to the Client
that it is duly authorised to enter into this
Agreement with the Client as agent and trustee
for and on behalf of each of the Morgan
Stanley Companies.
F.2. Repetition of Representations
The Client shall be deemed to represent and warrant
during the continuation of this Agreement, with reference
to the facts and circumstances then existing, that each of
the representations and warranties set out in paragraph
F.1. above remains true, accurate and correct.
F.3. Valuations and Reports
F.3.1 Valuations: Morgan Stanley may provide the
Client with various estimated non-actionable valuations
of Transactions (including, without limitation, financial
markets transactions or transactions involving
Investments) or reports containing valuations of the
Client’s positions or balances. In this connection, the
Client acknowledges the following qualifications on
valuations provided by Morgan Stanley:
Morgan Stanley will not be liable for any use or
disclosure by the Client of, or any reliance by the Client
on, any information contained in any valuation. Morgan
Stanley makes no representation or warranty in relation
to any such information, whether as to the correctness,
completeness, sufficiency, or reliability for any purpose
of such information, any entitlement of the recipient to
receive, use, disclose or rely on such information or
otherwise. In particular estimated valuations of
Transactions or prices attributed to Investments are
provided to the Client for information and internal
purposes only, and are not intended for use for any other
purpose including, without limitation, financial
disclosure purposes, marketing, reporting (whether
regulatory or otherwise), the determination of net asset
value or for use by any third party. The valuation
estimates or prices do not necessarily reflect Morgan
Stanley’s internal bookkeeping or theoretical model-
based valuations of the Transactions or Investments for
which a valuation or price is requested or provided and
do not necessarily suggest that a market exists for the
Transaction or Investments. In particular, certain factors
may not have been assessed for purposes of valuations or
prices including, for example, market conditions, the
notional amount of a Transaction or holding, credit
spreads, underlying volatility, costs of carry, use of
capital and profit, which may substantially affect the
value of any specific Transaction or holding of
Investments. The valuation estimates or prices may vary
significantly from valuation estimates or prices available
from other sources and Morgan Stanley makes no
representation or warranty with respect to such valuation
estimates or prices shown. It is the Client’s
responsibility to ensure that it is aware of the basis on
which information provided to it is prepared and whether
it is appropriate for use for a particular purpose and the
Client must always independently verify any such
information and ensure the information is appropriate for
any purpose for which it intends to use such information.
Unless otherwise expressly stated, such valuation
estimates or prices are not an offer to enter into, transfer
or assign any Transaction, or terminate any Transaction,
or a commitment by Morgan Stanley to make such an
offer. An indicative valuation of a Transaction or
Investment may differ substantially from an actionable
value.
F.3.2 Reports: Morgan Stanley may provide the
Client with various reports reflecting the Client’s
positions and balances as well as other information. In
this connection the Client acknowledges, in addition to
the provisions of paragraph A.3.4, the following
qualifications to such reports and information:
(i) The reports may reflect positions and balances
held at various brokers, financial institutions or
which may have been supplied by the Client or
the Client’s agents. Whilst these positions may
be reflected in reports provided by Morgan
Stanley or recorded in the Client’s Account,
they will not represent Morgan Stanley’s
official books and records and will not have
been independently verified by Morgan
Stanley. Morgan Stanley accepts no
responsibility for any such positions and
balances or their inclusion in its reports and
reserves the right to reverse or correct any such
positions or balances if they are incorrect.
(ii) Morgan Stanley may from time to time provide
the Client with information relating to a
particular market or jurisdiction received from
its global network of sub-custodian banks or
other third party sources. Morgan Stanley will
not have independently verified such
information and will have no liability for any
inaccuracies, errors or incomplete information
provided by such third parties.
F.4. No Responsibility for Investment Objectives
The Client acknowledges that Morgan Stanley will not
be monitoring any of the Accounts for the purposes of
evaluating their composition or their or the Client’s
performance and will not be aware of or monitoring the
Client’s overall financial position, investment objectives
or investment restrictions.
F.5. Research Recommendations
F.5.1. Receipt: Morgan Stanley may from time to
time provide research reports and
recommendations to the Client, but is under no
obligation to do so. Where Morgan Stanley
does provide such research reports and
recommendations, the Client acknowledges
that it may not receive them at the same time as
other customers of Morgan Stanley.
F.5.2. Prior Internal Use: The Client acknowledges
that employees and officers of Morgan Stanley
Page 12
may receive, have knowledge of, act upon or
use research reports and recommendations (or
any conclusions expressed thereon or research
or analysis upon which they are based) before
they are received by customers of Morgan
Stanley. Morgan Stanley is under no
obligation to take account of any such reports
and recommendations when it deals with or for
the Client.
F.6. Conflicts of Interests
F.6.1. Morgan Stanley hereby discloses that the
following conflicts of interest may affect the
Client:
(i)Morgan Stanley has acted, is acting or is
seeking to act as a financial adviser or lending
banker to the issuer (or any of its affiliated
companies) or has advised or is advising any
person in connection with a merger, acquisition
or take over by or for such issuer (or any of its
affiliated companies);
(ii)Morgan Stanley has sponsored or underwritten
or otherwise participated in or is sponsoring or
underwriting or otherwise is participating in a
transaction;
(iii)Morgan Stanley has a holding, dealing, or
market making position or may otherwise be
trading or dealing in Investments or assets of
any kind underlying, derived from or otherwise
directly or indirectly related to such
Investments;
(iv)Morgan Stanley has received or is receiving
payments or other benefits for giving business
to the firm with which the Client’s order is
placed;
(v)Morgan Stanley has been or is an associate of
an issuer (or any of its affiliated companies);
and
(vi)Morgan Stanley is matching the Client’s
transaction with that of any other client
(including without limitation Morgan Stanley,
any Associated Firm, connected customer or
other customer of Morgan Stanley) either on
behalf of such person as well as on behalf of
the Client (“agency cross”) or by executing
matching transactions at or about the same
time with the Client and such person (“back to
back principal trade”).
F.6.2. No further disclosure to the Client is required
of any relationship, arrangement or interest
which falls within the circumstances referred to
in F.6.1. above and Morgan Stanley shall be
entitled to retain any profit or benefit arising as
if no such relationship, arrangement or interest
existed.
F.6.3. Morgan Stanley shall not be obliged to disclose
to the Client any matter, fact or thing if such
disclosure would be a breach of any duty owed
by Morgan Stanley to any other person, or if
the employees, officer or director who is
dealing for or with the Client does not have
actual notice of such matter, fact or thing.
F.7. Third Party Service Providers
From time to time Morgan Stanley may provide or make
available to the Client, or to others acting with or on
behalf of the Client, information regarding parties, which
shall not include the Morgan Stanley Companies, that
may provide goods or services to the Client (“Service
Providers”). The Client acknowledges that Morgan
Stanley does not guarantee or warrant the accuracy,
reliability or timeliness of such information, or of the
goods or services provided by any Service Providers.
The Client agrees that Morgan Stanley shall have no
liability whatsoever to the Client for any losses, claims,
damages and liabilities suffered or incurred by the Client,
and the Client shall indemnify and hold Morgan Stanley
harmless from and against any and all losses, claims,
damages and liabilities suffered by Morgan Stanley,
arising out of or relating to, actions or omissions by the
Service Providers, Morgan Stanley’s provision or
making available of such information, or the Client’s
selection or use of or reliance on such Service Providers.
G. OBLIGATIONS
G.1. Margin
The Client will provide MSI plc with Margin in
accordance with the following provisions:
(i) The Client shall at all times hold in its Account or
Accounts Margin with a value at least equal to the
Client’s Margin Requirement. In determining the
value of Margin, MSI plc may apply such haircut
to the current market value of the Margin as it may
determine in its sole discretion.
(ii) Where the value of Margin held by MSI plc is less
than the Client’s Margin Requirement, MSI plc
may (but is not obliged to) make a demand for
further Margin (which may be oral or in writing
and may require the Client to deliver additional
Margin on the same day) and the Client will deliver
or pay to MSI plc such further Margin within the
period so specified for payment or delivery.
Failure by MSI plc to make such demand will not
in any way affect Morgan Stanley’s rights or the
Client’s obligations under this Agreement.
G.2. Fees
G.2.1. The Client will pay fees to MSI plc for the prime
brokerage services in accordance with the Fee
Schedule, which may be amended upon
reasonable notice. Such fees are in addition to
any other fees, charges or costs that may apply,
including, in relation to (i) the execution of
Transactions, (ii) the failure of Transactions to
clear, (iii) any other fees, charges or costs
associated with any non-prime brokerage service,
Page 13
and (iv) the exercise by Morgan Stanley on
behalf of the Client of any Corporate Action or
voting rights relating to any Investment of the
Client. MSI plc is entitled to deduct any fees,
charges or costs from any Account.
G.2.2. Morgan Stanley charges comprise commission
as notified separately to the Client from time to
time and/or mark-up or mark-down. MSI
plc’s charges vary according to the
Transaction or service or client, and therefore
the charges notified to the Client in respect of
any particular transaction may differ from
those incurred by another client in a similar
transaction. Where Morgan Stanley uses its
own internal sources of liquidity, it may retain
a spread and an agreed commission in respect
of certain trading strategies.
G.2.3. Morgan Stanley may share charges with
Associated Firms or other third parties or
receive remuneration from them in respect of
Transactions carried out with or for the Client
or it may be acting on both sides of a
Transaction. Details of any such arrangements
will be made available upon written request.
G.3. Indemnification
G.3.1. General Indemnity: The Client will fully
indemnify each Indemnified Person on demand
against any and all Claims which any
Indemnified Person may suffer or incur directly
or indirectly (including those incurred to a
sub-custodian, broker, Executing Broker,
Exchange, Clearing House or other regulatory
authority) as a result, or in connection with, or
arising out of (i) this Agreement and the
Customer Documents, (ii) any Transaction
effected with the Client or on the Client's
instructions, (iii) acting on any other
instructions of the Client whatsoever (iv) any
services provided to the Client pursuant to this
Agreement or the Customer Documents, (v)
without limiting the foregoing, any breach by
the Client of its obligations under this
Agreement or the Customer Documents or any
Transaction, (vi) any representation or
warranty proving to be incorrect when made or
repeated, or deemed to have been made or
repeated and (vii) any claims, actions,
proceedings or investigations arising out of or
in connection with this Agreement or the
Customer Documents or any Transaction
hereunder. References herein to Transactions,
instructions given by the Client, services to be
provided to the Client or breaches by the Client
of its obligations include Transactions entered
into by, instructions given, services to be
provided to, and breaches by, an Agent.
This indemnity will not extend to any
Indemnified Person in so far as the Claims
suffered by the same are a direct result of its
fraud, wilful default or negligence or breach of
applicable law or regulation by the Indemnified
Person, other than where the breach of law or
regulation arises as a result of the Indemnified
Person taking any action or inaction on the
instructions of the Client or an Agent or as a
result of the failure by the Client to take any
action required to be taken by it under
applicable law or regulation.
G.3.2. Currency Indemnity: If, under any applicable
law (whether as a result of a judgment against
the Client or its liquidation or for any other
reason), any payment in connection with this
Agreement is made or recovered in a currency
other than that which it is required to be paid,
then, to the extent that the payment to Morgan
Stanley (when converted in accordance with
Morgan Stanley’s usual practice on the date of
receipt or recovery, or if it is not practicable to
make that conversion on that date, on the first
date on which it is practicable to do so) falls
short of the amount unpaid under this
Agreement, the Client will as a separate and
independent obligation, fully indemnify
Morgan Stanley against the amount of the
shortfall, including, without limitation, any
premiums and costs of exchange payable in
connection with the purchase of the currency
and/or conversion. For the purposes of this
paragraph, it will be sufficient for Morgan
Stanley to demonstrate that it would have
suffered a loss had an actual exchange or
purchase been made on such date.
G.3.3. Nothing in this Agreement will require the
Client to indemnify or compensate MSI plc to
any extent prohibited by the FCA Rules.
G.4. Taxes
G.4.1. Withholding: All amounts payable to Morgan
Stanley under this Agreement or any
Transaction shall be paid in full without set-off
or counterclaim and, except to the extent
required by law, free and clear of and without
any deduction or withholding whatsoever. If
the Client is required by law to make any
deduction or withholding from any payment, it
will pay to Morgan Stanley, simultaneously
with making such payment, such additional
amount as may be necessary to ensure that the
net amount received by Morgan Stanley after
all deductions and withholdings is equal to the
amount which would have been received by
Morgan Stanley had no such deduction or
withholding been required.
G.4.2. Taxes Additional: All amounts payable by the
Client under this Agreement or any Transaction
are exclusive of applicable taxes and duties to
which Morgan Stanley may be subject (other
than taxes or duties on Morgan Stanley’s net
income). The Client will pay such taxes and
duties to Morgan Stanley at the same time as
the amounts to which they relate.
G.4.3. Tax Claims: The Client will be fully
responsible for payment of all taxes and duties
Page 14
and for the making of all claims in relation to
any taxes or duties to which Morgan Stanley
and/or the Client may be subject (other than
taxes and duties on Morgan Stanley’s net
income), whether for exemption from
withholding taxes or otherwise, for filing all
tax returns and for providing any relevant tax
authorities with all necessary information in
relation to any business Morgan Stanley carries
on for or with the Client or any cash or
Investments which Morgan Stanley holds on its
behalf. The Client will indemnify Morgan
Stanley on demand against any Claims suffered
or incurred by Morgan Stanley as a result of
any failure of the Client to comply with this
paragraph.
G.4.4. Transfer Taxes: The Client will be responsible
for and will pay promptly (and in any event
before any interest or penalty becomes
payable) any taxes or duties, including without
limitation, any stamp, sales, transfer,
documentary, withholding and other similar
taxes and duties to which Morgan Stanley or
the Client may be accountable or liable in
relation to this Agreement or any related
instruction, order or document (whether as a
result of any Investments being registered in
Morgan Stanley’s name or those of its nominee
or otherwise) or which arises in connection
with the services provided under or associated
with this Agreement or any Transaction. The
Client will notify Morgan Stanley where any
transfer of Investments to an Account
constitutes a transfer where Morgan Stanley
may be required to pay or collect any taxes or
duties contemplated in the foregoing, or to
report the transfer of such Investments.
When requested, the Client will notify Morgan
Stanley promptly of any information relating to
the Client’s tax status or obligations which is
required in order for Morgan Stanley to meet
its tax or audit obligations. The Client will
ensure that any information provided is
accurate and will notify Morgan Stanley
promptly of any change to such information.
The Client will indemnify Morgan Stanley on
demand against any Claims suffered or
incurred by Morgan Stanley as a result of the
Client’s failure to pay any such taxes or duties,
or any delay or omission by the Client in
paying any such taxes or duties or in the
provision of such information, together with
any incidental costs associated therewith,
including (without limitation) any
disbursements, costs, resource costs or the
costs of external advisers incurred in response
to investigations, enquiries, or other
administrative or judicial actions, processes or
procedures instigated by any revenue or other
governmental authority in any jurisdiction.
G.5. Default Interest
If the Client does not pay any amount when due under
the terms of this Agreement, it will be required to pay
interest to Morgan Stanley on such amount (before as
well as after judgment) in the same currency as such
overdue amount for the periods from (and including) the
original due date for payment to (but excluding) the date
of actual payment, at the Default Rate. Such interest will
be calculated on the basis of daily compounding and the
actual number of days elapsed.
G.6. Investment Adviser/Investment Manager
The Client may appoint an Agent to purchase, sell and
trade generally in, exercise, and otherwise enter into,
arrange and carry out Transactions and give other
instructions relating to Investments, whether
electronically or otherwise, and for the Client's account
and risk and in the Client's name or number on Morgan
Stanley’s books, including Transactions which will or
may result in the Client having a short position in any
such Investment. Morgan Stanley is authorised to accept
and act on:
(a) any and all orders and instructions received in
connection with such Transactions whether
electronically or otherwise from an Agent; and
(b) any other instructions of the Agent in any
respect concerning the Client's Account(s)
(including, without limitation, delivering or
otherwise transferring investments and/or
paying monies as the Agent may order or
direct, and whether or not any such delivery or
other transfer is to be made against payment, or
any such payment is to be made against
delivery or other transfer).
G.7. Payment, Transfer and other Instructions
G.7.1. Instructions: Morgan Stanley shall be entitled
without further inquiry to execute or otherwise
act upon instructions or purported instructions,
whether in electronic form or otherwise,
received from persons who reasonably appear
to Morgan Stanley to have authority to act on
behalf of the Client including, without
limitation, an Agent notwithstanding that it
may afterwards be discovered that such
instructions were not genuine or were not
issued by an authorised person. Such
execution or action shall, in the absence of
negligence, wilful default or fraud of Morgan
Stanley, constitute a good discharge by Morgan
Stanley of its obligations and it shall not be
liable for any actions taken or omitted to be
taken in good faith in reliance on such
instructions nor shall it be liable for any error,
omission or inaccuracy in any transmission as
received by Morgan Stanley. Subject to the
foregoing, an instruction (sent by any method)
will only be effective if actually received by
Morgan Stanley.
G.7.2. Cash Payments Instructions and Securities
Transfera Instructions: The Client will from
time to time notify MSI plc in writing of the
Page 15
names of the people who are authorised to give
Cash Payments Instructions and Securities
Transfers Instructions on its behalf by
providing MSI plc with a Cash Payments and
Securities Transfers Authorisation. Regardless
of the method of instruction, until MSI plc
receives written notice to the contrary, it is
entitled to assume that any of those people
have full and unrestricted power to give Cash
Payments Instructions and Securities Transfers
Instructions on the Client’s behalf.
G.7.3. Online Cash Instructions: MSI plc may
agree to accept Cash Payment Instructions
from the Client through Morgan Stanley’s
online cash instruction system which will
automatically generate an instruction to the
respective agent bank. MSI plc will not check
or monitor such instructions before they are
issued to the agent bank and accepts no liability
for any errors or omissions contained therein.
It will be the Client’s responsibility when using
these systems to ensure that any user
identifications and/or passwords used by it
and/or any Authorised User are kept secure and
the protection of any specific system access
password will be the responsibility of the
Client. MSI plc will be entitled to assume that
instructions received via these systems are
instructed by an authorised person.
G.7.4. SWIFT Cash Instructions: MSI plc may
agree to accept Cash Payment Instructions
from a SWIFT Bank Identifier Code specified
by the Client. The Client authorises MSI plc to
accept and act on such Cash Payments
Instructions and acknowledges that SWIFT
messages may not include the name of the
person giving the instruction. MSI plc will not
check or monitor such instructions before they
are issued to the agent bank and accepts no
liability for any errors or omissions contained
therein. It will be the Client’s responsibility
when using SWIFT to ensure that any user
identifications and/or passwords used by it
and/or any authorised person are kept secure
and the protection of any specific system
access password will be the responsibility of
the Client. MSI plc will be entitled to assume
that instructions received via SWIFT are
instructed by an authorised person.
G.7.5 Other Methods of Instruction: Transfer or
Cash Payment Instructions may not be given
by any other means, including by way of
electronic mail, unless expressly agreed by
MSI plc.
G.7.6 Transfer Instructions: In carrying out
instructions to make transfers of assets
(whether from an Account of the Client’s to
another prime brokerage account held by a
different client or from an Account to an
account held by a third party with an external
custodian) MSI plc shall be performing a
purely administrative function. Subject to
G.7.1, MSI plc is entitled to assume that
instructions presented by the transferor in the
required form are valid and it may act on such
instructions accordingly. MSI plc will not
undertake any review of instructions for the
purposes of determining their validity
including, for example, suitability or
appropriateness or compliance with any
investment restrictions, or for the purposes of
determining that the Client receives fair value
for the assets.
G.8. Confidentiality, and Information
G.8.1. Confidentiality: Both Morgan Stanley and the
Client will treat as confidential the Confidential
Information learned about the other in the
course of the relationship governed by this
Agreement. Except as otherwise provided in
this paragraph, neither the Client nor Morgan
Stanley will disclose the Confidential
Information to any third party without the
other's written consent. The provisions of this
paragraph G.8 shall replace and supersede any
prior agreement between the parties as to the
confidentiality of any Confidential
Information.
G.8.2. Permitted Disclosure:
(i) Each of Morgan Stanley and the Client
authorises the other to disclose any information
or take any act required by law, rule,
regulation, order, directive or announcement in
any jurisdiction, or that is requested by any self
regulating organisation, Exchange, Clearing
House or any other body having regulatory or
tax or enforcement responsibility in relation to
any business conducted by them except where
paragraph G.8.2 (iv) applies.
(ii) The Client authorises Morgan Stanley to
disclose to the Client’s investment manager,
investment adviser, auditor, administrator and
other advisers or Agents, or to third party
services providers (including Service
Providers) in connection with the provision of
services to the Client or to Morgan Stanley in
connection with this Agreement and the
services contemplated thereunder, any
information relating to the Accounts or
otherwise (including but not limited to
Confidential Information) as they may from
time to time request and Morgan Stanley may
disclose any such information to other third
parties, including but not limited to investors,
at the direction of the Client’s investment
manager investment adviser, administrator and
other advisers or Agents. The Client will
indemnify Morgan Stanley against any loss or
liability it may suffer or incur as a result of any
such disclosure.
(iii) Nothing in paragraph G.8.1. shall prevent one
Associated Firm disclosing such information to
another Associated Firm.
Page 16
(iv) Neither Morgan Stanley nor the Client will
disclose information of the kind specified in
section 275(1) of the PPSA unless otherwise
required by section 275(7) of the PPSA.
G.8.3. Provision of Information: The Client will
provide Morgan Stanley on demand with all
such information as Morgan Stanley may
reasonably request in connection with this
Agreement, any Transaction or the Client’s
ability to perform its obligations hereunder.
H. EVENTS OF DEFAULT
The occurrence at any time of any of the following
events will be an “Event of Default” for the purposes of
this Agreement:
(i) Failure to Pay or Deliver: The Client fails to
make any payment or delivery or meet any
Margin call, in each case, upon the due date or
within the period specified;
(ii) Breach of Agreement: The Client fails to
perform any other material obligation hereunder
and, if such failure is capable of remedy, such
failure is not remedied on or before the second
Notice Business Day after notice of such failure
is given to the Client;
(iii) Act of Insolvency: An Act of Insolvency occurs
or any enforcement action is taken in respect of
any security or arrangement having a similar
effect to security with respect to the Client;
(iv) Misrepresentation: Any representation made by
the Client proves to have been incorrect or untrue
in any material respect when made or repeated,
or deemed to have been made or repeated;
(v) Admission of Inability or Unwillingness to
Perform: The Client admits to Morgan Stanley
or any other person its inability to, or intention
not to, perform any of its obligations under the
Customer Documents and/or any Transaction;
(vi) Regulatory Suspensions: The Client is
suspended from membership of, or participation
in, any Exchange, Clearing House or association
or self-regulating organisation, or suspended
from dealings in Investments by any government
agency;
(vii) Cross Default:
(a) in relation to the Client or any of its
affiliates, a default, event of default,
termination event or the like occurs or is
declared under any other agreement of
whatever nature with Morgan Stanley or any
Associated Firm;
(b) in relation to the Client or any of its
affiliates, any indebtedness or other
financial obligation in an amount greater
than U.S. $250,000 (or its equivalent in any
other currency or currencies) is not paid or
met at its stated maturity (or within any
applicable grace period) or by reason of any
default, event of default, termination event
or the like on the Client’s part becomes due
prior to its stated maturity or, if payable or
repayable on demand, when so demanded;
(viii) Suspension of NAV/redemptions: The net asset
value calculation of the Client or the redemption
of investor interests in respect of the Client is
suspended, restricted or delayed for any reason;
(ix) Material Adverse Change: The Client suffers a
material adverse change in its financial condition,
results, properties, business or operations as
determined by MSI plc in its absolute discretion;
(x) Ceasing to be a Trustee: Where the Client is the
trustee of a trust, it ceases to be trustee of the
trust for any reason whatsoever;
(xi) Insolvency of Trust Fund: Where the Client is a
trustee of a trust, the liabilities of the trust fund
exceed the market value of its assets or the
trustee is unable to satisfy all of its liabilities
incurred as trustee in full by proper recourse to
the assets of the trust fund;
(xii)
Invalidity of Security: MSI plc reasonably
determines that the Security is or may be invalid,
unenforceable, prejudiced or otherwise
ineffective in whole or in part for any reason
whatsoever; or
(xiii) Impossibility/Illegality: The Client is prevented
from making any payment or delivery or it
becomes impossible, impracticable or illegal for
the Client to make any payment or delivery.
The Client will notify MSI plc immediately of the
occurrence of an Event of Default or of an event which
with the passing of time, giving of notice, expiry of any
applicable grace period or the making of any
determination by MSI plc may constitute an Event of
Default.
I. USE OF INVESTMENTS
I.1. Use of Investments
(i) The Client hereby authorises any Morgan Stanley
Company at any time or times to borrow, lend,
charge, rehypothecate, dispose of or otherwise
use for its own purposes any Investments which
are for the time being subject to the Security in
an amount up to but no greater than the Adjusted
Value without giving notice of such borrowing,
lending, charge, rehypothecation, disposal or
other use to the Client. Such Morgan Stanley
Company may retain for its own account all fees,
profits and other benefits received in connection
with any such borrowing, loan or use. Upon (i) a
Page 17
borrowing, lending or other use, such
Investments will become the absolute property of
that Morgan Stanley Company (or that of its
transferee) free from the Security and from any
equity, right, title or interest of the Client’s and
(ii) a charge or rehypothecation of any of the
Client’s Investments, all of those Investments,
including the Client’s interest in those
Investments, will be subject to the charge or
other security interest created by such charge or
rehypothecation. Upon any such use, the Client
will have a right against the Morgan Stanley
Company (and to the extent that such Morgan
Stanley Company fails to deliver Equivalent
Investments, to MSI plc) for the delivery of
Equivalent Investments in accordance with
paragraph I.2. No Morgan Stanley Company will
be permitted to exercise its right of use in relation
to any additional Client Investments at any time
following the occurrence of a MSI plc Act of
Insolvency.
(ii) Where a Morgan Stanley Company borrows,
lends or otherwise uses Hong Kong Securities
any such borrowing, lending or use shall be
effected by way of a loan of the relevant
securities by the Client to the Morgan Stanley
Company under the OSLA. The Morgan Stanley
Company shall not be required to issue a
Borrowing Request (as defined in the OSLA) in
respect of any such loan made.
(iii) MSI plc shall determine the Adjusted Value and
the Equivalent Dollar Value of Investments used
under I.1. on a daily basis. In valuing any
Investments for the purposes of this paragraph
I.1. MSI plc shall rely on the value given by any
reputable pricing source and, in the absence of
any such value or (if MSI plc determines that
such value is, in its reasonable opinion,
inaccurate), such value as MSI plc reasonably
determines.
I.2. Redelivery of Used Investments
The relevant Morgan Stanley Company or MSI plc on
behalf of such Morgan Stanley Company may deliver, or
procure the delivery of, Equivalent Investments to the
Client under paragraph I.1. by causing such Investments
to be transferred, appropriated or designated to the
Account in which such Investments were held prior to
such use or, if not possible to do so, or if an Event of
Default has occurred, to such other Account or Accounts
subject to the Security as it shall determine. Such
Investments will upon such transfer, appropriation or
designation become subject to all the provisions of this
Agreement, including without limitation, those of
Section J and this Section I.
J. SECURITY
J.1. Security
Charge: As continuing security for the
payment and discharge of all Liabilities, the
Client charges to MSI plc for itself and as
trustee for the other Morgan Stanley
Companies by way of first fixed charge and
assigns by way of security with full title
guarantee and free from any adverse interest
whatsoever:
(i) all rights, title and interest of the Client in or in
respect of Investments and other assets not
falling within sub-paragraphs (ii) to (vi) below
constituted by credits standing from time to
time to any Account;
(ii) all Investments which, or the certificates or
documents of title to which, are for the time
being deposited with or held by a Morgan
Stanley Company;
(iii) all other Investments and all rights, cash
(including, without limitation, dividends) and
property whatsoever which may from time to
time be derived from, accrue on or be offered
in respect of any Investments referred to in
sub-paragraphs (i) and (ii) above, whether by
way of Corporate Action or otherwise
howsoever;
(iv) all cash for the time being credited to any
Account;
(v) all rights of the Client arising in respect of any
Investments or cash referred to in sub-
paragraphs (i) to (iv) above, including, without
limitation, any rights against any custodian,
banker or other person;
(vi) all rights of the Client under this Agreement
and the Customer Documents (including those
existing after any netting or set off of amounts
owed under such Customer Documents)
including, without limitation, all rights of the
Client to delivery of Equivalent Investments
and Equivalent Securities;
(vii) all sums of money held by any Morgan Stanley
Company for the Client, the benefit of all
accounts in which any such money may from
time to time be held and all the Client’s rights,
title and interest under any trust relating to such
money or to such accounts as aforesaid,
but, in each case, so that the covenants implied
by the Law of Property (Miscellaneous
Provisions) Act 1994 in the charges contained
in or created pursuant to this Agreement are
construed with the omission of (A) the words
“other than any charges, encumbrances or
rights which that person does not and could not
reasonably be expected to know about” in
section 3(1) of that Act; and (B) section 6(2) of
that Act.
J.2. Withdrawals
J.2.1. The Client may request Morgan Stanley (either
orally, in writing or by electronic transmission
and either expressly or impliedly) to deliver
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cash and/or Investments from an Account to a
third party. Such request is subject to the
provisions of the Security and this Agreement.
If Morgan Stanley permits delivery of such
cash and/or Investments from an Account to a
third party then, on the relevant delivery being
made, the relevant cash and/or Investments
shall be automatically released from the
Security.
J.2.2. Permitting any withdrawal of Investments
and/or cash from an Account, or a series of
such withdrawals, will not commit Morgan
Stanley to permit any other withdrawals from
the Accounts.
J.3. Supplemental Provisions Relating to the
Security
J.3.1. Continuing Security: The Security is
continuing and will extend to the ultimate
balance of all the Liabilities, regardless of any
intermediate payment or discharge in whole or
in part.
J.3.2. Security Unaffected: The Security is in
addition to any other security, guarantee or
indemnity now or subsequently held by
Morgan Stanley in respect of the Liabilities and
the Security is not in any way prejudiced by
any other such security, guarantee or
indemnity. Morgan Stanley may at any time
and without reference to the Client give up,
deal with, vary, exchange or abstain from
perfecting or enforcing any other such security,
guarantee or indemnity at any time and
discharge any party thereto, and realise the
same as it thinks fit without in any way
affecting or prejudicing the Liabilities or the
Security. The Client acknowledges that the
Security shall not in any way be affected by the
level of Margin required pursuant to Section G.
J.3.3. Further Assurance: For the purpose of
perfecting or enforcing the Security, if MSI plc
so requests at any time or times the Client will
promptly execute and sign all such transfers,
assignments, powers of attorney, further
assurances or other documents and do all such
other acts and things as may reasonably be
required to realise the Security or vest any of it
in MSI plc or to its order or to a purchaser or
transferee or to perfect or preserve the rights
and interests of MSI plc and the other Morgan
Stanley Companies in respect of the Security
(including, without limitation, the institution
and conduct of legal proceedings) or for the
exercise by Morgan Stanley of all or any of the
powers, authorities and discretions conferred
on Morgan Stanley by this Agreement. The
Client hereby by way of security irrevocably
appoints each Morgan Stanley Company
severally as its attorney to execute any such
transfers, assignments, powers of attorney,
further assurances or other documents and do
all such other acts and things as aforesaid for
the purpose of perfecting or enforcing the
Security, or attempting to do so. The Client
hereby ratifies and confirms and agrees to
ratify and confirm the exercise or purported
exercise by a Morgan Stanley Company of the
power of attorney.
J.3.4. Law of Property Act: Sections 93 (restriction
of right of consolidation) and 103 (restriction
of right of sale) of the Law of Property Act
1925 will not apply to this Agreement. The
Liabilities will become due for the purposes of
section 101 of the Law of Property Act 1925,
and the statutory power of sale and of
appointing a receiver which are conferred on
the Morgan Stanley Companies under that Act
(as varied or extended by this Agreement) and
all other powers shall be deemed to arise
immediately after execution of this Agreement.
J.3.5. Avoidance of Payments: If Morgan Stanley
reasonably determines that any payment
received or recovered by Morgan Stanley may
be avoided or invalidated after the Liabilities
have been discharged in full, and after any
facility which might give rise to such
Liabilities has been terminated, this Agreement
(and the Security created thereby) will remain
in full force and effect and Morgan Stanley will
not be obliged to release any cash or
Investments charged under the Security until
the expiry of such period as Morgan Stanley
shall reasonably determine.
J.3.6. No Release: No payment which may be
avoided or adjusted under any law, including
any enactment relating to bankruptcy or
insolvency, and no release, settlement or
discharge given or made by Morgan Stanley on
the faith of any such assurance, security or
payment, shall prejudice or affect the right of
Morgan Stanley to recover the Liabilities from
the Client or to enforce the Security to the full
extent of the Liabilities.
J.3.7. Negative Pledge: The Client will not create or
have outstanding any mortgage, pledge, lien,
hypothecation, security interest or other charge
or encumbrance, or any other agreement or
arrangement having the same economic effect,
over or in respect of the present or future
Charged Assets (other than for any security
created under the Customer Documents).
J.3.8. Continuation of Accounts: At any time
following (i) Morgan Stanley receiving notice
(either actual or otherwise) of any subsequent
security interest affecting any assets subject to
the Security or (ii) the occurrence of any Act of
Insolvency in respect of the Client, Morgan
Stanley may open a new Account in the
Client’s name (whether or not Morgan Stanley
permits any existing Account to continue). If
Morgan Stanley does not open such a new
Account, Morgan Stanley will nevertheless be
treated as if Morgan Stanley had done so at the
time, as the case may be, when the notice was
received or deemed to have been received of
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the subsequent security interest or at the time
of the Act of Insolvency. No cash or
Investments thereafter paid into any Account,
whether new or continuing, shall discharge or
reduce the amount receivable pursuant to this
Agreement.
J.3.9 Protection of Third Parties: No purchaser
from, or other person dealing with, Morgan
Stanley shall be concerned to enquire whether
any of the powers exercised or purported to be
exercised has arisen or become exercisable,
whether the Liabilities remain outstanding or as
to the propriety or validity of the exercise or
purported exercise of any power; and the title
of such a purchaser and the position of any
such person shall not be impeachable by
reference to any of those matters and the
protections contained in sections 104 to 107 of
the Law of Property Act 1925 shall apply to
any person purchasing from or dealing with
Morgan Stanley.
J.3.10. Receipts: The receipt of Morgan Stanley shall
be an absolute and a conclusive discharge to a
purchaser and shall relieve the purchaser of any
obligation to see to the application of any
moneys paid to or by the direction of Morgan
Stanley.
J.3.11. Construction: In paragraphs J.3.9. and J.3.10.
"purchaser" includes any person acquiring for
money or money's worth any security interest
over, or any other interest or right whatsoever
in relation to the Charged Assets.
J.3.12. Certificate of Borrowings: For all purposes,
including any legal proceedings, a certificate
by any officer of MSI plc as to the sums and/or
liabilities for the time being due to or incurred
by MSI plc shall be conclusive in absence of
manifest error.
J.4. Enforcement
J.4.1. Enforceability: Without prejudice to Morgan
Stanley’s rights under paragraphs J.5., K.1. and
K.2., on or at any time after the occurrence of
an Event of Default in relation to the Client and
without prior notice or demand on the Client,
MSI plc (for itself and as agent, or as the case
may be, trustee on behalf of the other Morgan
Stanley Companies) may enforce the Security
and exercise all the powers and rights of a
mortgagee conferred by statute or otherwise
and (without prejudice to the generality of the
foregoing) may (i) appropriate, sell or
otherwise dispose of all the title to and interest
in any asset subject to the Security or (as MSI
plc may elect and without prejudice to any later
exercise of this power) the whole or part of the
equitable interest divested of the legal title for
such consideration (which may comprise or
include Investments), upon such terms and
generally in such manner as MSI plc may, in its
sole and absolute discretion, think fit provided
that (a) where Morgan Stanley sells or disposes
of any such assets Morgan Stanley shall use its
reasonable endeavours to obtain a fair value
where reasonably obtainable in the
circumstances; and (b) where Morgan Stanley
appropriates assets pursuant to this paragraph
J.4.1. the value given to such assets shall be the
Net Value (such appropriated assets being
treated as Receivable Investments for this
purpose); and (ii) apply all or any part of any
cash credited to an Account or the value of any
appropriated assets towards the discharge of
the Liabilities upon such terms and generally in
such manner as MSI plc may, in its sole and
absolute discretion, think fit.
J.4.2. Application of Net Proceeds: The net
proceeds of any enforcement will be applied
towards discharge of the Liabilities in such
order as MSI plc in its sole discretion shall
determine. Subject to paragraph J.3.5, the
Client will be entitled to any balance remaining
after the unconditional and irrevocable
discharge of all Liabilities. In the event of a
shortfall, the Client will immediately on
demand pay to each relevant Morgan Stanley
Company the balance remaining due to it.
J.4.3. Other Means of Enforcement: If the Client
fails to discharge any Liabilities when due,
Morgan Stanley may, but is not bound to,
resort to any other reasonable means of
obtaining discharge at any time and in any
manner or order it thinks fit, without thereby
affecting the Security.
J.4.4. Suspense Account: Morgan Stanley may, for
the purpose of enabling it to maximise its
recoveries in any actual or potential winding-
up, dissolution or analogous proceeding
relating to the Client, or prior to the application
of any amounts, credit any amounts received or
recovered by it in exercise of its rights under
this Agreement (including Section P) to, and
require the same to be paid to it for crediting to,
an interest bearing suspense account for so long
and in such manner as it may determine.
J.4.5. PPSA disapplied: The provisions of the
PPSA specified in paragraphs (a) to (r)
inclusive of section 115 of the PPSA will not
apply in relation to any Charged Assets the
subject of a security interest established under
or contemplated by this Agreement, to the
extent that this is permitted by the relevant
paragraph of section 115 of the PPSA in
relation to that provision.
J.4.6 PPSA exclusion of notice requirement: To
the extent not prohibited by the PPSA, the
Client waives its right to receive any notice
otherwise required to be given by Morgan
Stanley under section 157 (verification
statements) or any other provision of the PPSA.
J.5. Limited Close-Out
Page 20
J.5.1. Termination: Without prejudice to Morgan
Stanley’s rights under paragraph K.1. and K.2.,
or under paragraph J.4.1., on or at any time
after the occurrence of an Event of Default in
relation to the Client, MSI plc may serve a
notice to the Client (a “Termination Notice”)
(and so that MSI plc may serve one or more
Termination Notices at any time while an
Event of Default is continuing) whereupon all
or such of the following as may be specified in
the Termination Notice shall occur:
(i) the Settlement Facility will be terminated and
all Equivalent Securities that the Client is
required to deliver under paragraph B.2.(v) will
be immediately deliverable;
(ii) all Equivalent Investments in respect of which
the Client has a right of delivery under
paragraph I.2. will be deliverable;
(iii) such outstanding Exchange-Traded Derivatives
Transactions as may be specified in the
Termination Notice will be terminated in
accordance with the terms of the MNA;
(iv) such outstanding FX Transactions as may be
specified in the Termination Notice will be
terminated,
so that the performance of the respective
obligations of the parties with respect to all
such payments and deliveries shall be effected
only in accordance with paragraphs J.5.2. to
J.5.3. below.
J.5.2. Amounts Determined. MSI plc will establish
as at the date on which the Termination Notice
was served:
(i)the Default Market Value of all Equivalent
Securities and Equivalent Investments to be
delivered by or to the Client under paragraph
J.5.1(i) and (ii);
(ii)the Liquidation Amount in respect of all
Exchange-Traded Derivatives Transactions
terminated under paragraph J.5.1 (iii); and
(iii) the Loss of each party in respect of all FX
Transactions terminated under paragraph
J.5.1(iv).
J.5.3. Netting: On the basis of the amounts so
established, an account shall be taken (as at the
date on which the Termination Notice was
served) of what is due from each party to the
other under paragraph J.5.2. and the amounts
due from one party shall be set off against the
amounts due from the other and only the
balance of account shall be payable by the
party having the claim valued at the lower
amount pursuant to the foregoing. Any such
balance shall be payable by that party on
demand by the other party. For the purposes of
this calculation, all sums not denominated in
U.S. Dollars shall be converted to U.S. Dollars
at the then current market exchange rates.
Paragraphs K.2.1.(ii) and (iii) shall apply in
respect of any amount payable under this
paragraph as if references in those paragraphs
to the Termination Amount were a reference to
the amount payable under this paragraph.
J.5.4 The provisions of J.5.1 to J.5.3. shall apply
separately between each Morgan Stanley
Company and the Client as if such Morgan
Stanley Company were party to a separate
agreement with the Client in all respects
identical to this Agreement.
K. EARLY TERMINATION, NETTING AND
SET OFF
The provisions of paragraphs K.1. and K.2. shall apply
separately between each Morgan Stanley Company and
the Client as if such Morgan Stanley Company were
party to a separate agreement with the Client in all
respects identical to this Agreement.
K.1. Early Termination
K.1.1. Early Termination: (i) Upon or following the
occurrence of an Event of Default, without
prejudice to any other rights hereunder or under
any transaction, contract or law, or (ii)
following the occurrence of an MSI plc Act of
Insolvency, the relevant Morgan Stanley
Company may by notice to the Client in the
case of (i), or the Client may by notice to MSI
plc in the case of (ii) (in either case a “Close-
Out Notice”), declare that the provisions of
paragraphs K.1.2. to K.1.4. and K.2. will apply.
K.1.2. Service of Close-Out Notice:
(i) Service of a Close-Out Notice under paragraph
K.1.1. by a Morgan Stanley Company shall
constitute an immediate event of default or
termination event (howsoever the same are
described) under such Customer Documents as
may be specified in the Close-Out Notice (each
such Customer Document being a “Designated
Customer Document”), whether or not the
Event of Default in question would otherwise
constitute an event of default or termination
event under any such Designated Customer
Document and without the need for the service
of a separate notice under any such Designated
Customer Document, but so that the service of
a Close-Out Notice in respect of one Customer
Document shall not prevent Morgan Stanley
from serving a Close-Out Notice in respect of
any other Customer Document at any time.
(ii) Service of a Close-Out Notice by the Client
shall constitute an Event of Default under this
Agreement in respect of MSI plc (but in respect
of no other Morgan Stanley Company) and this
Page 21
Agreement shall be a “Designated Customer
Document” for the purposes of paragraphs
K.1.3. and K.1.4..
K.1.3. No Further Payments or Deliveries: No
further payments or deliveries under the
Designated Customer Documents in respect of
outstanding Transactions will be required to be
made, but without prejudice to the other
provisions of the Designated Customer
Documents, and:
(i) all outstanding Transactions under the
Designated Customer Documents (other than
Exchange-Traded Derivatives Transactions and
FX Transactions entered into under this
Agreement) will, to the extent possible, be
terminated immediately in accordance with
their terms and any Transactions under the
Designated Customer Documents will be dealt
with in accordance with the relevant default,
close out or termination provisions of any such
Designated Customer Document;
(ii) where this Agreement is a Designated
Customer Document, the Loan will be
immediately repayable;
(iii) where this Agreement is a Designated
Customer Document, the Settlement Facility
will be terminated immediately and Equivalent
Securities that the Client is required to deliver
under paragraph B.2.(v) will be immediately
deliverable;
(iv) where this Agreement is a Designated
Customer Document, Equivalent Investments
in respect of which the Client has a right of
delivery under paragraph I.2. will be
immediately deliverable;
(v) where this Agreement is a Designated
Customer Document, all outstanding
Exchange-Traded Derivatives Transactions
will, to the extent possible, be terminated
immediately in accordance with the terms of
the MNA;
(vi) where this Agreement is a Designated
Customer Document, all outstanding FX
Transactions will, to the extent possible, be
terminated immediately;
(vii) where this Agreement is a Designated
Customer Document, all outstanding
Transactions not falling within any other sub-
paragraph of this paragraph K.1.3. will, to the
extent possible, be terminated immediately;
and
(viii) all other amounts due but unpaid under the
Designated Customer Documents (including,
where this Agreement is a Designated
Customer Document, without limitation, any
fees owing to Morgan Stanley and any amounts
payable under Section P) will be immediately
payable and so that where this paragraph
applies, performance of the respective
obligations of the parties with respect to all the
payments, repayments and deliveries shall be
effected only in accordance with paragraphs
K.1.4. and K.2. below.
Notwithstanding the Security and provided an
Act of Insolvency shall not have occurred (in
which case this sub-paragraph shall not apply),
if Morgan Stanley or the Client serves a Close-
Out Notice under paragraph K.1.1., all rights of
the parties under each Designated Customer
Document shall be subject to the provisions of
paragraphs K.1. and K.2. and the Security shall
be released in respect of such rights to the
extent necessary under any applicable law to
enable the operation of the netting pursuant to
paragraph K.2..
K.1.4 Amounts Determined: Where this Agreement
is a Designated Customer Document, the
amount of the Loan to be repaid by the Client
shall be determined by MSI plc. The Non-
Defaulting Party will establish as at the date of
the Default Event:
(i) the Default Market Values of all Investments,
Equivalent Securities and Equivalent
Investments to be delivered by each party
under any Transaction terminated under
paragraph K.1.3.(i) and, where this Agreement
is a Designated Customer Document, to be
delivered by each party under paragraphs
K.1.3. (iii), (iv) and (vii);
(ii) the purchase prices to be paid by each party in
respect of securities purchased by that party
under transactions executed with Morgan
Stanley;
(iii)where this Agreement is a Designated
Customer Document, the Loss of each party in
respect of all FX Transactions and other
Transactions (other than Exchange Traded
Derivatives Transactions) under this
Agreement terminated in accordance with this
Section K (other than Transactions for the
delivery of securities);
(iv) the Liquidation Amount with respect to the
Exchange-Traded Derivatives Transactions or,
to the extent that it is not possible to determine
the Liquidation Amount in accordance with the
MNA, the Loss in respect of such
Transactions; and
(v) all other amounts payable under paragraph
K.1.3.(viii).
Provided that no account shall be taken under
this paragraph or under paragraph K.2.1 of any
Investments which are credited to an Account
and held by MSI plc as custodian or any money
which the parties have agreed is to be treated as
client money for the purposes of and subject to
the FCA Rules.
Page 22
K.2. Netting
K.2.1. Netting:
(i) On the basis of the amounts established in
accordance with paragraph K.1.4., an account
shall be taken (as at the date of the Default
Event) of (a) what is due from each party to the
other under this Agreement and (b) any
amounts due from one party to the other as a
result of an early termination or close-out of
any Designated Customer Document and the
amounts due from one party shall be set off
against the amounts due from the other and
only the balance of the account (the
“Termination Amount”) will be payable by
the party having the claim valued at the lower
amount pursuant to the foregoing. For the
purposes of this calculation, all sums not
denominated in U.S. Dollars shall be converted
into U.S. Dollars at the then current market
exchange rates;
(ii) if the Termination Amount is payable by the
Client to Morgan Stanley, that amount is
immediately due and payable and will form
part of the Liabilities in respect of which
Morgan Stanley may enforce the Security or
any of its other rights under this Agreement or
otherwise; and
(iii) if the Termination Amount is payable by
Morgan Stanley to the Client, subject to K.3.2.,
that amount shall be paid into such Account as
Morgan Stanley shall determine and be subject
to the terms of this Agreement or, if the
operation of this Section K is pursuant to
K.1.1.(ii) then such amount shall be paid by
MSI plc as the Client directs.
K.2.2. Statement: On or as soon as reasonably
practicable following the calculations made
under K.2.1., the Non-Defaulting Party will
provide to the other party a statement showing
such calculations in reasonable detail.
K.3. Other Rights
K.3.1. Pre-condition to Payment and Deliveries: As
a separate and further protection to Morgan
Stanley, the Client agrees that where the Client
has failed to provide Margin demanded
pursuant to paragraph G.1. or otherwise failed
to perform its obligations under any
Transactions or otherwise under this
Agreement (whether or not the Security is
enforceable or being enforced) any obligation
Morgan Stanley may have to pay or repay any
money or deliver or redeliver any asset
(whether as Margin or otherwise) otherwise
than under and in accordance with paragraphs
K.1. and K.2. will be conditional upon there
being no Liabilities.
K.3.2. Set-off: As between each Morgan Stanley
Company and the Client, whether or not an
Event of Default has occurred, any Liabilities
owed to that Morgan Stanley Company will, at
that Morgan Stanley’s Company's option (and
without prior notice to the Client), be reduced
by its set-off against any amount(s) payable
(whether or not then due and owing) to the
Client by that Morgan Stanley Company under
the Customer Documents (and any such
amount(s) payable by that Morgan Stanley
Company will be discharged to the extent it is
so set-off). Morgan Stanley will give notice to
the Client after any set off is effected under this
paragraph.
K.3.3. Combination of Accounts: As between each
Morgan Stanley Company and the Client, a
Morgan Stanley Company may, at any time
following an Event of Default, without notice
to the Client combine, consolidate or merge all
or any of the Accounts with that Morgan
Stanley Company with any Liabilities owed to
that Morgan Stanley Company and may set off
any amount standing to the credit of any such
Accounts in or towards satisfaction of any of
the Client's Liabilities to that Morgan Stanley
Company. Each Morgan Stanley Company
may do so notwithstanding that the balances on
such Accounts and the Liabilities may not be
expressed in the same currency and a Morgan
Stanley Company is hereby authorised to effect
any necessary conversions in accordance with
paragraph K.4..
K.3.4 Transfers between Morgan Stanley
Companies: Each Morgan Stanley Company
is authorised by the Client in its discretion at
any time and from time to time to transfer any
money or investments held by the Morgan
Stanley Company for the Client's account to or
to the order of any other Morgan Stanley
Company for the purpose of, or with a view to,
application thereof in discharge of any
Liabilities due from the Client to such other
Morgan Stanley Company, or in order to meet
any obligation of the Client to provide Margin
in relation to such Liabilities.
K.4. Conversion
The Client agrees that Morgan Stanley may at any time
for the purposes of reducing or determining a Liability,
giving effect to the provisions of paragraphs K.3.2. or
K.3.3., converting a payment received in a currency other
than that in which it was due, or otherwise, (i) convert
any Liabilities owed or cash held in one currency into
another currency using Morgan Stanley's current
exchange rates or other reasonable rates as Morgan
Stanley deems appropriate in good faith and/or (ii)
convert any obligation to deliver non-cash property into
an obligation to deliver cash in such amount as is
determined by Morgan Stanley as appropriate in good
faith, save that, where the delivery obligation is owed by
MSI plc, MSI plc shall not be able to exercise the right to
convert in this paragraph K.4. following an MSI plc Act
of Insolvency provided always that this shall be without
prejudice to the operation of the set-off provisions set out
in paragraphs K.1., K.2. and K.3..
Page 23
L. LIMITATION OF LIABILITY
L.1. Limitation of Liability
L.1.1. Limitation of Exclusions: Nothing in this
Agreement will exclude or restrict any duty or
liability to any extent prohibited by the FCA
Rules or PRA Rules that Morgan Stanley may
have to the Client under the regulatory system
(as defined in the FCA Rules and PRA Rules).
L.1.2. Limitation of Liability: (i) Morgan Stanley
and its employees and officers will not be
liable for any loss, cost, charge, fee, expense,
damage or liability resulting from any act or
omission made in connection with this
Agreement or the services provided hereunder
(including, without limitation, the provision of
any Software). In particular, but without
limitation, Morgan Stanley will not be liable
for any loss of, or any failure to insure,
Investments or for the quality, quantity,
condition or delivery of Investments or the
correctness, validity, sufficiency or
genuineness of any of the documents relating
to Investments. This exclusion does not apply
where such loss results directly from the
negligence, wilful default or fraud of Morgan
Stanley or its employees or officers. Morgan
Stanley and its employees and officers will not
in any circumstances be liable for any
consequential loss, damage or liability
(including but not limited to loss of profit)
regardless of whether it is aware of the
likelihood of such loss, damage or liability; (ii)
without limiting the foregoing, Morgan Stanley
shall have no liability whether in contract, tort
(including negligence) or otherwise for any
loss, cost, charge, fee, expenses, damage or
liability resulting from the provision of any
Software.
L.1.3. No Liability for Others: Morgan Stanley
accepts the same level of responsibility for any
nominee company controlled by it as for its
own acts under this Agreement. Subject to
this, Morgan Stanley will not be liable to the
Client for the solvency, acts or omissions of
any party in whose control any of the Client's
assets (or documentation relating thereto) may
be held or through whom any Transactions
may be effected or any bank with whom
Morgan Stanley maintains any bank account or
any other party with whom Morgan Stanley
deals or transacts business or who is appointed
by Morgan Stanley in good faith on the Client's
behalf, provided that, in the case of sub-
custodians, this exclusion of liability shall not
apply to loss which is directly caused by a
breach of MSI plc’s obligations in relation to
the selection and monitoring of sub-custodians
set out in paragraph A.2.1 and provided further
that this exclusion shall not extend to any sub-
custodian who is an Affiliate. For the purposes
of this paragraph L.1.3., “control” has the same
meaning as set out in the FCA Rules and PRA
Rules.
L.2. Force Majeure
Morgan Stanley will not be liable to the Client for any
delay in performance, or for the non-performance, of any
of its obligations under this Agreement by reason of any
cause beyond its reasonable control, or for any loss,
costs, charges, fees, expenses, damage or liabilities
caused by the occurrence of any contingency beyond its
reasonable control. This includes, without limitation, any
breakdown or failure of transmission, communication or
computer facilities, postal or other strikes or similar
industrial action, the failure of any relevant Exchange,
Clearing House, sub-custodian and/or broker for any
reason to perform its obligations, acts of terrorism and
acts of God such as adverse weather conditions or the
occurrence of other natural events.
M. MISCELLANEOUS
M.1. Notices
M.1.1. Form: Any Notices may be given orally unless
required in writing by the terms of this
Agreement.
M.1.2. Method of Transmission: Any notice in
writing (including, without limitation, any
confirmation or demand) may be given by
posting or delivering it or by sending it by
facsimile transmission or any other
transmission. Any notice or demand given by
post will be deemed given five Notice Business
Days after posting and any notice given by
delivery, facsimile or electronic mail will be
deemed given upon delivery, facsimile or
transmission (as the case may be). In proving
service of notice, it shall be sufficient to prove,
in the case of delivery by post, that the letter
was correctly addressed and was posted first
class or, where appropriate, airmail or, in the
case of delivery otherwise than by post
(including transmission), that it was delivered
to the correct destination.
M.1.3. Service on Agent: A Notice will be deemed to
have been received by the Client if service of
such Notice is made in accordance with
paragraphs M.1.1. and M.1.2. above on the
Client’s Agent, at such address, facsimile
number or electronic mail address as is notified
to Morgan Stanley by such Agent from time to
time.
M.1.4. Change of Notice Details: A party may
change its address, facsimile number or
electronic address for the purposes of this
Agreement by giving another party at least 5
Notice Business Days written Notice of such
change.
Page 24
M.1.5. Cases Where Actual Receipt Required:
Communications from the Client or Morgan
Stanley under paragraphs G.6, K.1.1, M.1.4 or
N.2.1. will be deemed received only if actually
received.
M.1.6. Conclusiveness: Any contract note,
confirmation or account statement that is given
in writing by Morgan Stanley will be deemed
correct in the absence of manifest error.
M.1.7. Genuineness of Signatures: Morgan Stanley
is entitled to assume that any signatures in
Notices are genuine and that any Notices
received by facsimile and/or electronic
transmission are genuine and sent by the
persons appearing to send the same.
M.2. Monitoring and Recording of
Communications
For quality control and security purposes, as a
record of orders / Instructions and related
matters and in order to comply (and monitor
compliance) with applicable laws and
regulations, this Agreement and any applicable
policies and procedures, Morgan Stanley, its
Associated Firms and/or other persons on its or
their behalf may monitor or record
communications (including email, instant
messaging, facsimile, telephone and other
electronic communications) with the Client or
its agent(s)
to the extent permissible under the
applicable law for legitimate business purposes
or for purposes permitted by law from time to
time. These records shall be prima facie
evidence of any orders/Instructions or
communications monitored or recorded and
shall be admissible as such in any legal
proceedings. The Client will not use, file, or
cite as a reason for objecting to the admission
of Morgan Stanley’s records as evidence in any
legal proceedings because they are not
originals, are not in writing or are documents
produced by a computer. Morgan Stanley will
retain records in accordance with its
operational procedures, which may change
from time to time in its absolute discretion. The
Client should keep adequate records in
accordance with applicable laws and
regulations and should not rely on Morgan
Stanley to comply with its record keeping
obligations.
M.3. Entire Agreement; Remedies Cumulative
M.3.1. Entire Agreement: The Customer Documents
constitute the entire agreement of the parties
with respect to the subject matter thereof and
supersede all prior oral and written
communications.
M.3.2. Remedies Cumulative: Morgan Stanley's
rights under this Agreement are cumulative,
may be exercised as often as it considers
appropriate and are in addition to its rights
under general law. Any failure to exercise or
any delay in exercising any such rights will not
operate as a waiver or variation of that or any
other such right and any defective or partial
exercise of any such rights will not preclude
any other or further exercise of that or any
other right.
M.4. Severability
Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction will, as to such
jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction will not invalidate or
render unenforceable such provision in any other
jurisdiction.
M.5. Exclusion of Equities
Without prejudice to Morgan Stanley’s rights under any
other paragraph in this Agreement, each party undertakes
to pay any amount payable and to deliver any assets that
are deliverable under this Agreement on the due date
regardless of any right of equity, set-off (other than any
contractual right of set off) or counterclaim that it may
have or allege against the other party.
M.6. Power to Return Equivalent Investments
The Client agrees that if Morgan Stanley re-transfers or
re-delivers Investments to the Client, these do not need to
be the identical Investments originally deposited,
charged or transferred, to Morgan Stanley, and the Client
will accept Equivalent Investments.
M.7. Data Protection and Client Information
M.7.1 MSI plc shall, in connection with the Customer
Documents and all transactions thereunder
comply (where applicable) with the Data
Protection Laws.
M.7.2 The Client shall comply with and observe the
Data Protection Laws and ensure that it has
obtained all necessary consents for MSI plc to
process any personal data in connection with
the Customer Documents and all transactions
thereunder.
M.7.3 Morgan Stanley, its Associated Firms and/or
other persons acting on its or their behalf may
process and use information relating to the
Client, its Accounts, Investments or
Transactions and/or the relationship governed
by this Agreement (“Client Information”) to
tailor, administer and operate services in
accordance with the Customer Documents and
Transactions thereunder (including tailoring
Investments or marketing specific products of
interest, authorising or confirming
Transactions and for billing purposes); to help
Morgan Stanley understand and continue to
develop the services it is able to provide to the
Client and clients generally; in the course of
Page 25
the operational support and development of
their businesses; to carry out credit, money
laundering and conflict checks and for fraud
prevention purposes (and this may include
consideration of information regarding political
affiliations and criminal offences committed or
alleged to have been committed); to exercise
and defend Morgan Stanley’s legal rights; and
in order to comply with legal and regulatory
obligations and requests anywhere in the world
(including reporting to and being audited by
national and international regulatory
enforcement or exchange bodies and
complying with court orders or subpoenas).
M.7.4 Morgan Stanley, its Associated Firms and/or
other persons on its or their behalf, may in
connection with the Customer Documents and
all Transactions thereunder collect Client
Information (a) directly from the Client; (b)
through its Agents; and (c) from other
information sources.
M.7.5 Morgan Stanley’s and its Associated Firms’
processing and use of Client Information may
include disclosure of Client Information
between Morgan Stanley and its Associated
Firms; to third parties processing Client
Information on behalf of Morgan Stanley or its
Associated Firms or otherwise providing it or
them with professional or other services; to the
Client’s investment manager, investment
advisor, auditor, administrator or other
advisors or Agents; to third parties such as
investors, potential investors, settlement
agents, overseas banks, Exchanges or Clearing
Houses to whom information is disclosed in
the course of providing services to the Client
under this Agreement; to credit reference,
fraud prevention and other similar agencies,
and other financial institutions, with whom
information is shared for credit and money
laundering checking and fraud prevention
purposes; to persons to whom Morgan Stanley
assigns or novates its rights or obligations
under this Agreement; and to national and
international regulatory, enforcement or
exchange bodies or courts anywhere in the
world as required by applicable law or
regulations or at their request. Disclosure may
involve overseas storage and other overseas
transfer, processing and use of Client
Information, and disclosure to these third
parties, including in or to countries or
territories which do not offer the same level of
protection of personal information as is
enjoyed within the European Economic Area.
M.7.6 Before providing Morgan Stanley, an
Associated Firm or any other person on its
behalf with any information regarding an
individual in connection with this Agreement,
the Client should ensure that the individual (i)
knows that the Client will be providing his or
her information to Morgan Stanley or the
Associated Firm; (ii) has the information set
out in paragraphs M.2 and M.7.3 to M.7.5
above regarding the collection, use, processing,
disclosure and overseas transfer of his or her
information and the possibility of monitoring
or recording of his or her communications; and
(iii) is aware that he or she has rights of access
to, and correction of, his or her personal
information held by Morgan Stanley and its
Associated Firms, that, if he or she wishes to
exercise either of these rights, he or she can do
so by written request to the Compliance
Officer at MSI plc or the appropriate contact at
the Associated Firm and that, in the case of a
request for access to personal information,
Morgan Stanley and its Associated Firms
reserve the right to charge an appropriate fee.
M.8. Amendment
Morgan Stanley may amend or supplement the
arrangements with the Client by sending supplemental or
revised Customer Documents or by written agreement.
Where an amendment or supplement is necessitated by a
change of applicable law, regulation, rule, order or
directive this may take effect immediately or otherwise
as Morgan Stanley may specify. Any other amendment
or supplement will, unless Morgan Stanley has received
the Client’s written objection, take effect twenty-one
days after despatch or if twenty-one days is impracticable
in the circumstances such shorter time (not being less
than ten business days) as Morgan Stanley may specify,
and will apply in respect of any commitment,
Transaction or contract entered into by Morgan Stanley
and the Client after that date. Any alteration which the
Client may wish to make to the Customer Documents
must be agreed by Morgan Stanley in writing.
M.9. Complaints
If the Client has a complaint about MSI plc it should
raise the complaint in the first instance with the MSI plc
employee acting for it. If the Client is not satisfied with
the response of the employee (or if the Client prefers not
to raise the matter with the employee) it may raise the
matter with MSI plc’s Compliance Officer.
M.10. E-Commerce
The Client acknowledges and agrees that unless
expressly included in this Agreement and any relevant
terms of use issued from time to time by Morgan Stanley
the requirements of the E-Commerce Directive
(00/31/EC) as implemented in the United Kingdom are
excluded to the extent permissible by law.
M.11. U.S. Regulations
Notwithstanding anything to the contrary stated or
implied in this Agreement, Morgan Stanley shall not be
required to take any action or refrain from taking any
action in connection with any Transaction or otherwise in
relation to any Customer Document that would constitute
non-compliance with or result in penalties under the laws
of the United States (including, for the avoidance of
Page 26
doubt, the U.S. laws restricting participation in or
compliance with certain foreign boycotts, directly or
indirectly, as contained in the U.S.
Export Administration Act of 1979 and the U.S. Internal
Revenue Code, as such laws are amended from time to
time) or that would place Morgan Stanley or any
Associated Firm in a position of non-compliance with
such laws.
N. ASSIGNMENT AND TERMINATION
N.1. Assignment
N.1.1. Successors and Assigns: The obligations
under this Agreement bind, and the rights will
be enforceable by, the parties and their
respective successors and permitted assigns.
N.1.2. Novation to Associated Firms: Each Morgan
Stanley Company (the "Transferor") may at
any time by delivering to the Client a written
substitution notice (“the Substitution Notice”)
cause all or any part of its rights, benefits
and/or obligations under this Agreement to be
transferred to any other Associated Firm (the
“Transferee”) provided that (i) where the
Client is listed on the Irish Stock Exchange the
Associated Firm is regulated as a broker by a
regulator recognised by the Irish Stock
Exchange and has a specified credit rating (as
defined by the listing requirements and
procedures for investment funds of the Irish
Stock Exchange); or (ii) in any other case, the
Associated Firm has a credit standing similar to
that of the Transferor or is supported by a
guarantee from a company with a similar credit
standing to the Transferor. Upon delivery of a
Substitution Notice to the Client, to the extent
that in the Substitution Notice the Transferor
seeks to cause all or any part of its rights and/or
obligations hereunder to be novated, the Client
and the Transferor will be released from further
obligations to each other hereunder in respect
of those rights and/or obligations so novated
and, to the extent that they have been novated
in accordance with this paragraph, their
respective rights and obligations against each
other will be cancelled, and the Client and the
Transferee will acquire the same rights and
assume the same obligations between
themselves as they would have had, had the
Transferee been an original party hereto instead
of the Transferor, with the rights and/or the
obligations acquired or assumed by it as a
result of such novation. The Client hereby
irrevocably authorises Morgan Stanley as its
attorney to acknowledge such Substitution
Notice on the Client's behalf.
N.1.3 Except in respect of de minimis sums
transferred in accordance with the Client
Money Rules (where the Client’s consent is not
required), the Client agrees that MSI plc may
transfer to another person, as part of a transfer
of business to that person, any client money
balances, provided that:
(a) The sums transferred will be held for the Client
by the person to whom they are transferred in
accordance with the Client Money Rules; or
(b) If not held in accordance with (a), MSI plc will
exercise all due skill, care and diligence in
assessing whether the person to whom the
client money is transferred will apply adequate
measures to protect these sums.
N.1.4. Assignment: The Client may not assign,
transfer or enter into any sub-participation or
subordination with respect to any of its rights,
benefits and/or obligations under this
Agreement, any Transaction or any contract
entered into under this Agreement or declare a
trust of any such rights without the prior
written consent of Morgan Stanley. The
Client's obligations may not, without the prior
written consent of Morgan Stanley, be
performed by anybody else. Any purported
assignment, transfer, sub-participation,
subordination, declaration of trust or
performance of obligations without such
consent will be invalid.
N.2. Termination
N.2.1. Power to Terminate: Any party can terminate
this Agreement by giving at least 5 Notice
Business Days prior written notice. If one or
more Morgan Stanley Companies terminates
this Agreement as between themselves and the
Client that will not (unless any such
termination is expressed to be on behalf of all
Morgan Stanley Companies) operate as a
termination in respect of any other Morgan
Stanley Company.
N.2.2. Illegality: Without prejudice to the generality
of N.2.1. or any other rights under the
Customer Documents, Morgan Stanley
reserves the right immediately to terminate any
or all of the Customer Documents (including
but not limited to this Agreement) or
immediately cease to provide any or all of the
services provided hereunder without notice if it
determines in its discretion that it has become
unlawful under any applicable law for Morgan
Stanley or the Client to perform any or all of its
respective obligations under the Customer
Documents, including, without limitation, as a
result of the application or any violation of
ERISA.
N.2.3. Effect of Termination: Termination of this
Agreement will not affect outstanding rights or
the Liabilities. Any termination will be
without prejudice to the Security and Morgan
Stanley’s continuing rights to all Margin. This
Agreement will apply to the Liabilities until all
Liabilities have been finally, unconditionally
and irrevocably discharged. After the
unconditional and irrevocable discharge of all
Liabilities and the termination of this
Agreement and subject to Morgan Stanley’s
Page 27
continuing rights as aforesaid, Morgan Stanley
shall deliver or cause to be delivered to the
Client or to its order any remaining monies and
Investments held by Morgan Stanley.
N.2.4. Survival: Termination of this Agreement will
not affect any provision of this Agreement that
is intended to survive termination, including,
without limitation, those provisions (i) creating
the Security in Morgan Stanley's favour and (ii)
granting any indemnity in favour of Morgan
Stanley.
N.2.5. Agency: Subject to paragraph N.2.1. the
Client will not terminate any appointment
(whether express or implied) of Morgan
Stanley as its agent for the purposes of this
Agreement without the prior written consent of
Morgan Stanley.
N.2.6. Third Party Rights:
(i) Subject to the terms of this sub-paragraph, a
person who is not a party to this Agreement
has no right under the Contract (Rights of
Third Parties) Act 1999 to enforce any term of
this Agreement (but this shall not affect any
right or remedy of any person which exists or
is available apart from that Act).
(ii) Without prejudice to any rights that a Morgan
Stanley Company has as party to this
Agreement or otherwise or any rights that an
Associated Firm has pursuant to this
Agreement, such a Morgan Stanley Company
or Associated Firm, as the case may be, may
enforce the terms of this Agreement in
accordance with its terms and the provisions of
the Contract (Rights of Third Parties) Act
1999.
(iii) The parties do not require the consent of any
third party to rescind or vary this Agreement.
O. GOVERNING LAW AND JURISDICTION
O.1. Governing Law: Unless otherwise agreed in
writing, this Agreement and all Transactions
entered into hereunder and any non-contractual
obligations arising out of or in relation to this
Agreement or such Transactions will be
governed by, and construed in accordance with,
English law.
O.2. Jurisdiction: MSI plc and the Client each
hereby submit to the exclusive jurisdiction of
the courts of England in respect of any suit,
action or proceeding (including claims for set-
off and counterclaim) which may arise out of
or in connection with the creation, validity,
effect, interpretation or performance of, or the
legal relationships established by this
Agreement or otherwise arising out of or in
connection with this Agreement or (unless
otherwise agreed in writing) any Transaction
entered into thereunder including, without
limitation, disputes relating to any non-
contractual obligations.
O.3. Inconvenient Forum: MSI plc and the Client
hereby waive trial by jury and waive any
objections on the grounds of venue or forum
non conveniens or any similar grounds.
O.4. Immunity: To the extent that the Client may
be entitled in any jurisdiction to claim for itself
or for its property or assets immunity from
service of process, jurisdiction, suit,
judgement, execution, attachment or legal
process in respect if its obligations or to the
extent that in any such jurisdiction there may
be attributed to it or its property or assets such
immunity (whether or not claimed) the Client
hereby waives such immunity to the fullest
extent under the laws of such jurisdiction.
O.5. ERISA Transactions: In the event that any
transactions pursuant to the Customer
Documents become regulated under ERISA,
Morgan Stanley and the Client hereby agree to
submit to the jurisdiction of the New York
courts with regard to any disputes or claims
arising in connection with such transactions.
P. GUARANTEE AND INDEMNITY
P.1. Guarantee
In consideration of the Client undertaking on the terms of
this Section P to indemnify each Morgan Stanley
Company, and of each of the other guarantees contained
in this Section P, each Morgan Stanley Company
unconditionally guarantees to, and covenants with, each
other Morgan Stanley Company that it will be liable
hereunder to pay to any other Morgan Stanley Company
any Liabilities from time to time owing to any of the
Morgan Stanley Companies (whether or not due and
payable and whether or not demand shall have been
made on the Client therefor) PROVIDED ALWAYS
THAT the liability of each Morgan Stanley Company
hereunder shall be limited to an amount equal to the
aggregate net amount owing from that Morgan Stanley
Company to the Client on the date of the demand on that
Morgan Stanley Company hereunder (including any
amounts standing to the credit of the Client in any
Account(s) maintained by that Morgan Stanley
Company) after deducting all Liabilities of the Client to
that Morgan Stanley Company (whether or not due and
payable at the date of demand and whether or not
demand for payment of such Liabilities shall then have
been made on that Morgan Stanley Company).
P.2. Sole Principal Debtor
As between the Morgan Stanley Companies, but without
affecting the Client's obligations, each Morgan Stanley
Company will be liable to each of the other Morgan
Stanley Companies as if it were the sole principal debtor
and not merely a surety. Accordingly, no Morgan Stanley
Page 28
Company will be discharged, nor will its liability be
affected by anything which would not discharge it or
affect its liability if it were the sole principal debtor
(including (i) any time, indulgence, concession, waiver
or consent at any time given to the Client by any Morgan
Stanley Company, (ii) any amendment or supplement to
any Customer Document, or to any security or other
guarantee, (iii) the making or absence of any demand on
the Client for payment, (iv) the enforcement or absence
of enforcement of any Customer Documents, or of any
other security or guarantee, (v) the taking, existence or
release of any security or other guarantee, (vi) the
occurrence of any Act of Insolvency in respect of the
Client, (vii) the illegality, invalidity or unenforceability
of or any defect in any provision of any Customer
Document or any of the Client's obligations under them,
(viii) any reorganisation or change in the constitution of
the Client, or (ix) any other event which would, but for
this provision, constitute a legal or equitable discharge of
a guarantee).
P.3. Obligations Continuing
The obligations of each Morgan Stanley Company under
this Section P are, and will remain, in full force and
effect by way of continuing security until the Customer
Documents have been terminated and each of the
Morgan Stanley Companies has irrevocably received or
recovered all amounts payable under the Customer
Documents. Furthermore, the obligations of each
Morgan Stanley Company hereunder are additional to,
and not instead of, any security or other guarantee at any
time existing in favour of any of the Morgan Stanley
Companies and may be enforced without first having
recourse to the Client, any other person, any security or
any other guarantee.
P.4. Indemnification
P.4.1. Indemnity: The Client irrevocably undertakes
and covenants to each Morgan Stanley
Company that it will indemnify the Morgan
Stanley Company on demand against any
Claims relating to or arising out of this Section
P. For the avoidance of doubt, the Client
hereby acknowledges and confirms that its
obligation to indemnify each Morgan Stanley
Company pursuant to this P.4.1. will arise as
soon as a liability (including any contingent
liability) is incurred by a Morgan Stanley
Company pursuant to this Section P, and
accordingly that the obligation to indemnify a
Morgan Stanley Company shall arise whether
or not a Morgan Stanley Company has paid any
amounts to any other Morgan Stanley
Company pursuant to this Section P, and
whether or not such other Morgan Stanley
Company has made a demand on the Client.
For the avoidance of doubt, the Client's
indemnity obligations shall be Liabilities
secured by and subject to the provisions of this
Agreement.
P.4.2 Clawback: In the event that any amount is
paid by a Morgan Stanley Company under the
guarantee set out in paragraph P.1. and all or
part of the corresponding amount payable to
that Morgan Stanley Company by the Client
pursuant to the indemnity set out in paragraph
P.4.1. becomes repayable by such Morgan
Stanley Company (the amount of such
repayment being the “Repayment”) then,
whichever Morgan Stanley Company received
the guarantee payment, shall pay to that
Morgan Stanley Company the amount of such
Repayment, and an amount equal to such
Repayment will fall due from the Client to that
Morgan Stanley Company.
Page 29
INTERPRETATION AND DEFINITIONS
By entering into this Agreement, a contractual relationship is created that has legal consequences. This Agreement shall take
effect when a copy thereof has been returned to MSI plc duly signed by the Client or on its behalf.
INTERPRETATION
Except where the context otherwise requires:
1. Definitions: The terms defined in the Definitions Section will have the meanings specified therein;
2. Obligations Several: The obligations of the Morgan Stanley Companies hereunder are several only and not joint or
joint and several;
3. Persons: References to a person includes any individual, corporation, association, partnership, government, state or
agency of a state or other entity (whether or not having a separate legal personality) and its successors, transferees and
assigns;
4. Laws: Reference to a provision of law or other rule or regulation is a reference to that provision as amended or re-
enacted and in force from time to time;
5. Documents: Reference to a Customer Document or other document is a reference to that Customer Document or
other document as amended, novated or supplemented; and
6. Headings and Sections: Headings and the table of contents in this Agreement are for ease of reference only.
Reference to a Section will be a reference to the named Section of this Agreement.
To the extent that the terms of any other Customer Document would otherwise limit, restrict or exclude the rights or
remedies given to the Morgan Stanley Companies in this Agreement or contradict the terms of this Agreement with respect
to the subject matter hereof, the terms of this Agreement will prevail. The foregoing shall apply equally to any Customer
Document entered into prior to, on or after the date of this Agreement and the terms of that Customer Document shall be
read accordingly (and any entire agreement provision included therein shall be deemed amended to the extent it would
otherwise be inconsistent with the foregoing).
DEFINITIONS
In this Agreement except where the context otherwise requires:
“Account” means an account opened for the Client by a Morgan Stanley Company in respect of
any service provided to the Client by a Morgan Stanley Company or any Transaction
entered into by the Client and a Morgan Stanley Company, in each case, in
connection with this Agreement and includes, for the avoidance of doubt, the Prime
Brokerage Accounts
“Act of Insolvency” means (i) the passing of a resolution for the Client’s voluntary winding up (unless for
the purposes of corporate reconstruction or amalgamation in respect of which
Morgan Stanley has given its prior written approval); (ii) the presentation or filing of
a petition for the Client’s winding up or alleging the bankruptcy or insolvency of the
Client or seeking any reorganisation, arrangement, composition or similar relief; (iii)
the taking of any steps for the making of an administration order in respect of the
Client; (iv) the appointment of a liquidator, trustee, receiver, administrator or similar
officer over any of the Client’s assets; (v) the Client calling a meeting of its creditors
pursuant to Section 98 of the Insolvency Act 1986 or any other person calling a
meeting pursuant to Section 3 of the Insolvency Act 1986; (vi) the Client seeking,
consenting to or acquiescing in the appointment of a trustee, receiver or administrator
over any of its assets; (vii) the Client making a general assignment for the benefit of,
or entering into a reorganisation, arrangement or composition with, creditors; (viii)
the Client becoming insolvent or unable to pay its debts, or the Client fails or admits
its inability generally to pay its debts as they become due; (ix) the occurrence of any
procedure equivalent, analogous or similar to the foregoing (i) to (viii) in any other
jurisdiction; or (x) where the Client is the trustee of a trust, the Client is unable to pay
debts incurred in that capacity out of the assets of the trust
Page 30
“Adjusted Value” means, at any time, the absolute value of the amount, as determined by MSI plc,
yielded by the following formula:
Adjusted Value = 140% x (Settlement Facility Market Value + Debits)
“Affiliate” means any direct or indirect wholly-owned subsidiary of Morgan Stanley (the US
incorporated holding company)
"Agent" means an investment adviser, investment manager, administrator or other third party
appointed by the Client
"Agreement" means this Agreement (including all its Sections and attachments), Notices delivered
hereunder, documents or other confirming evidence of Transactions and any
additional documents relating to the services provided hereunder
“Appropriate Market” means, in relation to Investments of any description, the market which is the most
appropriate market for Investments of that description, as determined by the Non-
Defaulting Party
“Associated Firms” means any undertaking in the Morgan Stanley group of companies from time to time,
and, as the context requires, any person connected with Morgan Stanley from time to
time
“Australian Settlement Securities” means Settlement Securities which MSI plc determines (acting in good faith) to be
Australian Securities
"Authorised Person" means each person authorised under the Cash Payments and Securities Transfers
Authorisation to give a Cash Payment Instruction or Securities Transfer Instruction
"Authorised User" means the Client and those of its employees, agents, representatives or advisers that,
in connection with the services provided to the Client by MSI plc under this
Agreement, need to use the Software and have been provided with the Software by
MSI plc
“Cash Payments and
Securities Transfers Authorisation” means a written authorisation from the Client in a form acceptable to MSI plc (which
shall include the form of Cash Payments and Securities Transfers Authorisation
attached as Schedule V to this Agreement)
“Cash Payments Instruction” means an instruction from the Client requesting MSI plc to make a free payment of
cash from a Prime Brokerage Account to an account of a third party that is not made
against delivery of Investments into the Prime Brokerage Account or as payment in
respect of a Transaction executed with Morgan Stanley (but, excluding for the
avoidance of doubt, any payment of cash in respect of a purchase of securities that is
not settling on a delivery versus payment basis and where it is normal market practice
for the cash to be paid before the receipt of the purchased securities)
“Charged Assets” means Investments and cash transferred to Morgan Stanley and credited to any
Account which is subject to the Security
“Claims” means all direct and indirect costs, charges, fees, expenses, damages, liabilities and
losses, including any consequential losses and damages and including any costs,
charges, fees, expenses, damages, liabilities and losses incurred or sustained by
Morgan Stanley from time to time in accordance with or as a result of the
terminating, liquidating, obtaining or re-establishing any hedge or related trading
position including, without limitation, break costs and any legal costs and costs of
enforcing or protecting or attempting to enforce or protect any of Morgan Stanley’s
rights under this Agreement or any Transaction
“Clearing House” means any clearing house providing settlement, clearing or similar services whether
or not as part of an Exchange
“Confidential Information” means any proprietary and/or non-public information which shall include, without
limitation, (i) in relation to the Client, information relating to the Client’s investment
strategy and holdings and (ii) in relation to Morgan Stanley, details regarding the
Page 31
Loan, products or services provided by Morgan Stanley (including, the pricing and/or
fees relating to the provision of such products or services)
"Corporate Action" means, without limitation, any conversion, subscription rights, subdivision,
consolidation, redemption, merger, rights relating to takeovers or other offers or
capital re-organisation, capitalisation issue, rights issue, redenomination,
renominalisation or other event similar to the foregoing. Corporate Action will not
include any voting rights that are exerciseable, whether in connection with the
foregoing, or otherwise
"Corporate Action Information" means information relating to Corporate Actions in respect of the Client's
Investments
"Currency Business Day” means in respect of any obligations involving a payment denominated in: (i) euro, a
day on which the Trans-European Automated Real-time Gross Settlement Express
Transfer system operates; or (ii) any other currency, a day on which banks in the
principal financial centre of the country of which the currency in which the payment
is denominated is the official currency are generally open for business
“Customer Documents” means this Agreement and any other or additional documents or agreements entered
into between the Client and Morgan Stanley, whether or not expressly incorporated in
this Agreement (such documents may include, without limitation, any Cash Payments
and Securities Transfers Authorisation, each Schedule to this Agreement. the OSLA,
an Overseas Securities Lenders Agreement, Global Master Securities Lenders
Agreement, Global Master Repurchase Agreement, International Currency Options
Master Agreement, International Foreign Exchange Master Agreement and
International Swap and Derivatives Association Master Agreement, collateral
payment or bridge agreement or any similar agreement) and any annexes,
supplements or confirmations in relation thereto
“Data Protection Laws” means the UK Data Protection Act 1998 and all other applicable data protection laws
and regulations
“Debits” means the Equivalent Dollar Value of any debit cash balances credited to the Prime
Brokerage Account, and for the purposes of calculating Adjusted Value it shall be
input into the formula as a positive number
“Default Event” means the service of a Close-Out Notice with respect to any of the events set out in
K.1.1. (i) or (ii)
“Default Market Value” for the purposes of paragraph J.5.2. and paragraph K.1.4., the “Default Market
Value”of any Investments, Equivalent Securities or Equivalent Investments shall be
determined in accordance with sub-paragraphs (i) and (ii) below.
(i) If between the occurrence of the relevant Event of Default and the Default
Valuation Time the Non-Defaulting Party gives to the other party a written notice (a
“Default Valuation Notice”) which:
(A) states that, since the occurrence of the relevant Event of Default, the
Non-Defaulting Party has sold, in the case of Receivable Investments, or
purchased, in the case of Deliverable Investments, Investments which form
part of the same issue, are of an identical type and description as those
Investments, Equivalent Securities or Equivalent Investments, and that the
Non-Defaulting Party elects to treat as the Default Market Value:
(aa) in the case of Receivable Investments, the net proceeds of sale
after deducting all reasonable costs, commissions, fees and expenses
incurred in connection therewith (provided that where the Investments
sold are not identical in amount to the Investments, Equivalent
Securities or Equivalent Investments, the Non-Defaulting Party may
elect to treat either (x) such net proceeds of sale divided by the amount
of securities sold and multiplied by the amount of the Investments,
Equivalent Securities or Equivalent Investments as the Default Market
Value or (y) elect to treat such net proceeds of sale of the Investments,
Equivalent Securities or Equivalent Investments actually sold as the
Default Market Value of that proportion of the Investments, Equivalent
Page 32
Securities or Equivalent Investments, and, in the case of (y), the Default
Market Value of the balance of the Investments, Equivalent Securities
or Equivalent Investments shall be determined separately in accordance
with the provisions of this paragraph and accordingly may be the
subject of a separate notice (or notices) under this sub-paragraph (i) or
sub-paragraph (ii)); or
(bb) in the case of Deliverable Investments, the aggregate cost of
such purchase, including all reasonable costs, commissions, fees and
expenses incurred in connection therewith (provided that where the
Investments purchased are not identical in amount to the Investments,
Equivalent Securities or Equivalent Investments, the Non-Defaulting
Party may elect to treat either (x) such aggregate cost divided by the
amount of Investments purchased and multiplied by the amount of the
Investments, Equivalent Securities or Equivalent Investments as the
Default Market Value or (y) elect to treat the aggregate cost of
purchasing the Investments, Equivalent Securities or Equivalent
Investments actually purchased as the Default Market Value of that
proportion of the Investments, Equivalent Securities or Equivalent
Investments, and, in the case of (y), the Default Market Value of the
balance of the Investments, Equivalent Securities or Equivalent
Investments shall be determined separately in accordance with the
provisions of this paragraph and accordingly may be the subject of a
separate notice (or notices) under this sub-paragraph (i)or
sub-paragraph (ii)); or
(B) states that the Non-Defaulting Party (acting in good faith) has elected to
treat as the Default Market Value of any Receivable Investments or
Deliverable Investments prices derived from quotations obtained from
market makers or dealers in the Appropriate Market (including, if
commercially reasonable, prices obtained from persons acting in such
capacity who are employees of the Non-Defaulting Party, and in the
case of Morgan Stanley of any of its Affiliates, and in the case of the
Client of its investment manager), or from such other commercially
reasonable pricing source as the Non-Defaulting Party may determine,
using pricing methodology which is customary or otherwise reasonably
appropriate for the relevant type of security (as determined by the Non-
Defaulting Party), and together with all Transaction Costs which would
be incurred in connection with such a purchase or sale transaction
calculated on the assumption that the aggregate thereof is the least that
could reasonably be expected to be paid in order to carry out the
transactions; or
(C) states:
(aa) that either (x) acting in good faith, the Non-Defaulting Party has
endeavoured but been unable to sell or purchase Investments in
accordance with sub-paragraph (i)(A) above or to obtain quotations or
other pricing source valuations in accordance with sub-paragraph (i)(B)
above (or both) or (y) the Non-Defaulting Party has determined that it
would not be commercially reasonable to obtain or use such quotations,
or valuations; and
(bb) that the Non-Defaulting Party has determined the Net Value of
the relevant securities (which shall be specified) and that the
Non-Defaulting Party elects to treat such Net Value as the Default
Market Value of the relevant Investments,
then the Default Market Value of the relevant securities shall be an
amount equal to the Default Market Value specified in accordance with
(A), (B) or, as the case may be, (C) above.
(ii) If by the Default Valuation Time the Non-Defaulting Party has not given a
Default Valuation Notice, the Default Market Value of the relevant Investments,
Equivalent Securities or Equivalent Investments shall be an amount equal to their Net
Page 33
Value on the date of the Default Event or on such other date as the Non-Defaulting
Party, acting in good faith and in a commercially reasonable manner, may determine
“Default Rate” means a rate per annum equal to the cost (without proof or evidence of any actual
cost) to Morgan Stanley if it were to fund or of funding the relevant amount plus 1%
per annum
“Default Valuation Time” means for the purposes of the definition of Default Market Value, the close of
business in the Appropriate Market on the twentieth (20
th
) dealing day after the day
on which the Default Event occurs
“Deliverable Investments” means Investments, Equivalent Investments or Equivalent Securities to be delivered
by the Defaulting Party
“Designated Customer Document” in the case of a Close-Out Notice served by Morgan Stanley, has the meaning given
to it in K.1.2. and, in the case of a Close-Out Notice served by the Client, means this
Agreement
“Equivalent Dollar Value” means, (i) where any amount or value is not denominated in US Dollars, the
equivalent in US Dollars reasonably determined by Morgan Stanley and (ii) where
any amount or value is denominated in US Dollars, the actual US Dollar amount
“Equivalent Investments” Investments or securities are “equivalent” to other Investments or securities if they
are of the same issuer,
and “Equivalent Securities” part of the same issue and of an identical type, nominal value, description and amount
and have the same rights as those other Investments or securities: PROVIDED
THAT, where any Investment or securities are subject to any Corporate Action,
Morgan Stanley may reasonably determine what Investments, securities or other
assets (which may consist of or include money or other property) are to be treated as
“equivalent” for this purpose; and the expressions “Equivalent Investment” and
“Equivalent Securities” are to be construed accordingly
"ERISA" means the U.S. Employment Retirement Income Security Act of 1974 as amended
“Event of Default” means any of the events described in the Events of Default Section H
“Exchange” means any exchange, regulated market, multi-lateral trading facility, trading system,
market or association of dealers in any part of the world on or through which
Investments, commodities or currencies (including for the avoidance of doubt, spot
foreign exchange) or assets underlying, derived from or otherwise related directly or
indirectly to the same are bought and sold and shall include any automated trading
system
“Exchange Business Day” means in respect of a Transaction relating to any securities or an exchange, a day
which is a dealing day in the most appropriate market for securities of that type (as
determined by Morgan Stanley) or a day on which such exchange is open; provided
such day is also a Notice Business Day
“Exchange-Traded Derivatives means a transaction entered into under the Terms Relating to Exchange-Traded
Transaction” Derivative Transactions
“Executing Broker” means a broker selected by the Client to execute Transactions, which may or may not
be a Morgan Stanley Company
“FCA” means the Financial Conduct Authority and any successor regulator
“FCA Rules” means the rules of the FCA from time to time, or any rules which replace or succeed
such rules
“Fee Schedule” means the schedule of prime brokerage fees described as the International Prime
Brokerage Fee Schedule as amended by MSI plc from time to time
“Financial Instrument” has the meaning given to it by the FCA Rules and PRA Rules
“FSMA” means the Financial Services and Markets Act 2000 of the United Kingdom
Page 34
“FX Transaction” means a foreign exchange transaction entered into with Morgan Stanley under Section
C of this Agreement
“Hong Kong Settlement Securities” means Settlement Securities which MSI plc determines to be Hong Kong Securities
"Income" means any interest, dividends or other distributions of any kind whatsoever with
respect to any Investments
“Indemnified Person” means each Morgan Stanley Company and Associated Firm and its respective
officers and employees
“Investments” means all assets of any kind whatsoever, other than cash
“Liabilities” means the aggregate (as determined by Morgan Stanley) of all monies, debts,
liabilities and obligations which now are or have been or at any time hereafter may be
or become due, owing or incurred by the Client to any Morgan Stanley Company (or,
as the context may require, to any one or more Morgan Stanley Companies) under the
Customer Documents, any Transaction, contract or otherwise, together with any
reasonable costs, charges or expenses (including, without limitation, reasonable legal
fees) which Morgan Stanley may incur in perfecting, enforcing or maintaining, or
attempting to perfect, enforce or maintain, any of its rights under the Customer
Documents, any Transaction or otherwise, including without limitation, amounts of
principal, interest and other monies due and payable under the Loan or any other
loans made by Morgan Stanley to the Client (in each case, whether alone or jointly,
or jointly and severally, with any other person, whether actually or contingently and
whether as principal debtor, guarantor, surety or otherwise)
“Liquidation Amount” means the Liquidation Amount determined in accordance with the provisions of the
MNA
“Loan” means any monies (in any currency) lent by MSI plc to the Client pursuant to
paragraph A.5.
“Loss” means, with respect to any Transaction terminated under paragraph J.5. or paragraph
K.1. (other than Transactions for the delivery of securities), the amount which the
Non-Defaulting Party reasonably determines in good faith to be the relevant party’s
overall total losses and costs (or gain, in which case expressed as a negative number)
in connection with that terminated Transaction or group of terminated Transactions,
as the case may be, including any loss of bargain, cost of funding or, at the election of
the Non-Defaulting Party but without duplication, loss or cost incurred as a result of
the termination, liquidation, obtaining or re-establishing of any hedge or related
trading position (or any gain resulting from any of them). Loss includes losses and
costs (or gains) in respect of any payment or delivery required to have been made on
or before the relevant termination date of a terminated transaction and not made
“Margin” means cash, Investments or other assets of a number and type determined by Morgan
Stanley in its absolute discretion
“Margin Requirement” means the amount of Margin that Morgan Stanley requires the Client to hold with
Morgan Stanley in order for Morgan Stanley to allow the Client to maintain the
Liabilities, as determined by Morgan Stanley in its sole discretion
“MNA” means the Master Netting Agreement in respect of Exchange-Traded Derivatives
Transactions in the form attached hereto
“Morgan Stanley” and
“Morgan Stanley Companies” means separately MSI plc and each of the companies set out below the Morgan
Stanley signature section of this Agreement and any company to whom any rights,
benefits and/or obligations are transferred pursuant to paragraphs N.1.2. or N.1.3.
“Morgan Stanley Company” means any of the Morgan Stanley Companies
"MSI plc" means Morgan Stanley & Co. International plc
Page 35
“MSI plc Act of Insolvency” means (i) the passing of a resolution for MSI plc’s voluntary winding up (unless for
the purposes of corporate reconstruction or amalgamation); (ii) the presentation or
filing of a petition for MSI plc’s winding up or alleging the bankruptcy or insolvency
of MSI plc or seeking any reorganisation, arrangement, composition or similar relief
and such petition, (a) results in a judgement of insolvency or bankruptcy, or (b) is not
dismissed, discharged, stayed or restrained within 30 days of the initiation or
presentation thereof; (iii) the appointment of an administrator in respect of MSI plc
(pursuant to the “special administration regime” under The Investment Bank Special
Administration Regulations 2011 or otherwise); (iv) the appointment of a liquidator,
trustee, receiver, administrator or similar officer over substantially all of MSI plc’s
assets; (v) MSI plc calling a meeting of its creditors pursuant to Section 98 of the
Insolvency Act 1986 or any other person calling a meeting pursuant to Section 3 of
the Insolvency Act 1986; (vi) MSI plc seeking, consenting to, or acquiescing in the
appointment of a trustee, receiver or administrator over substantially all of its assets;
(vii) MSI plc making a general assignment for the benefit of, or entering into a
reorganisation, arrangement or composition with, creditors; (viii) MSI plc becoming
insolvent or unable to pay its debts, or MSI plc fails or admits its inability generally
to pay its debts as they become due; or (ix) the occurrence of any procedure
equivalent, analogous or similar to the foregoing (i) to (viii) in any other jurisdiction
“Net Value” means at any time, in relation to any Deliverable Investments or Receivable
Investments, the amount which, in the reasonable opinion of the Non-Defaulting
Party, represents their fair market value, having regard to such pricing sources and
methods (which may include, without limitation, available prices for Investments
with similar maturities, terms and credit characteristics as the relevant Investments,
Equivalent Securities or Equivalent Investments) as the Non-Defaulting Party
considers appropriate, less, in the case of Receivable Investments, or plus, in the case
of Deliverable Investments, all Transaction Costs which would be incurred in
connection with the purchase or sale of such securities
“Non-Defaulting Party” means MSI plc in the case of the occurrence of any of the events set out in paragraph
K.1.1.(i) and the Client in the case of the occurrence of any of the events set out in
paragraph K.1.1.(ii), and “Defaulting Party” for the purpose of the definitions of
“Deliverable Investments” and “Receivable Investments” shall be construed
accordingly
“Notice” means any notice, demand, instruction, confirmation, contract note or request
delivered or to be delivered pursuant to this Agreement
“Notice Business Day” means a day on which MSI plc and banks in London are generally open for the
transaction of business
or “business day” contemplated by this Agreement
“Open Contract” means a Contract which has not been closed out and which has not yet matured
“Order Execution Policy” means the Order Execution Policy Disclosure Statement issued by Morgan Stanley as
amended or supplemented from time to time
“OSLA” means the Overseas Securities Lender’s Agreement between the Client and MSI plc
“PPSA” means the Personal Properties Securities Act, 2009 (Cth) of Australia
“PRA” means the Prudential Regulation Authority and any successor regulator
“PRA Rules” means the rules of the PRA from time to time, or any rules which replace or succeed
such rules
“Prime Brokerage Account” means an Account opened on the books and records of MSI plc in its capacity as
prime broker to the Client
“Receivable Investments” means Investments, Equivalent Investments or Equivalent Securities to be delivered
to the Defaulting Party
“Securities Transfers Instruction” means an instruction from the Client requesting MSI plc to make a free transfer of
Investments from a Prime Brokerage Account to an account of a third party that is
not made against payment of cash into the Prime Brokerage Account or as a delivery
Page 36
in respect of a Transaction executed with Morgan Stanley (but excluding, for the
avoidance of doubt, any delivery of Investments in respect of a sale of Investments
that is not settling on a delivery versus payment basis and where it is normal market
practice for the Investments to be transferred before the receipt of the corresponding
payment of cash)
“Security” means the security created by or pursuant to this Agreement
“Settlement Facility” means a facility made available by MSI plc pursuant to paragraph B.1.1. to enable the
Client to settle its actual or anticipated obligations to transfer securities. The Client’s
obligation to transfer securities being a “Settlement”
“Settlement Facility Market Value” means the Equivalent Dollar Value of all Equivalent Securities required to be
redelivered by the Client to Morgan Stanley (including for the avoidance of doubt any
position which is held as an over-borrow or excess borrow), and for the purposes of
calculating Adjusted Value it shall be input into the formula as a positive number
“Software” means any and all computer software, programs, electronic communication or
execution systems, analytical tools and associated materials such as users’ guides and
any changes or upgrades thereto (including, but not limited to, ClientLink and
Matrix) provided to the Client by Morgan Stanley in connection with the services to
be provided under this Agreement
"South African Securities" means any "listed security" contemplated by Item 1 of the South African Securities
Transfer Tax Act No.25, 2007
“Transactions” means all Loans, Settlements, FX Transactions, Exchange-Traded Derivative
Transactions and any other transactions, howsoever described including without
limitation any Electronic Transaction
“Transaction Costs” means in relation to any Transaction contemplated in paragraphs (i) or (ii) of the
definition of “Default Market Value”, the reasonable costs, commission, fees and
expenses (including mark-up or mark-down) that would be incurred in connection
with the purchase of Deliverable Investments or the sale of Receivable Investments,
calculated on the assumption that the aggregate thereof is the least that could
reasonably be expected to be paid in order to carry out the Transaction
Page 37
SCHEDULES
Each of the following Schedules form part of the Agreement:
I. ELECTRONIC SERVICES
II. TERMS RELATING TO EXCHANGE TRADED DERIVATIVES
PART A – DEALING
PART B – MASTER NETTING AGREEMENT
PART C – EURONEXT.LIFFE REQUIRED TERMS
PART D – LONDON METAL EXCHANGE
III. REQUIRED TERMS FOR STOCK EXCHANGES
IV. HONG KONG TRANSACTIONS
V. CASH PAYMENTS AND SECURITIES TRANSFERS AUTHORISATION
Page 38
SCHEDULE I - ELECTRONIC SERVICES
This Schedule forms part of the Agreement and sets forth the terms and conditions under which Morgan Stanley agrees to
provide You (as defined below) with the use of one or more systems for the purpose of electronically transmitting trading
instructions, including without limitation certain electronic services that may enable You to route orders and otherwise
engage in electronic transactions (“Electronic Transactions”), electronically communicate with Morgan Stanley, receive
investment research, reports and portfolio information, and any algorithms or software related thereto (collectively, the
“Services”) either directly or through third parties, including without limitation contractors and technology, market data and
content providers (“Vendors”). Defined terms used in the Agreement shall have the same meaning when used in this
Schedule.
1.Parties. As used herein, the term “You” and “Your” shall mean the Client, and all other authorised representatives
of the Client, individually, and each other party on whose behalf You may use the Services at any time. As a condition to
using the Services, You shall ensure that any individuals and affiliates using the Services accept and agree to be bound by
the provisions in this Schedule. The Services are provided by Morgan Stanley or an affiliate located or authorised to do
business in the country (including state, province or other jurisdiction) where Morgan Stanley deem the Services to be
accessed by You. Services are not intended to be provided to and may not be used by any party in any jurisdiction where the
provision or use thereof would be contrary to applicable law, rules or regulations (“Applicable Law”).
2.Binding Terms. (a) You agree to be bound by any rules, conventions, regulations, user agreements, user guides or
instructions related to the Services or of any regulatory authorities, exchanges or trading systems through which Your trades
are executed, as well as any terms of use, including disclosures, disclaimers, data protection and privacy policies that are
displayed by the Services or which You may click through (the “Rules”), all of which shall be in addition to, and not in lieu
of, Your obligations under this Schedule; and (b) You shall continue to be bound by the Agreement and any other Customer
Document, and nothing herein shall be deemed to supersede or modify any such Customer Document.
3.Security. You may be provided with user identifications, passwords, authentication codes or other security devices
or procedures (collectively, “Passwords”) for access to the Services. You may not share Your Passwords with any third
party without Morgan Stanley’s and/or the Vendors’ written approval, as applicable. Upon request, You shall provide
Morgan Stanley with a list of persons authorised to use Your Passwords, and You shall promptly advise Morgan Stanley of
any changes in such authorised persons. You agree not to alter, delete, disable or otherwise circumvent any Password or
permit or assist any other party to do so in a manner not authorised by Morgan Stanley and/or the Vendors, as applicable.
Morgan Stanley and/or the Vendors reserve the right to suspend Your access to the Services and change (or require You to
change) Your Passwords at any time. You are responsible for any transmissions, instructions, information, processes, click-
through consents, click stream data or other communications (“Communications”) attributable to Your Passwords, whether
entered by Your authorised personnel or by any other person, and any agreement or consent communicated from such access
shall be deemed to be a duly signed writing of Yours sufficient to bind You. You shall notify Morgan Stanley immediately
upon learning or suspecting that any unauthorised party has obtained any Password used in connection with any Service.
You shall maintain adequate internal procedures and controls over Your use of the Services.
4.Placement of Orders; Objections
(a)MSI plc or one of Morgan Stanley’s affiliates shall process requests to execute Electronic Transactions received
through the Services (the “Orders”), and shall only be deemed to have received an Order if such Order has been received
and processed, even if You have not received an acknowledgment of the Order. Morgan Stanley will use reasonable efforts
to execute Orders on the terms received and in accordance with the Order Execution Policy. The applicable Service may
provide You with a notice (each a “Notice of Execution”), which may be in addition to any confirmation or other notice
required under Applicable Law, for each Order executed through the Services.
(b)You agree that Morgan Stanley has no obligation to enter into any Electronic Transaction with You or to provide a
quote with respect to any Electronic Transaction with You. Unless a quotation is specifically identified as actionable, it is
indicative and for informational purposes only. Morgan Stanley may cancel or reject an Order in whole or in part at any
time and for any reason in Morgan Stanley sole discretion.
(c)You shall be responsible for all executions (partial or otherwise) of Orders identified by the Services as sent by You,
even if You did not receive a Notice of Execution. Execution terms as reflected in any Notice of Execution are subject to
adjustment by Morgan Stanley for errors, whether on Morgan Stanley’s part, the part of Morgan Stanley’s agent, any
Vendor, the Services or any market to which Your Order was routed.
(d)You shall not be responsible for execution completed after Your Order has been cancelled in the applicable market
and for which an acknowledgment was sent to that effect. An Order shall not be deemed to have been cancelled if Morgan
Stanley receives execution of Your Order from such market prior to or subsequent to Morgan Stanley’s receipt of
confirmation from such market that the Order was cancelled. System response times may vary due to market conditions,
system performance, Internet traffic or other factors. During times of heavy trading volume, Orders or cancellation requests
received through the Services may take longer to execute or cancel, and Orders that are executed may be at prices that
diverge significantly from the market price quoted or displayed at the time the Order was entered. In the event of system
Page 39
delay or failure, or otherwise in relation to any concerns You may have about Your Electronic Transactions, You are
responsible for contacting Morgan Stanley by alternative means, such as telephone.
(e)Unless otherwise provided for in any Customer Document or the Rules, if You have any objections to any report of
the execution of Your Orders and/or any statement of Your account(s), You must raise them with Morgan Stanley within one
business day of the date on which Your report or statement was sent.
(f)You are solely responsible for Your compliance with the Rules and Applicable Law, including suitability
requirements, the preparation and/or filing of any of Your reports to any relevant exchange and/or any other regulatory
authority or the maintenance of records required to be maintained by You.
(g)Morgan Stanley or, where applicable, the Vendor may impose and/or change limits on the amount, size and type of
trades and securities, commodities, futures, currencies, derivatives thereon or any other instruments You may trade through
the Services and modify any aspect of or limit or terminate use of the Services.
(h)You shall cooperate fully with Morgan Stanley in any inquiries made by any of Morgan Stanley’s third party market
data suppliers, any relevant exchange, any Vendor or any other regulatory authority in relation to the provision of the
Services.
(i)Unless You specifically instruct Morgan Stanley to route Your Orders directly to one or more specified markets,
Morgan Stanley may, in Morgan Stanley’s discretion, select any market, including one or more internal matching systems or
third party trading systems.
5.Usage and Proprietary Rights. Morgan Stanley grants You, for the term of this Schedule, a personal, limited, non-
exclusive, revocable, non-transferable licence to use the Services subject to the terms hereof, and the following: You have no
ownership rights in the Services, which are owned by Morgan Stanley, the Vendors or their respective licensors, and are
protected under copyright, trade mark and other intellectual property laws and other Applicable Law. You receive no
copyright or any other intellectual property right in or to the Services, except as provided above. You may use the Services
only for Your internal business purposes. You agree that Morgan Stanley and its affiliates may provide certain portions of
the Services under licence from third parties, and You agree to comply with any additional restrictions on Your usage that
Morgan Stanley may communicate to You from time to time, or that are otherwise the subject of an agreement between You
and such licensors. Each party will treat the existence and terms of this Schedule as confidential (subject always to the terms
of the Agreement) and You further agree that any information relating to the content or operation of the Services is
confidential and proprietary to Morgan Stanley, and that you will refrain from disclosing such information to any third party.
You grant Morgan Stanley, its affiliates and Vendors a royalty-free, perpetual, irrevocable, non-exclusive, worldwide licence
to use, access and benefit from any information and data that you provide or transmit to Morgan Stanley and its affiliates
(whether directly or through a Vendor) or that is otherwise accessed in connection with the Services (“Data”). Morgan
Stanley shall have exclusive title and ownership rights, including all intellectual property rights, throughout the world in all
derivative works that are created using the Data.
6.Change to Terms and Conditions. Upon notice to You, Morgan Stanley may add, delete or otherwise modify any
portion of this Schedule in whole or in part at any time, including without limitation to impose charges for use of the
Services or any portion thereof. Your continued use of the Services 10 days after receipt of such notice shall represent Your
acceptance of such terms.
7.Use of the Internet. You agree that the Internet is not a secure network and that any Communications transmitted
over the Internet may be intercepted or accessed by unauthorised or unintended parties, may not arrive at the intended
destination or may not arrive in the form transmitted. You agree that neither Morgan Stanley nor the relevant Vendor take
any responsibility for any Communications transmitted over the Internet and that there can be no assurance that such
Communications shall remain confidential or intact. Any Communications transmitted to or from You through the Services
shall be at Your sole risk. If You access or view the Services by means or in formats other than as originally intended or
provided by Morgan Stanley, You remain responsible for reviewing all pertinent portions of the Services, including any
relevant disclosures and disclaimers.
8.E-mail, Chat and Instant Messaging. E-mail, chat and instant messaging features may be provided to You as a
convenience to enhance Your Communications with Morgan Stanley. Unless otherwise agreed to by Morgan Stanley, You
shall not use these features to request, authorise or effect any Electronic Transaction, to send fund transfer instructions or
account information, or for any other Communication that requires non-electronic written authorisation. Morgan Stanley
shall not be responsible for any loss or damage that results if any such request is not accepted or processed. You agree that
You shall use these features in compliance with the Rules and Applicable Law, and You shall not use them to transmit
inappropriate information, including information that may be deemed obscene, defamatory, harassing or fraudulent.
9.Representations and Warranties. Each time You use the Services and with respect to each Electronic Transaction,
You hereby represent and warrant that:
(a) You have the power and authority (including under any applicable investment restrictions or guidelines and on
behalf of any party for whom You are using the Services) to enter into and perform Your obligations under this Schedule,
and this Schedule is Your legal, valid, binding and enforceable obligation.
(b)Any Orders submitted by You are and shall comply with this Schedule, any applicable Customer Document,
Applicable Law and Rules.
Page 40
(c)All securities, commodities, futures, currencies, derivatives thereon and any other instruments that You offer and
sell using the Services shall be free and clear of any liens, mortgages, encumbrances or restrictions of any kind (including
legends or restrictions on transfer), both when they are offered or sold and upon their delivery at settlement.
(d)You are not and shall not be, at any time when You offer, buy or sell any security using the Services, an “affiliate”
of the issuer thereof or, in the case of convertible or exchangeable securities, the issuer of the underlying security.
(e)Each representation and warranty made by You under any Rules shall be deemed to have been made for the benefit
of Morgan Stanley.
(f)You shall not introduce, nor permit any person to introduce into the Services, any code, malicious or hidden
mechanisms that would impair the operation of the Services or of Morgan Stanley’s computers or other devices or software,
or would permit other users access to the Services, nor shall You use the Services to gain any unauthorised access to any
computer system.
10.DISCLAIMER OF WARRANTIES. THE SERVICES ARE PROVIDED “AS IS”, AND MORGAN STANLEY,
ITS AFFILIATES AND THE VENDORS DISCLAIM ALL REPRESENTATIONS, WARRANTIES AND IMPLIED
TERMS, WHETHER IN LAW, TORT, FACT OR CONTRACT, INCLUDING WITHOUT LIMITATION (I) WITH
RESPECT TO THE ACCURACY, COMPLETENESS OR TIMELINESS OF THE SERVICES OR ANY PART
THEREOF; OR (II) THAT THE SERVICES OR ANY PART THEREOF SHALL BE UNINTERRUPTED OR ERROR
FREE; AND (III) THOSE OF NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE RELATING TO THE SERVICES OR ANY PART THEREOF. ANY HYPERLINK TO ANOTHER SITE IS
NOT AND DOES NOT IMPLY AN ENDORSEMENT, INVESTIGATION, VERIFICATION OR MONITORING BY
MORGAN STANLEY, ITS AFFILIATES AND THE VENDORS OF ANY INFORMATION ON THAT SITE.
11.LIMITATION OF LIABILITY. TO THE FULLEST EXTENT PERMITTED BY LAW, IN NO EVENT SHALL
MORGAN STANLEY, ITS AFFILIATES OR THE VENDORS OR THEIR RESPECTIVE OFFICERS, DIRECTORS,
OWNERS, AGENTS AND EMPLOYEES (THE “MORGAN STANLEY PARTIES”) HAVE ANY LIABILITY TO YOU
OR ANY OTHER PERSON FOR ANY INDIRECT, CONSEQUENTIAL OR SPECIAL LOSSES, COSTS, LIABILITES
OR DAMAGES OF ANY KIND, INCLUDING DIRECT OR INDIRECT LOSS OF PROFITS (TOGETHER, “COSTS”),
ARISING OUT OF, OR IN CONNECTION WITH, THIS AGREEMENT OR THE PERFORMANCE OR BREACH OF
THIS AGREEMENT, OR YOUR OR ANY OTHER PERSON’S USE OF, OR INABILITY TO USE, THE SERVICES.
THESE LIMITATIONS SHALL APPLY REGARDLESS OF THE FORM OF ACTION, WHETHER BASED ON
STATUTE EQUITY OR ARISING IN CONTRACT, INDEMNITY, WARRANTY, STRICT LIABILITY OR TORT
(INCLUDING NEGLIGENCE), AND REGARDLESS OF WHETHER ANY MORGAN STANLEY PARTY KNOWS OR
HAS REASON TO KNOW OF THE POSSIBILITY OF SUCH DAMAGES. NOTWITHSTANDING ANY OTHER
PROVISIONS OF THIS AGREEMENT AND WITHOUT PREJUDICE TO THE FOREGOING AND TO CLAUSE 10
ABOVE, THE MAXIMUM AGGREGATE LIABILITY OF THE MORGAN STANLEY PARTIES FOR DIRECT LOSS
(WHETHER UNDER STATUTE, OR ARISING IN EQUITY, CONTRACT, TORT (INCLUDING NEGLIGENCE) OR
INDEMNITY, WARRANTY, STRICT LIABILITY OR OTHERWISE) UNDER THIS AGREEMENT AND WITH
RESPECT TO THE SERVICES SHALL NOT EXCEED THE AMOUNT OF FEES PAID BY YOU IN CONNECTION
WITH THE SPECIFIC TRANSACTION GIVING RISE TO SUCH LOSS OR DAMAGE, UNLESS CAUSED DIRECTLY
BY THE WILLFUL DEFAULT OR FRAUD OF THE MORGAN STANLEY PARTIES. THIS LIMITATION OF
LIABILITY IS IN ADDITION TO ANY OTHER LIMITATION PROVIDED IN ANY APPLICABLE ACCOUNT
AGREEMENT OR RULES.
12.Your Indemnification Obligations. You agree to indemnify, defend and hold harmless the Morgan Stanley Parties
from and against any and all losses, liabilities, judgments, arbitration awards, settlements, expenses, damages and costs,
including attorneys’ fees and disbursements, as incurred by any of them arising in any manner out of or relating to Your use
of, or inability to use, the Services or any breach or alleged breach by You of this Schedule. You shall co-operate with the
Morgan Stanley Parties as fully as reasonably required in the defence of any third party claim subject to these indemnity
provisions. Morgan Stanley reserves the right to assume the exclusive defence and control of any matter otherwise subject
to indemnification by You. You shall not in any event settle any matter without the prior written consent of Morgan Stanley.
This indemnity is in addition to any other indemnity provided in any applicable Customer Document or Rules.
13.Governing Law; Injunctive Relief. This Schedule, its enforcement, and any dispute arising out of or relating to the
subject matter of this Schedule (including any non-contractual obligations relating thereto) shall be governed by the laws of
England, and the parties irrevocably consent to the exclusive jurisdiction of the courts of England for any such disputes.
You acknowledge that any breach or threatened breach by You of any provision of this Schedule may cause Morgan Stanley
or its affiliates or the Vendors irreparable injury and damage and, therefore, that any such breach or threatened breach may
be enjoined through injunctive proceedings in addition to any other rights and remedies that may be available to Morgan
Stanley or its affiliates or the Vendors at law or in equity.
14.Notice. Any notices or other communications required or permitted to be given or delivered under this Schedule
by Morgan Stanley to You shall be provided through the Services, by e-mail, by facsimile (with confirmation of receipt) or
in writing to the address provided by You, which You are solely responsible for updating as necessary. Any notices or other
communications under this Schedule by You to Morgan Stanley shall be provided in writing to Morgan Stanley & Co.
International plc., 25 Cabot Square, Canary Wharf, London E14 4QA, England, Attention: Legal and Compliance Division,
or as otherwise specified in writing, and, if the name of an affiliated entity appears on the signature line below, to that entity
Page 41
at the address provided below as well. Notices transmitted electronically (e-mail or fax or phone) shall be effective upon
transmission, provided that such notice is properly addressed; all other notices shall be effective upon receipt.
15.Assignment; Waiver. You may not assign, sublicense, delegate, subcontract or otherwise transfer Your rights,
duties and obligations under this Schedule to a third party without Morgan Stanley’s express written consent. Any
instrument purporting to make an assignment or other transfer in violation of this provision shall be null and void. Any
forbearance or delay on the part of either party hereto in enforcing any provision of this Schedule or any of its rights
hereunder shall not be construed as a waiver of such provision or of a right to enforce the same for such occurrence or any
future occurrence.
16.Termination. Morgan Stanley may terminate or suspend this Schedule with respect to any Service immediately,
with or without cause, upon notice to You. You may terminate this Schedule, with or without cause, upon at least one day’s
written notice in non-electronic form to Morgan Stanley. Notwithstanding any such termination or suspension, this Schedule
shall remain in effect in respect of any other Service to which You continue to have access. This Schedule shall remain in
effect with respect to any Orders placed or Electronic Transactions initiated prior to effectiveness of any termination, and
neither party shall be relieved of any payment or other obligation that accrued prior to termination. Sections 2, 4, 5 and 9-19
shall survive the termination of this Schedule.
17.Privacy and Cookies. Morgan Stanley, its affiliates and Vendors may process personal data as part of and/or in
connection with the Services. This includes using cookies and similar technology to collect information about Your use of
our Services and Your preferences. To find out more information about how Morgan Stanley processes personal data and
uses cookies and how to reject cookies, see Morgan Stanley’s Privacy & Cookies Policy at
http://www.morganstanley.com/privacy_pledge.html. By accessing or using the Services you consent to Morgan Stanley, its
affiliates and Vendors processing your personal data and using cookies as further detailed in Morgan Stanley’s Privacy &
Cookies Policy. You acknowledge and agree that if You choose to reject cookies, some or all parts of the Services may not
function properly or may not be accessible.
18. E-commerce Directive. Unless expressed otherwise in an individual product or Service’s terms of use, no
contracting or transaction information required by the E-Commerce Directive, as implemented under applicable law, will be
provided in relation to business to business contracts concluded electronically as a result of Your use of the Services.
19. Miscellaneous. This Schedule, together with any applicable Customer Documents, constitutes the entire
agreement between You and Morgan Stanley with respect to the Services. Solely in connection with an Electronic
Transaction, in the event of any conflict between this Schedule and any Customer Document, the terms of this Schedule shall
prevail. Any cause of action with respect to the Services must be commenced within one year after the claim or cause of
action arises. If for any reason a court of competent jurisdiction finds any provision of this Schedule, or portion thereof, to
be unenforceable, that provision shall be enforced to the maximum extent permissible so as to effect the intent of this
Schedule, and the remainder of this Schedule shall continue in full force and effect. The rights and remedies of the parties
hereunder are cumulative and are in addition to, and not in lieu of, all rights and remedies available at law and in equity.
Except as expressly agreed in writing between us or provided in this Schedule, this Agreement and the Customer Documents
do not create any rights under the Contracts (Rights of Third Parties) Act 1999, save that each of Morgan Stanley’s affiliates
shall be entitled to benefit from and to enforce any benefit under this Agreement as if such benefit has been expressly
granted to that affiliate.
20. Foreign Exchange Trading. To the extent that You use the Services for the purposes of FX Trading, the following
shall apply:
A. Services. The Services contemplated by this Section 20 include (i) services currently known as FX Trading and
the foreign exchange functionality provided on Passport (formerly TradeXL) both accessible through Morgan Stanley’s
Client Link and (ii) any other foreign exchange service as may be offered to You by Morgan Stanley directly or through
third parties, each of which shall be deemed a Vendor for purposes of this Schedule.
(a) Client Link. In connection with your use of Morgan Stanley’s Client Link, Section 4, entitled “Placement of
Orders; Objections”, and Section 8, entitled “E-mail, Chat and Instant Messaging”, of this Schedule are qualified by the
following terms:
(i)For purposes of Section 4(a), FX Trading will only accept market orders as “Orders”; the foreign exchange
functionality on Passport will accept market orders, requests for quotes, and dealable quotes as “Orders”. We reserve the
right to change the parameters established for foreign exchange dealable quotes provided on Passport at any time and
without notice to you.
(ii)In the event of any inconsistency with respect to the terms of an Electronic Transaction between either a Notice of
Execution or daily reports of Electronic Transactions accessible through Client Link and a confirmation, the terms of the
confirmation for the relevant Electronic Transaction shall prevail.
(iii) Notwithstanding the provisions set forth in Section 4(d), You may not cancel any Orders that you submit through
Morgan Stanley Client Link. Morgan Stanley Client Link does not accept on-line cancellation requests.
Page 42
(iv) For purposes of Section 4(e), You will be able to access through Morgan Stanley Client Link daily reports of all
Electronic Transactions executed prior to the close of business on each business day on which You execute Electronic
Transactions through such Service. You shall be deemed to have accepted the terms of all such Electronic Transactions
unless You object to them by contacting Morgan Stanley by telephone by the close of trading on such business day.
(v) Notwithstanding the terms of Section 8, Morgan Stanley may agree in advance to accept Orders from You that are
sent to Morgan Stanley by e-mail or instant messaging. With respect to any Orders submitted to Morgan Stanley by e-mail
or instant messaging , You agree to accept all risk related to the possibility that Your Order may be delayed, corrupted, or
otherwise fail to reach Morgan Stanley in a timely manner in the form in which it was transmitted by You. In addition, You
acknowledge that Morgan Stanley will act upon Orders that we receive from You by e-mail or instant messaging only after
such Orders have been reviewed and approved by an authorised person of Morgan Stanley, who shall then, subject to the
instructions contained in Your message, submit the trade for execution. You further acknowledge that Orders received by e-
mail or instant messaging are subject to the rules contained in Section 4 of this Schedule, including our ability to cancel such
Orders in whole or in part for any reason.
(b) Third Party Foreign Exchange Services. Section 4, entitled “Placement of Orders; Objections”, shall be qualified
in its entirety by the terms of any user guide and/or product information governing the use of a third party foreign exchange
service, which terms shall govern Your use of such third party service to transact with Morgan Stanley to the extent that such
terms may conflict with the provisions set forth in this Schedule. In the event that the terms of this Schedule that govern
what rights Morgan Stanley may assert in connection with Your use of any third party foreign exchange service are
inconsistent with any third party beneficiary terms contained in the customer or user agreement that You have executed
directly with a Vendor governing Your use of such third party service, the terms of this Schedule shall prevail.
B. Scope of Use. You shall be permitted to use the Services to enter into foreign exchange transactions with Morgan
Stanley, and to access any information and content that Morgan Stanley and/or any Vendor may provide on, through or in
connection with the relevant Services (“Service Data”).
C. Service Fees. There are currently no service fees payable by You to Morgan Stanley for use of the Services.
D. Additional Software Provided. Morgan Stanley is not providing you with any additional software in order to use
the Services.
SCHEDULE II – TERMS RELATING TO EXCHANGE-TRADED DERIVATIVES
The terms in this Schedule (consisting of Parts A, B, C, D and E) will apply if the Client trades exchange-traded derivatives
with or through Morgan Stanley. Any capitalised term used in this Schedule and not otherwise defined shall have the
meaning given to it in the Agreement.
PART A – DEALING
1.SERVICES
1.1The services covered by this Schedule are dealing and clearing services in financial and commodity options,
futures and contracts for differences traded on or under the Rules of an Exchange.
43
2.B
ASIS OF DEALING
2.1Some futures and options Exchanges only allow dealings between members of the Exchange. If Morgan Stanley is
not a member of a particular Exchange, Morgan Stanley will need to use an intermediate broker who is a member to execute
a Transaction for the Client on that Exchange.
2.2Many futures and options Exchanges require members to deal with each other as principal. Morgan Stanley will
always deal as principal on an Exchange or with an intermediate Broker, unless the Rules of the Exchange actually require
Morgan Stanley to trade as the Client’s agent. This means that to give the Client the benefit of the contract Morgan Stanley
have entered into on Exchange or with an intermediate Broker (the “Exchange Contract”) Morgan Stanley will enter into a
contract with the Client which is identical in all respects with the Exchange Contract except that it will be between the Client
and Morgan Stanley (the “Client Contract”).
2.3Accordingly, when Morgan Stanley carries out a Transaction for the Client, Morgan Stanley will make or place an
Exchange Contract on the floor of the relevant market (by open outcry on the floor of, or on an automated trading system
administered by, a futures and options Exchange) or with or through an intermediate Broker, and an equivalent Client
Contract will come into existence. The Client and Morgan Stanley will have equivalent rights and obligations under the
Client Contract that Morgan Stanley and Morgan Stanley’s counterparty have under the Exchange Contract.
2.4Where permitted by the Rules Morgan Stanley may take the opposite side of a client order or otherwise enter into
cross trades with or for the Client.
3.C
LIENT INSTRUCTIONS AND ACTIONS
3.1At maturity delivery obligations will (or, in the case of an option, will if it is exercised) arise. Frequently those
trading for investment purposes will not wish to make or receive delivery of the underlying Investment or asset but prefer to
take any profit or loss in cash, which can be achieved by closing out the contract. Subject to the requirements of the
Agreement, the Rules and any further requirements Morgan Stanley notifies to the Client, the Client may at any time before
the time for performance of a Client Contract request Morgan Stanley to close out the corresponding Exchange Contract or,
if a purchased option, to exercise that option. If the closing out of the Exchange Contract results in a sum of money being
due to the Exchange, Clearing House or Broker by Morgan Stanley, Morgan Stanley will notify the Client of that amount
which will be immediately payable by the Client to Morgan Stanley under the corresponding Client Contract.
3.2To enable Morgan Stanley to settle, deliver or, in the case of options, exercise or allocate an Exchange Contract the
Client will give Morgan Stanley such instructions and take such action as Morgan Stanley reasonably requires. So that
Morgan Stanley can communicate such instructions to the relevant Exchange, Clearing House or Broker, or take any other
action that is necessary to effect such instructions, the Client must give Morgan Stanley the Client’s instructions within any
time limit Morgan Stanley notifies to the Client.
3.3If the Client fails to give Morgan Stanley any instructions or to take any actions that Morgan Stanley has required
pursuant to paragraph 3.2 of this Schedule, Morgan Stanley may: (i) close out any relevant open positions; (ii) make or
receive delivery of any underlying Investment or asset: and (iii) take action to cover, reduce or eliminate any potential losses
or liabilities in respect of the relevant Exchange Contract, on such terms and in such manner as Morgan Stanley, in a acting
in a commercially reasonable manner, deems necessary or appropriate. For the avoidance of doubt Morgan Stanley shall not
be under any obligation to exercise rights under this paragraph 3.3.
3.4The Client must decide whether or not to exercise any option. Morgan Stanley will not be responsible to the Client
for the consequences of failing to exercise an option if Morgan Stanley does not receive sufficiently clear and timely
instructions from the Client in relation to the exercise of such option.
4.A
LLOCATION
4.1If the relevant Exchange, Clearing House or Broker does not allocate Exchange Contracts at maturity directly to a
specific account Morgan Stanley may allocate those Exchange Contracts at random or, exercising Morgan Stanley’s
commercially reasonable discretion, in a way that is equitable as between clients. If dealings on Morgan Stanley’s own
account are involved at the same time, then Morgan Stanley will allocate such Exchange Contracts to all of Morgan
Stanley’s clients first and Morgan Stanley will receive no allocation until all relevant Client Contracts have been satisfied.
5.D
ELIVERY TO THE CLIENT
5.1Subject to the terms of the Agreement and provided that the Client has fulfilled all of the Client’s obligations under
the Agreement, when Morgan Stanley receives any sums and/or Investments or other assets under an Exchange Contract
Morgan Stanley will pay such sums and/or deliver such Investments or other assets to the Client under the corresponding
Client Contract after deduction of any Taxes or other charges.
6.A
LTERATION OF CONTRACTS
6.1If the relevant Exchange, Clearing House or Broker requires any terms or conditions of an Exchange Contract to be
altered, Morgan Stanley may take such actions as Morgan Stanley, in Morgan Stanley’s commercially reasonable discretion,
consider necessary or desirable to comply with such requirements or to avoid or mitigate loss resulting from such alteration.
All actions taken by Morgan Stanley will be binding on the Client, and the Client agrees that any alteration will be deemed to
be incorporated into the corresponding Client Contract. Morgan Stanley will notify the Client of any alteration (in advance,
where this is reasonably practicable).
44
7.M
ARKET INTERVENTION
7.1Exchange and Clearing House Rules contain broad powers in the event of the default of a member or other adverse
situation which may, for example, involve the Exchange or Clearing House exercising rights of set-off, closing out, ceasing
to recognise or refusing to clear any contract (including an Exchange Contract). The Client agrees that if an Exchange or
Clearing House exercises its powers Morgan Stanley may take such action with respect to any affected Exchange Contracts
and related Client Contracts as Morgan Stanley, in its commercially reasonable discretion, considers necessary or desirable
and any such action will be binding on the Client. Morgan Stanley will not be liable to the Client in respect of any relevant
Client Contract to the extent that a corresponding Exchange Contract is affected by the exercise of powers by an Exchange or
Clearing House. This will not affect the Client’s obligations and liabilities in respect of the relevant Client Contract.
8.M
ARGIN
8.1The Client will pay or deliver Margin in accordance with the terms of the Agreement.
8.2 Where Cash is transferred to the Client’s Listed Derivatives Account (“Cash Margin”) in accordance with
paragraph A.4.2 of the Agreement, such Cash Margin shall be treated by MSI plc as client money (as defined in the Client
Money Rules). Among other things, this requires MSI plc to hold client money in an account at an approved bank or in a
qualifying money market fund (as defined in the Client Money Rules). For the avoidance of doubt, any money that is
transferred to MSI plc on a title transfer basis under the terms of this Agreement is not client money as defined by the Client
Money Rules.
Cash treated by MSI plc as client money will be held in an account at an approved bank or unless the Client notifies MSI plc
otherwise in writing may be placed by MSI plc in a qualifying money market fund. If MSI plc provides custody of units in
such qualifying money market funds MSI plc will do so in accordance with the FCA’s custody rules and not in accordance
with the Client Money Rules and accordingly MSI plc shall not be liable for any restriction on redemption or diminution in
value of such units in a qualifying money market fund.
MSI plc may also allow another third party (for example, an exchange, market, intermediate broker, OTC counterparty or
clearing house) to hold or control client money in order to effect one or more Transactions through or with that person or to
satisfy the Client’s obligation to provide collateral in respect of a Transaction. MSI plc has no responsibility for any acts or
omissions of any third party to whom it passes money received from the Client. The third party to whom MSI plc passes
money may hold it in an omnibus account and it may not be possible to separate such money from MSI plc’s money, or the
third party’s money. The Client agrees and acknowledges that where MSI plc allows a third party to hold or control client
money, this may involve a transfer of full ownership of the money to that third party, in which case the Client will no longer
have a proprietary claim to such money and the transferee may deal with it in its own right. In the event of insolvency or
other analogous proceedings in relation to that third party, MSI plc will only have an unsecured claim against the third party
on behalf of the Client and MSI plc’s other clients, and the Client will be exposed to the risk that the money received by MSI
plc from the third party is insufficient to satisfy the claims of the Client and all other clients with claims in respect of the
relevant account.
MSI plc may pass client money to a person who is located outside the United Kingdom. In such circumstances the legal and
regulatory regime applying to the bank, intermediate broker, settlement agent or OTC counterparty will be different from
that of the United Kingdom and, in the event of failure of the bank, intermediate broker, settlement agent or OTC
counterparty, this money may be treated in a different manner from that which would apply if the money was held by a bank,
intermediate broker, settlement agent or OTC counterparty in the United Kingdom. Where this is necessary to provide the
services you have requested under this Agreement, the Client requests MSI plc to deposit its client money with such third
parties.
MSI plc may pass client money to an exchange or clearing house, inside or outside the United Kingdom. Certain exchanges
or clearing houses may not acknowledge the notice which MSI plc is required to serve on them which confirms that they
have no right of set-off or counterclaim between MSI plc’s client accounts and any other accounts that MSI plc may
maintain with them. In such circumstances the Client’s money might not be protected as effectively where an
acknowledgement is provided.
MSI plc is required to limit the client money that it deposits or holds with relevant group entities (as defined in the FCA
Rules) so that those funds do not at any point in time exceed 20 per cent of the balance on (1) all of MSI plc’s general client
bank accounts (as defined in the FCA Rules) considered in aggregate; (2) each of its designated client bank accounts (as
defined in the FCA Rules); and (3) each of its designated client fund accounts (as defined in the FCA Rules).
Where MSI plc agrees to effect transactions, in a jurisdiction outside the United Kingdom, then it may need to appoint a
settlement agent to undertake those transactions. In order to meet the settlement obligations to the relevant Exchange or
Clearing House, MSI plc will need to pass the Client’s money or Investments to a settlement agent in that jurisdiction. In
that event the Client’s money might not be protected as effectively when held by such a settlement agent as if it were held in
a client bank account in the United Kingdom. The Client should note that in the event of a shortfall arising on the money
available to meet the claims of segregated clients the Client’s claim will be restricted to the money held in MSI plc’s client
bank accounts in respect of transactions carried on through that settlement agent and to any money received from the
settlement agent relating to those transactions.
45
The Client agrees that MSI plc may, in its sole discretion, decide to pay away to a registered charity of MSI plc’s choice any
money that MSI plc holds for you as client money and, accordingly, release it from its client bank account(s) and cease to
treat the Client’s money as client money if there has been no movement in the Client’s balance for a period of six years
(notwithstanding any payments or receipts of charges, interest or similar items) and MSI plc has been unable to contact the
Client having taken reasonable steps in accordance with the Client Money Rules to trace the Client and return the money.
MSI plc undertakes to make good any valid claim against released balances.
9.M
ORGAN STANLEY’SPOWERS
9.1Without prejudice to Morgan Stanley’s rights under the Agreement, following an Event of Default Morgan Stanley
may (with prior notice to the Client if this is practicable) take such steps as Morgan Stanley, in its absolute discretion,
consider necessary or desirable to comply with, perform or cancel any of Morgan Stanley’s obligations to the relevant
Exchange, Clearing House or Broker in respect of any Exchange Contract, including:
(a)buying or selling the Investment or asset underlying the Exchange Contract;
(b)buying or selling futures or options contracts;
(c)opening new long or short positions in order to establish a spread or straddle;
(d)applying any Margin;
(e)cancelling, terminating or otherwise liquidating any Transaction; and/or
(f)setting off any obligation of Morgan Stanley’s against an obligation of the Client’s.
Any amounts that Morgan Stanley incurs in exercising rights under this paragraph 9 will be immediately due by the Client to
Morgan Stanley and Morgan Stanley may apply any Margin, including realising Margin, in satisfaction of the Client’s
liability.
9.2Morgan Stanley may convert any funds realised under this paragraph 9 at such rate and into such currencies as
Morgan Stanley may reasonably consider appropriate.
9.3The Client agrees that following an Event of Default Morgan Stanley will not be obliged to deliver to the Client
under any Client Contract the underlying Investment or asset or any money received or receivable on closing out until the
Client have satisfied or discharged all of the Client’s liabilities to Morgan Stanley under the Agreement.
10.T
ERMINATION
10.1Termination of the Agreement will be without prejudice to our rights to Margin and the relevant terms of the
Agreement will continue to apply until all Exchange Contracts and matching Client Contracts have been closed out, settled
or delivery effected and all liabilities in respect of such contracts discharged.
11.REPRESENTATIONS
The Client represents, warrants and undertakes that:
(a) any orders or instructions given by it to MSI plc in respect of exchange traded derivatives transactions pursuant to
this Agreement will represent speculative transactions as defined in the CFTC Rule 1.3(z); and
(b) if the Client is domiciled in the United States of America the Client shall only enter into non-US futures
transactions and non-US CFTC approved listed options with MSI plc pursuant to this Agreement.
The representations and warranties contained in this clause 11 shall be deemed to be repeated each time an order or
instruction is given by the Client under this Agreement.
Exchange-Traded Derivative Supplement
Definitions
“Broker” means a member of an Exchange and/or Clearing House that is instructed by us to execute, clear or settle a
transaction and may be an Associated Firm;
“Client Contract” has the meaning given in paragraph 2.2 of Part A this Schedule;
“Exchange Contract” has the meaning given in paragraph 2.2 of Part A of this Schedule;
“Rules” means:
(a) all applicable laws and regulations;
46
(b) all applicable rules, orders, announcements, decisions, directions, guidelines, provisions, requirements, terms and
customs of a governmental, regulatory or self-regulatory authority, Exchange, Clearing House, Broker or other body
having regulatory or enforcement responsibility (including requirements resulting from agreements entered into by us,
an Associated Firm or Broker with or in favour of the relevant Exchange, Clearing House, regulatory or self-
regulatory authority, Broker or other body);
“Taxes” means taxes, duties, imposts and fiscal and regulatory charges of any nature, wherever and whenever imposed
including value added taxes, stamp and other documentary taxes and Exchange, Clearing House, regulatory and industry
levies.
“Transaction” means for the purposes of this Schedule the entering into of an Exchange Contract, closing out or effecting
delivery and/or settlement of an Exchange Contract (including the exercise or allocation of an option contract).
PART B – MASTER NETTING AGREEMENT
THIS MASTER NETTING AGREEMENT (“MNA”) is made as of the date of the Agreement of which it forms part and
is between (A) the Client; and (B) MSI plc.
The Futures and Options Association is an industry association. It publishes the following form of Master Netting
Agreement which provides for the close-out and netting of the parties’ obligations under exchange-traded derivatives
contracts.
IT IS HEREBY AGREED AS FOLLOWS:
1. Scope of this Agreement
1.1 Unless otherwise agreed in writing by the Parties in Annex 1 of this MNA or otherwise and subject to the next
sentence, this MNA and the particular terms agreed by the Parties govern each Transaction (as defined in Annex 1
of this MNA) entered into or outstanding between any two Designated Offices of the Parties on or after the date of
execution of this MNA. In the case of Transactions within paragraph (i), (ii), (iii) or (iv) of the definition of
“Transaction” in clause 13 of this MNA, this MNA governs only those Transactions where the Exchange
mentioned in such definition is a Specified Exchange.
1.2 This MNA, the particular terms of, and applicable to, each and every Transaction governed by this MNA, the
annexes to this MNA and all amendments to any of such items shall together constitute a single agreement between
the Parties. The Parties acknowledge that all Transactions governed by this MNA, which are entered into on or
after the date of execution of this MNA, are entered into in reliance upon the fact that all such items constitute a
single agreement between the Parties.
1.3 All defined terms in this MNA shall have the meaning given to them in Clause 13 of this MNA.
2. Settlement and Exchange of Clearing Organisation Rules
2.1 Unless a Liquidation Date has occurred or has been effectively set, a Party shall not be obliged to make any
payment or delivery scheduled to be made by that Party under a Transaction governed by this MNA for so long as
an Event of Default or Potential Event of Default with respect to the other Party has occurred and is continuing.
2.2 Unless otherwise agreed in writing by the Parties, if the Parties enter into any Transaction governed by this MNA
to close out any existing Transaction between the Parties then their obligations under such Transactions shall
automatically and immediately be terminated upon entering into the second Transaction, except for any settlement
payment due from one Party to the other in respect of such closed-out Transactions.
2.3 This MNA shall not be applicable to any Transaction to the extent that action which conflicts with or overrides the
provisions of this agreement has been started in relation to that Transaction by a relevant Exchange or clearing
organisation under applicable rules or laws and is continuing.
3. Representations, Warranties and Covenants
3.1 Each Party represents and warrants to the other Party as of the date of execution of this MNA and, in the case of the
representation and warranty in (v) of this Clause 3.1 of MNA relating to the entering into of Transactions, as of the
date of entering into each Transaction governed by this MNA that: (i) it has authority to enter into this agreement;
(ii) the person entering into the agreement on its behalf has been duly authorised to do so: (iii) this agreement and
the obligations created under this agreement are binding upon it and enforceable against it in accordance with their
terms (subject to applicable principles of equity) and do not and will not violate the terms of any agreements to
which such Party is bound; (iv) no Event of Default or Potential Event of Default has occurred and is continuing
47
with respect to it; and (v) it acts as principal and sole beneficial owner (and not as trustee) in entering into this
MNA and each and every Transaction governed by this MNA.
3.2Each Party covenants to the other Party that: (i) it will at all times obtain and comply with the terms of and do all
that is necessary to maintain in full force and effect all authorisations, approvals, licences and consents required to
enable it lawfully to perform its obligations under this agreement; and (ii) it will promptly notify the other Party of
the occurrence of any Event of Default or Potential Event of Default with respect to itself or any credit Support
Provider in relation to it.
4 Termination and Liquidation
4.1 If, at any time:
(i) a Party fails to make any payment when due under or to make or take delivery of any property when due
under, or to observe or perform any other provision of, this MNA (including any Transaction governed by
this MNA) and such failure continues for two business days after notice of non-performance has been
given by the other Party to the defaulting Party;
(ii) a Party commences a voluntary case or other procedure seeking or proposing liquidation, reorganisation,
an arrangement or composition, a freeze or moratorium, or other similar relief with respect to itself or to
its debts under any bankruptcy, insolvency, regulatory, supervisory or similar law (including any
corporate or other law with potential application to an insolvent Party), or seeking the appointment of a
trustee, receiver, liquidator, conservator, administrator, custodian, examiner or other similar official (each
a “Custodian”) of it or any part of its assets; or takes any corporate action to authorise any of the
foregoing; and, in the case of a reorganisation, arrangement or composition, the other Party does not
consent to the proposals;
(iii) an involuntary case or other procedure is commenced against a Party seeking or proposing liquidation,
reorganisation, an arrangement or composition, a freeze or moratorium, or other similar relief with respect
to it or its debts under any bankruptcy, insolvency, regulatory, supervisory or similar law (including any
corporate or other law with potential application to an insolvent Party) or seeking the appointment of a
Custodian of it or any part of its assets and such involuntary case or other procedure either (a) has not
been dismissed within five days of its institution or presentation or (b) has been dismissed within such
period but solely on the grounds of an insufficiency of assets to cover the costs of such case or other
procedure;
(iv) a Party dies, becomes of unsound mind, is unable to pay its debts as they fall due or is bankrupt or
insolvent, as defined under any bankruptcy or insolvency law applicable to such Party; or indebtedness of
a Party is not paid on the due date therefore or becomes, or becomes capable at any time of being
declared, due and payable under agreements or instruments evidencing such indebtedness before it would
otherwise have been due and payable, or proceedings are commenced for any execution, any attachment
or garnishment, or any distress against, or an encumbrancer takes possession of, the whole or any part of
the property, undertaking or assets (tangible and intangible) of a Party;
(v) a Party or any Credit Support Provider in relation to a Party (or any Custodian acting on behalf of a Party
or any Credit Support Provider in relation to a Party) disaffirms, disclaims or repudiates any obligation
under this agreement (including any Transaction governed by this MNA) or any Credit Support
Document;
(vi) any representation or warranty made or deemed made by a Party pursuant to this agreement or pursuant to
any Credit Support Document proves to have been false or misleading in any material respect as at the
time it was made or given;
(vii) (a) any Credit Support Provider in relation to a Party or the relevant Party itself fails to comply with or
perform any agreement or obligation to be complied with or performed by it in accordance with the
applicable Credit Support Document; (b) any Credit Support Document relating to a Party expires or
ceases to be in full force and effect prior to the satisfaction of all obligations of such Party under this
agreement (including any Transaction governed by this MNA), unless the other Party has agreed in
writing that this shall not be an Event of Default; (c) any representation or warranty made or deemed
made by any Credit Support Provider in relation to a Party pursuant to any Credit Support Document
proves to have been false or misleading in any material respect as at the time it was made or given or
deemed made or given; or (d) any event referred to in (ii) to (iv) or (viii) of this Clause 4.1 of MNA
occurs in respect of any Credit Support Provider in relation to a Party;
(viii) a Party is dissolved, or in respect of a Party whose existence is dependent upon a formal registration, such
registration is removed or ends, or any procedure is commenced seeking or proposing a Party’s
dissolution or the removal or ending of such a registration of a Party; or
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(ix) any event of default (however described) occurs under any terms of business in place between the Parties
or any other event specified for these purposes in Annex 1 of this MNA or otherwise occurs,
THEN the other Party (the “Non-Defaulting Party”) may exercise its rights under Clause 4.2 of MNA, except that,
if so agreed in writing by the Parties (whether by specifying as such in Annex 1 hereto or otherwise), in the case of
the occurrence of any Event of Default specified in paragraph (ii) or (iii) above the provisions of Clause 4.3 of
MNA shall apply.
4.2 Subject to Clause 4.3 of this MNA, at any time following the occurrence of an Event of Default, the Non-
Defaulting Party may, by notice to the Defaulting Party, specify a Liquidation Date for the termination and
liquidation of Transactions in accordance with the provisions of Clause 4.4 of this MNA.
4.3 If the Parties have so agreed, the date of the occurrence of any Event of Default specified in paragraph (ii) or (iii) of
Clause 4.1 of this MNA shall automatically constitute a Liquidation Date, without the need for any notice by either
Party and to the intent that the provisions of Clause 4.4 of this MNA shall then apply.
4.4 Upon the occurrence of a Liquidation Date:
(i) neither Party shall be obliged to make any further payments or deliveries under any Transactions
governed by this MNA which would, but for this Clause, have fallen due for performance on or after the
Liquidation Date and such obligations shall be satisfied by settlement (whether by payment, set-off or
otherwise) of the Liquidation Amount;
(ii) the Non-Defaulting Party shall (on, or as soon as reasonably practicable after, the Liquidation Date)
determine (discounting if appropriate), in respect of each Transaction governed by this MNA, its total
cost, loss or, as the case may be, gain, in each case expressed in the Non-Defaulting Party’s Base
Currency (and, if appropriate, including any loss of bargain, cost of funding or, without duplication, cost,
loss or, as the case may be, gain as a result of the termination, liquidation, obtaining, performing or re-
establishing of any hedge or related trading position), as a result of the termination, pursuant to this MNA,
of each payment or delivery which would otherwise have been required to be made under such
Transaction (assuming satisfaction of each applicable condition precedent and having due regard to, if
appropriate, such market quotations published on, or official settlement prices set by, a relevant Exchange
or clearing organisation as may be available on, or immediately preceding, the date of calculation); and
(iii) the Non-Defaulting Party shall treat each cost or loss to it, determined as above, as a positive amount and
each gain by it, so determined, as a negative amount and aggregate all of such amounts to produce a
single, net positive or negative amount, denominated in the Non-Defaulting Party’s Base Currency (the
“Liquidation Amount”).
4.5 If the Liquidation Amount determined pursuant to Clause 4.4 of this MNA is a positive amount, the Defaulting
Party shall pay it to the Non-Defaulting Party and if it is a negative amount, the Non-Defaulting Party shall pay it
to the Defaulting Party. The Non-Defaulting Party shall notify the Defaulting Party of the Liquidation Amount,
and by which Party it is payable, immediately after the calculation of such amount.
4.6 Unless the Parties specify otherwise in Annex 1 of this MNA or otherwise, where termination and liquidation
occurs in accordance with Clause 4.4 of this MNA, the Non-Defaulting Party shall also be entitled, at its discretion,
to apply the provisions of Clause 4.4 to any other Transactions entered into between the Parties which are then
outstanding, as if each such Transaction were a Transaction governed by this MNA.
4.7 The amount payable by one Party to the other Party pursuant to the provisions of Clause 4.5 of this MNA, or any
applicable laws or regulations, shall be paid in the Non-Defaulting Party’s Base Currency by the close of business
on the business day following the completion of the termination and liquidation under Clause 4.4 of this MNA, or
any laws or regulations having a similar effect, (converted as required by applicable law into any other currency,
any costs of such conversion to be borne by, and (if applicable) deducted from any payment to, the Defaulting
Party). Any such amount which is not paid on the due date therefore shall bear interest, at the average rate at which
overnight deposits in the currency of such payment are offered by major banks in the London interbank market as
of 11.00 a.m. (London time) (or, if no such rate is available, at such reasonable rate as the Non-Defaulting Party
may select) plus 1% per annum, for each day for which such amount remains unpaid.
4.8 For the purpose of any calculation hereunder, the Non-Defaulting Party may convert amounts denominated in any
other currency into the Non-Defaulting Party’s Base Currency at such rate prevailing at the time of the calculation
as it shall reasonably select.
4.9 The Non-Defaulting Party’s rights under this Clause 4 of this MNA shall be in addition to, and not in limitation or
exclusion of, any other rights which the Non-Defaulting Party may have (whether by agreement, operation of law
or otherwise).
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5 Set-Off
Without prejudice to any other right or remedy which it may have, either Party may, on or after the occurrence of a
Liquidation Date and the determination of the Liquidation Amount, set off any amount owing by it (whether actual
or contingent, present or future and including, if applicable and with out limitation, the Liquidation Amount and
any amount due and payable on or before the Liquidation Date but remaining unpaid) to the other Party against any
amount owing by such other Party (whether actual or contingent, present or future and including, if applicable and
without limitation, the Liquidation Amount and any amount due and payable before the Liquidation Date but
remaining unpaid) to the first Party.
6 Currency Indemnity
If a Party (the first Party) receives or recovers any amount in respect of an obligation of the other Party (the second
Party) in a currency other than that in which such amount was payable, whether pursuant to a judgement of any
court or otherwise, the second Party shall indemnify and hold harmless the first Party from and against any cost
(including costs of conversion) and loss suffered by the first Party as a result of receiving such amount in a
currency other than the currency in which it was due.
7. Assignments and Transfers
Neither Party may assign, charge or otherwise transfer or purport to assign, charge or otherwise transfer its rights or
obligations under this agreement (including the Transactions governed by this MNA) or any interest therein
without the prior written consent of the other Party, and any purported assignment, charge or transfer in violation of
this Clause shall be void.
8. Notices
Unless otherwise agreed, all notices, instructions and other communications to be given to a Party under this
agreement shall be given to the address, telex (if confirmed by the appropriate answerback) or facsimile (confirmed
if requested) number and to the individual or department specified in Annex 1 of this MNA, the Customer
Signature page or by notice in writing by such Party. Unless otherwise specified, any notice, instruction or other
communication given in accordance with this Clause shall be effective upon receipt.
9. Termination, Waiver and Partial Invalidity
9.1 Either of the Parties hereto may terminate this agreement at any time by seven days’ prior notice to the other Party
and termination shall be effective at the end of such seventh day; provided, however, that any such termination
shall not affect any then outstanding Transactions governed by this MNA, and the provisions of this agreement
shall continue to apply until all the obligations of each Party to the other under this MNA (including the
Transactions governed by this MNA) have been fully performed.
9.2 A Party may waive any right, power or privilege under this MNA only by (and to the extent of) an express
statement in writing.
9.3 If, at any time, any provision of this MNA is or becomes illegal, invalid or unenforceable in any respect under the
law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions of this MNA nor
the legality, validity or enforceability of such provision under the law of any other jurisdiction shall in any way be
affected or impaired thereby.
10. Time of Essence
Time shall be of the essence in this MNA.
11. Payments
Every payment to be made by a Party under this MNA shall be made in same day (or immediately available) and
freely transferable funds to the bank account designated by the other Party for such purpose.
12. Governing Law and Jurisdiction
12.1 These terms and any non-contractual obligations relating thereto shall be governed by, and construed in accordance
with, the laws of England and Wales.
12.2 With respect to any Proceedings, each Party irrevocably (i) agrees that the courts of England shall have exclusive
jurisdiction to determine any Proceedings and irrevocably submits to the jurisdiction of the English courts and (ii)
waives any objection which it may have at any time to the bringing of any Proceedings in any such court and
50
agrees not to claim that such Proceedings have been brought in an inconvenient forum or that such court does not
have jurisdiction over such Party.
12.3 Each Party irrevocably waives to the fullest extent permitted by applicable law, with respect to itself and its
revenues and assets (irrespective of their use or intended use), all immunity on the grounds of sovereignty or other
similar ground from (i) suit, (ii) jurisdiction of any courts, (iii) relief by way of injunction, order for specific
performance or for recovery of property, (iv) attachment of its assets (whether before of after judgement) and (v)
execution or enforcement of any judgement to which it or its revenues or assets might otherwise be entitled in any
Proceedings in the courts of any jurisdiction and irrevocably agrees to the extent permitted by applicable law that it
will not claim any such immunity in any Proceedings. Each Party consents generally in respect of any Proceedings
to the giving of any relief or the issue of any process in connection with such Proceedings, including, without
limitation, the making, enforcement or execution against any property whatsoever of any order or judgement which
may be made or given in such Proceedings.
13. Interpretation
13.1 In this MNA:
“Base Currency” means, as to a Party, the currency specified as such in Annex 1 of this MNA or agreed as such in
relation to it in writing between the Parties or, failing any such specification or agreement, the lawful currency of
the United Kingdom;
“Credit Support Document” means, as to a Party (the first Party), a guarantee, hypothecation agreement, margin
or security agreement or document, or any other document containing an obligation of a third party (“Credit
Support Provider”), or of the first Party, in favour of the other Party supporting any obligations of the first Party
under this agreement;
“Credit Support Provider” has the meaning given to it in the definition of Credit Support Document;
“Custodian” has the meaning given to it in Clause 4.1 of this MNA;
“Defaulting Party” means the Party in respect of which, or related to a Credit Support Provider in respect of
which, an Event of Default has occurred;
“Designated Office(s)” means, as to a Party, the office identified with its name on page 1 of this MNA and any
other office(s) specified in Annex 1 of this MNA or otherwise agreed by the Parties to be its Designated Office(s)
for the purpose of this agreement;
“Liquidation Date” means a day on which, pursuant to the provisions of Clause 4 of this MNA, the Non-
Defaulting Party commences the termination and liquidation of Transactions or such a termination and liquidation
commences automatically;
“Potential Event of Default” means any event which may become (with the passage of time, the giving of notice,
the making of any determination hereunder or any combination thereof) an Event of Default;
“Proceedings” means any suit, action, or other proceedings relating to this agreement and any non-contractual
obligations arising out of or in relation to this agreement;
“Specified Exchanges” means the exchanges specified in Annex 2 of this MNA and any other exchanges agreed
by the Parties to be Specified Exchanges for the purpose of Clause 1.1 of this MNA; and “Specified Exchange”
means any of them;
“Transaction” for the purposes of this MNA means:
(i) a contract made on an Exchange or pursuant to the rules of an Exchange;
(ii) a contract subject to the rules of an Exchange; or
(iii) a contract which would (but for its term to maturity only) be a contract made on, or subject to the rules of,
an Exchange and which, at the appropriate time, is to be submitted for clearing as a contract made on, or subject to
the rules of, an Exchange,
in any of cases (i), (ii), (iii) being a future, option, contract for differences, spot or forward contract of any kind in
relation to any commodity, metal, financial instrument (including any security), currency, interest rate, index or any
combination thereof;
51
(iv) a transaction which is back-to-back with any transaction within paragraph (i), (ii) or (iii) of this definition;
or
(v) any other transaction which the Parties agree shall be a Transaction.
13.2 In this MNA, “Event of Default” means any of the events listed in Clause 4.1 of this MNA; “Liquidation
Amount” has the meaning ascribed to it in Clause 4.4; and “Non-Defaulting Party” has the meaning ascribed to it
in 4.1.
13.3 Any reference in this MNA to:
a “business day” shall be construed as a reference to a day (other than a Saturday or Sunday) on which:
(i) in relation to a date for the payment of any sum denomination in (a) any currency (other than euro), banks
generally are open for business in the principal financial centre of the country of such currency; or (b) euro,
settlement of payments denominated in euros is generally possible in London or any other financial centre in
Europe selected by the Parties; and
(ii) in relation to a date for the delivery of any property, property of such type is capable of being delivered in
satisfaction of obligations incurred in the market in which the obligation to deliver such first property was incurred;
a “Clause” or “Annex” shall be construed as a reference to, respectively, a clause or Annex of this MNA, unless
the context requires otherwise;
a “currency” shall be construed so as to include any unit of account;
“indebtedness” shall be construed so as to include any obligation (whether present or future, actual or contingent,
as principal or surety or otherwise) for the payment or repayment of money;
“Parties” shall be construed as a reference to the parties to this agreement and shall include their successors and
permitted assigns; and “Party” shall be construed as a reference to which of the Parties is appropriate in the context
in which such expression may be used;
a Party to which a Credit Support Provider relates shall be construed as a reference to the Party whose obligations
under this agreement are supported by that Credit Support Provider; and
References to this “MNA” shall be construed as including the Annexes and as a reference to this MNA as the same
may be amended, varied, novated or supplemented from time to time.
ANNEX 1 TO MASTER NETTING AGREEMENT
1. Scope of the MNA
(a) Each of the following shall be a Transaction for the purpose of paragraph (v) of the definition of “Transaction” in
Clause 13.1 of this MNA: Not applicable.
(b) For the purposes of Clause 1.1, this MNA shall not apply to the following Transactions outstanding between the
Parties on the date of execution of this MNA: Not applicable.
(c) In the event of a discrepancy between this MNA and the Agreement, this MNA will govern in relation to close out
netting of Transactions but without prejudice to any other rights that MSI plc may have under the Agreement.
2. Designated Offices
Each of the following shall be a Designated Office: The offices specified in the Client Signature page of the Agreement.
3. Representations, Warrants and Covenants
Clause 3.1 of this MNA is hereby amended by deleting the words “in the case of the representation and warranty in (v) of
this Clause 3.1 of MNA relating to the entering into of Transactions,”.
4. Additional Event(s) of Default
Each of the following shall be an Event of Default for the purpose of paragraph (ix) of Clause 4.1 of this MNA: Any of the
events described in the Events of Default Section of the Agreement to which this MNA forms part..
5. Automatic Termination
52
Upon the occurrence of any Event of Default specified in paragraph (ii) or (iii) of Clause 4.1 of this MNA, the provisions of
Clause 4.3 shall not apply.
6. Termination of Other Transactions
The provisions of Clause 4.6 of this MNA shall not apply.
7. Notices
Clause 8 of this MNA is hereby deleted and replaced with the following: Unless otherwise agreed, all notices, instructions
and other communications to be given to a Party under this Agreement shall be given in accordance with paragraph M.1.2. of
the Agreement to the address, facsimile and/or email address specified for each Party pursuant to the Agreement.
8. No Reliance
In connection with this MNA and Part A of Schedule II of the Agreement, each Transaction and any other documentation
relating to this MNA, both Parties represent and acknowledge that (i) it is entering into each Transaction with a full
understanding of all material terms and risks thereof, and it is capable of assuming those risks; (ii) it has made its investment
and trading decisions (including decisions regarding the suitability of any transaction) based upon its own judgement and
upon any advice from such advisors as it has deemed necessary, and not in reliance upon any view expressed by the other
Party; (iii) the other Party is not acting as a fiduciary or an advisor for it, and all decisions have been the results of arm’s
length negotiations between the Parties; and (iv) the other Party has not given to it any assurance or guarantee as to the
expected performance or result of any Transaction.
9. Base Currency: US Dollars
10. Credit Support Document: The Agreement shall constitute a Credit Support Document for the purposes of Clause
4.1(vii) of this MNA.
11. Selected Financial Centres for Euro Settlements: Not Applicable
12. FDICIA Representations
The following provisions shall not apply to this MNA. Each Party represents and warrants to the other Party that it is a
financial institution under the provisions of Title IV of the Federal Deposit Insurance Corporation Improvement Act of 1991
(“FDICIA”), and the Parties agree that this MNA shall be a netting contract, as defined in FDICIA, and each receipt or
payment or delivery obligation hereunder shall be a covered contractual payment entitlement or covered contractual payment
obligations, respectively, as defined in and subject to FDICIA.
ANNEX 2 TO MASTER NETTING AGREEMENT
Specified Exchanges
The following Exchanges are Specified Exchanges for the purposes of Clause 1.1 of this MNA;
Any Recognised Investment Exchange, Recognised Overseas Investment Exchange, Designated Investment Exchange as
recognised, specified or defined by the FCA Rules or any other EEA exchange.
PART C – EURONEXT.LIFFE REQUIRED TERMS
The provisions of this Part C apply with regard to futures and options dealing under this Exchange-Trade Derivatives
Supplement where the Exchange Contract as defined in Part A is a futures or options contract subject to the Rules of
Euronext.LIFFE (“LIFFE”). MSI plc is an individual clearing member of LIFFE.
Any requirements referred to in this Part C shall refer to requirements currently in force. They cover matters that (i) Morgan
Stanley is required to deal with pursuant to LIFFE General Notice 399 and (ii) other LIFFE related terms. Please note that
most of the LIFFE required terms set out in General Notice 399 have been incorporated into the main body of this part of
this Schedule.
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General provisions for all transactions
1.EXCLUSION OF LIABILITY
Pursuant to the exclusion of liability provisions contained in the LIFFE Rules, as amended from time to time by General
Notice, the Client understand that business on the LIFFE market (the “LIFFE Exchange”) operated by LIFFE
Administration and Management (“LIFFE”) may from time to time be suspended, restricted or closed for such period as
may be determined in the interests of maintaining a fair and orderly market in accordance with the Rules of LIFFE. Any
such action may result in Morgan Stanley, and through Morgan Stanley, the Client being prevented from or hindered in
entering into contracts in accordance with the Rules of LIFFE. Furthermore, failures or malfunction of LIFFE
communications or equipment, market facilities or the ATS central processing system, or software provided by LIFFE may
result in Morgan Stanley being hindered in or prevented from entering into contracts in the terms of Exchange Contracts, or
may result in errors in orders or in contracts in the terms of Exchange Contracts. Morgan Stanley and LIFFE wish to draw
the following exclusion of liability to the Client’s attention:
Unless otherwise expressly provided in the Rules of LIFFE or in any other agreement to which LIFFE is party, Morgan
Stanley and LIFFE shall not be liable to the Client for any loss, damage, injury or delay, whether direct or indirect, arising
from any of the circumstances described above or any failure of some or all market facilities or from any act or omission of
LIFFE, its officers, employees, agents or representatives under the Rules of LIFFE or pursuant to the LIFFE’s obligations
under statute or from any breach of contract by or any negligence howsoever arising of LIFFE, its officers, employees,
agents or representatives.
2.A
RBITRATION
Notwithstanding any other agreement between the Client and Morgan Stanley, any dispute arising from or relating to this
Agreement, insofar as it relates to contracts made subject to the Rules of LIFFE, and any dispute arising from or relating to
any such contract, unless resolved between Morgan Stanley and the Client, be referred to arbitration under the Rules of
LIFFE, or to such other organisation as LIFFE may direct before either of Morgan Stanley or the Client resort to the
jurisdiction of the courts (other than to obtain injunction or an order for security for a claim).
General Provisions for specific types of Transactions
The terms set out in this part of this Schedule shall apply (in addition to paragraphs 1 and 2 above), as set out below, in
respect of:
(i) all Linked LIFFE Contracts and Linked Participating Exchange Contracts (both as defined below), pursuant to
LIFFE General Notice 880;
(ii) all Three Month Euroyen Interest Rate Contract (the “Euroyen Contract”) where the Client is a customer in
respect of the LIFFE contract, pursuant to LIFFE General Notice 807;
(iii) all Three Month Euroyen Interest Rate Contract (the “Euroyen Contract”) where the Client is a customer in
respect of the LIFFE contract and the TIFFE Contract, pursuant to LIFFE General Notice 807.
In the case of conflict between terms set out in General Notice 399, the terms set out in General Notice 807, and the terms
set out in General Notice 880, the terms of General Notice 399 shall prevail.
3.E
XCLUSION OF LIABILITY
LIFFE shall have no liability whatsoever to any member or client in contract, tort (including, without limitation, negligence),
trust, as fiduciary or under any other cause of action (except in respect of gross negligence, wilful default or fraud on its
part), in respect of any damage, loss, cost or expense of whatsoever nature suffered or incurred by any member or client, as
the case may be, as a result of: any suspension, restriction or closure of the market administered by either a Participating
Exchange, the LIFFE Exchange, or TIFFE (as the case may be) whether for a temporary period or otherwise, or as a result of
a decision taken on the occurrence of a market emergency; any failure by a Participating Exchange, the LIFFE Exchange,
LCH or TIFFE (as the case may be) to supply each other with data or information in accordance with arrangements from
time to time established between all or any of them; the failure of communications facilities or technology supplied, operated
or used by either a Participating Exchange, the LIFFE Exchange, LCH or TIFFE (as the case may be) for the purposes of the
Link; any event which is outside its or their control; any act or omission of either a Participating Exchange (where a
Participating Exchange is acting otherwise than in connection with its clearing function) or the LIFFE Exchange in
connection with any Participating Exchange Contract, Linked LIFFE Contract or Linked Participating Exchange Contract, or
any act or omission of the LIFFE Exchange or TIFFE in connection with any TIFFE Euroyen contract or LIFFE Euroyen
Contract; any act or omission of a Participating Exchange, the LIFFE Exchange, LCH or TIFFE (as the case may be) in
connection with the operation of the Link or the arrangements for the transfer of contracts
4.M
ARGIN AND CLIENT MONEY/ASSETS
Following the transfer of a Linked LIFFE Contract and the creation of a Participating Exchange Contract or prior to the
transfer of a Linked Participating Exchange Contract and the creation of a LIFFE Contract, margin requirements will be
determined in accordance with the rules of the Participating Exchange rather than the Rules of LIFFE. Any money or assets
54
held in any country outside the UK may be subject to the applicable law of that country and UK client money and other
assets rules may not apply. The Client should satisfy itself that this is acceptable to the Client before instructing Morgan
Stanley to transact any such business.
Following the transfer of the LIFFE Euroyen contract and the creation of a TIFFE Euroyen contract, margin requirements
will be determined in accordance with TIFFE Rules rather than the Rules of LIFFE. Any money or assets held in Japan will
be subject to applicable Japanese law rather than English law, and the Client should satisfy itself that this is acceptable to the
Client before instructing Morgan Stanley to transact Euroyen business.
Transfer Provisions
5.O
UTWARDTRANSFERS OF LINKED PARTICIPATING EXCHANGE CONTRACTS
Morgan Stanley shall endeavour to secure the transfer through the relevant Link of each Linked LIFFE Contract made
between Morgan Stanley which is intended for transfer. Upon confirmation by the relevant Participating Exchange of receipt
of trade/position details from LCH, rights and obligations under such contract, save for outstanding obligations with respect
to fees and margin and those rights and obligations referred to in the Rules of LIFFE and the Regulations of LCH, shall be
discharged and there shall arise simultaneously a Participating Exchange Contract between Morgan Stanley. The
Participating Exchange Contract shall be subject to the rules of the relevant Participating Exchange and shall not be subject
to the provisions of this Agreement.
6.D
ELAYED OUTWARD TRANSFERS OF LINKED PARTICIPATING EXCHANGE CONTRACTS
In the event that, on any LIFFE trading day or Participating Exchange Day (as appropriate), LCH or the Participating
Exchange is unable for whatever reason to transmit details of all Linked LIFFE Contract, Linked Participating Exchange
Contract, or LIFFE Euroyen Contract, or LCH or TIFFE or the relevant Participating Exchange is unable to receive or
acknowledge receipt of all such details, any such contract made between Morgan Stanley on that day shall remain as an
undischarged Linked LIFFE Contract, a Linked Participating Exchange Contract or an undischarged LIFFE Euroyen
Contract, (but without prejudice to any default provisions agreed between Morgan Stanley which may be operated to
discharge such contract), subject to the Rules of LIFFE and the General Regulations and Default Rules of LCH, or the rules
of the Participating Exchange (as appropriate) as from time to time in force, until such time as transfer can be achieved.
7.I
NWARDTRANSFERS OF LINKED PARTICIPATING EXCHANGE CONTRACTS
In respect of each Linked Participating Exchange Contract made between Morgan Stanley which is intended for transfer
through the relevant Link, rights and obligations under such contract, save for outstanding obligations with respect to fees or
margin and any other rights or obligations referred to in the Rules of the Participating Exchange, shall be discharged upon
confirmation by LCH of receipt of trade/position details from the Participating Exchange and there shall arise
simultaneously a LIFFE Contract between Morgan Stanley. The LIFFE Contract shall be subject to the Rules of LIFFE and
the General Regulations and Default Rules of LCH.
8.T
RANSFERS OF EUROYEN CONTRACTS: IN RESPECT OF LIFFE CONTRACTS
In respect of each Euroyen Contract made between Morgan Stanley, Morgan Stanley shall endeavour to secure its transfer
through the Link. Upon confirmation by LIFFE of receipt of trade/position details from LCH, rights and obligations under
such contract (save for outstanding obligations with respect to fees or margin and those rights and obligations referred to in
the Rules of LIFFE and the Regulations of LCH) shall be discharged.
9.T
RANSFERS OF EUROYEN CONTRACTS: IN RESPECT OF BOTH LIFFE AND TIFFE CONTRACTS
In respect of each Euroyen Contract made between Morgan Stanley and the Client, Morgan Stanley shall endeavour to
secure its transfer through the Link. Upon confirmation by TIFFE of receipt of trade/position details from LCH, rights and
obligations under such contract (save for outstanding obligations with respect to fees or margin and those rights and
obligations referred to in the Rules of LIFFE and the Regulations of LCH) shall be discharged and there shall arise
simultaneously a TIFFE Euroyen contract between Morgan Stanley and the Client. The TIFFE contract shall be subject to
the Rules of TIFFE.
LIFFE’s Block Trade Facility (Summary of LIFFE General Notice 1384)
10.B
LOCK TRADEFACILITY
The Client represents and warrants to Morgan Stanley that the Client fully understand the Block Trading Facility and its
implications, issued under cover of LIFFE General Notice 1384 and amended from time to time. On the basis of this
representation and warranty and the information which Morgan Stanley have about the Client’s expertise and knowledge,
Morgan Stanley hereby give the Client notice that Morgan Stanley shall treat the Client as a Wholesale Client (as defined in
the Block Trade Trading Procedures) and that Morgan Stanley may conduct Block Trades on the Client’s behalf using
LIFFE’s Block Trading Facility.
xThe Block Trade Facility (the “Facility”) was introduced by LIFFE to enable LIFFE members and their clients to
arrange business of significant size alongside the LIFFE CONNECT
TM
central order book, at a price consistent with fair
55
market value for a transaction of that nature, and submit such business to the LIFFE Exchange via LIFFE CONNECT
for authorisation during the normal trading hours of the contract concerned. LIFFE will designate those contracts
eligible for execution as Block Trades from time to time and will prescribe minimum volume thresholds for each, which
are subject to change from time to time by LIFFE General Notice.
xLIFFE members must ensure that any Block Trade price quoted satisfies fair market value principles.
xLIFFE will require justification of any trades negotiated at apparently abnormal levels and will reserve the right to
refuse to register any such trades. LCH reserves the right to make an additional intra-day margin call in respect of any
Block Trade submitted for registration.
xThere are no restrictions upon members entering into Block Trades (provided that the member seeking to register the
trade has the requisite trading right). However, only Wholesale Clients (i.e. those with sufficient knowledge, expertise
and understanding of the implications of the Facility) will be able to participate. Before a non-member may participate,
the member is required to satisfy himself that the client meets these criteria and to notify the client in writing, in
advance, that he is to be treated as a Wholesale Client. Following authorisation, the Block Trade will be published on
LIFFE CONNECT
TM
and via Quote Vendors.
Definitions
“Exchange Contract” is as defined in Part A of this Exchange-Traded Derivative Schedule;
“LCH” means The London Clearing House Limited;
“LIFFE Contract” means an Exchange Contract to which a Linked Participating Exchange Contract is linked;
“Linked LIFFE Contract” means an Exchange Contract made available for trading on the market pursuant to a Link,
which is specified as such in a General Notice published from time to time by the LIFFE Exchange and is linked to a
Participating Exchange Contract;
“Linked Participating Exchange Contract” means a Participating Exchange Contract which is specified as such in a
General Notice published from time to time by the LIFFE Exchange and is linked to an Exchange Contract;
“Participating Exchange” means an exchange which has concluded one or more agreements in relation to a Link with the
Exchange and/or LCH pursuant to which:- (i) contracts in the terms of one or more Linked LIFFE Contracts are to be
transferred to, for clearing by, such exchange or its clearing house; or (ii) contracts in the terms of a Linked Participating
Exchange Contract are to be transferred to, for clearing by, LCH. The term “Participating Exchange” shall include any
clearing house, which from time to time provides clearing services to such exchange;
“Participating Exchange Contract” in respect of a Participating Exchange, means a class of contract permitted to be made
by Participating Exchange members under Participating Exchange rules;
“TIFFE” means the Tokyo Financial Exchange.
PART D - A GUIDE TO THE STRUCTURE AND MARKET TERMINOLOGY
OF THE LONDON METAL EXCHANGE
Introduction and Purpose
This section is designed to provide clients trading on the London Metal Exchange (“LME”) with an overview of the
structure of the LME, market terminology, and a guide to how its members execute orders. It is not a comprehensive trading
guide, nor a complete guide to market terminology. Clients should always ensure that their requirements are explained in
detail to the member responsible for order execution.
The LME
Principal Nature
There are two types of contracts traded on the LME - Exchange Contracts and Client Contracts. Exchange Contracts are
contracts between clearing members of the LME. Client Contracts are contracts between clients and ring dealing members
(“RDM”), or associate broker clearing members (“ABCM”), or associate broker members (“ABM”)
1
. Only RDMs, ABCMs
and ABMs may issue Client Contracts. Statements that they issue to clients must state clearly ‘THIS IS AN LME
REGISTERED CLIENT CONTRACT’. Contract criteria pertaining to LME contracts, including metal/plastics
1
For the purposes of this notice these categories of members will be referred to as LME members, members or by the appropriate
abbreviation.
56
specifications, acceptable currencies, prompt dates, option strike prices for metals etc are detailed in the LME rulebook and
appropriate notices.
Exchange Contracts are traded between members, matched in the LME matching and clearing system (“LMEMS”) and
margined by LCH.Clearnet (“LCH”). Client Contracts are registered at the LCH but margining arrangements are left to
members to agree with their customers (subject to LME rules).
All LME contracts are between parties acting as principals. This prevents any party entering into an LME Contract as agent
for someone else but does not prevent an agent effecting a contract between two parties if the resulting LME contract is
between disclosed parties, each acting as a principal. It is an essential requirement of an LME Client Contract that one party
must be an RDM, ABCM or ABM. MSI plc is an ABCM. A list of members is available from the LME and on the LME
website: www.lme.com. A principal relationship does not mean that members do not take on quasi-fiduciary responsibilities
when they effect trades for customers. In particular, if a member undertakes to deliver a particular service, for example deal
a specific number of lots ‘in the Ring’ (see below), then it should take care to ensure that it complies with all the terms of
such a transaction.
In respect of Exchange Contracts, an LME broker buying metal or plastic under an Exchange Contract from another LME
broker cannot do so as agent for his client. Where an LME broker buys metal or plastic under an Exchange Contract with a
view to selling that metal or plastic to his client, this is achieved by entering into a back-to-back Client Contract with the
client. Brokers and customers can agree the conditions that apply to their Client Contracts. For example, a client may make it
a condition of his Client Contract that the broker must enter into a back-to-back Exchange Contract for the metal or plastic
being bought or sold. This does not make the client a party to the Exchange Contract but does create additional duties and
obligations owed by the broker under the Client Contract.
Clients should be clear about conditions that apply to their Client Contracts and about the obligations and duties that the
broker owes as a result of those conditions.
Brokers should be clear about the duties and obligations they owe as a result of conditions attaching to their Client Contracts.
They should also be clear about the duties they owe to their clients under the FCA’s conduct of business rules.
Dual Capacity
LME members may act both in the capacity of market maker and broker. They may act in a particular manner depending on
a number of circumstances, including the size of the order, the liquidity of the market at the time the order was placed, and,
not least, the client’s instructions. Client orders may be filled directly from a member’s ‘book’ or following the purchase/sale
of metal or plastic in the LME market. Furthermore, client orders may be offset, amalgamated, broken-up or netted for
execution. These methodologies apply equally to orders whether any resulting exchange contract is effected in the ring, in
the inter-office market, or on LME Select.
Clients with specific order requirements must make these known to the member at the time the order is placed. Clients
wishing to know how their order was executed should request such information from the member.
Trading on the LME
Trading takes place on the LME by open outcry in the rings and kerbs, between members in the inter-office, and over the
Exchange’s electronic trading system LME Select.
Open Outcry
Historically, during ring and kerb sessions, the majority of client business reflects prices traded in the open outcry sessions.
Clients can follow the market activity by monitoring quoted and traded prices disseminated via the LME market data system
(MDS), or by listening to the simultaneous floor commentary provided by member(s). The MDS publishes prices traded
during ring and kerb times on price vendor information services such as Reuters.
Members can continue to ‘make a market’ on request to a client whilst the ring and kerb sessions are in operation, although
this is entirely at the member’s discretion. Alternatively, the client can decide whether to place an order using the ‘order
styles’ mentioned below.
Inter-office
Inter-office trading is conducted between members by telephone or by electronic means. On contacting an LME member for
a quote, clients will usually be provided with the member’s current bid and offer. The client may trade on this quote, or call
another member in an attempt to improve the quote, or wait and monitor prices on the LME market data system, or leave an
order with a member. If an order cannot be filled from the member’s book, it may be executed via a back-to-back Exchange
Contract agreed via a telephone deal with another member or executed via an electronic trading system.
LME Select
57
LME Select allows members to trade LME futures Contracts in metals and plastics, traded options and Traded Average Price
Option contracts (TAPOs), and an index future and option. MSI plc also offers an order routing facility to clients via an
Application Protocol Interface (API) which allows them to view Select prices, execute trades, and place resting orders. All
trading on LME Select is in US dollars.
LME Select replaces neither inter-office trading nor trading in the ring. Depending on the time of day, it is possible for
members to deal by telephone or electronically in the inter-office market, by LME Select, or in the rings. Clients should
specify which mechanism their broker should use to effect an order, where they have a preference.
Firm prices of the best bid and offer available on LME Select, the total volumes available at these prices, and the price and
volume of each trade transacted are distributed to and displayed in real time by information vendors. Only LME Select
prices are displayed, not those of other third party electronic trading system providing LME prices. Only RDMs and ABCMs
are eligible to become LME Select Participants and to have direct access to the system. Clients may effect back-to-back
client contracts based upon prices available on LME Select, whether on the telephone or via electronic order-routing
systems.
Order Styles
Ring
Client orders are not traded in the rings or kerbs, so an order using the term ‘in/on/during the ring/kerb’ will be executed
on the basis of the prices traded/quoted during the particular session. If a client requires their order to be ‘shown’ or traded
across the ring/kerb then they should make this requirement known to their executor, who may or may not accept this as a
term of the order. The equivalent Exchange Contract for a client order may not replicate its terms. As the client is not a party
to any Exchange Contracts i.e. those traded in open outcry between members in the ring/kerb sessions, in specifying
ring/kerb, the client is merely identifying a pricing mechanism. A member which undertakes to match a price traded in the
ring/kerb is not necessarily undertaking that it will trade during that ring/kerb, only that it may do so. However, a client may
place an order with the specific request that the member trades an Exchange Contract replicating its order in the ring. In such
circumstance the RDM can only trade this order by open outcry in the ring.
If a client trades at the prevailing market quote proffered in the ring/kerb, their executor is not necessarily obliged to effect
an Exchange Contract at the same price. This can lead to situations where the client has traded at the prevailing market
quote, without that same price trading in open outcry across the floor of the Exchange. However, if the instructions from the
client are to achieve a specific price i.e. close of ring 2, then this is the price that should be given, if that specific order is
accepted.
Market
In normal circumstances a market order is one executed on a timely basis at the prevailing market price. As mentioned
above, at certain times of the business day, trading is taking place simultaneously in the ring or kerb, on LME Select, and in
the inter-office market. Traditionally, when open outcry trading is in course, the market is defined by activity within the
ring/kerb. At other times, the market is split between inter-office trading and trading on LME Select. During inter-office
sessions, indicative quotes are available on the MDS and firm prices available on LME Select and the LME Select page on
information vendors’ systems. The indicative prices might not be available to all parties.
Best
Order styles on the LME using the word ‘best’ confer some discretion upon the members when executing the order,
requiring them to use their ‘best endeavours’ on the client’s behalf. The extent of the discretion is fixed by the terms of the
order. This type of order is distinct from ‘best execution’ as defined by the FCA.
Best orders may be executed both in rings/kerbs, inter-office and on LME Select. Inter-office trades rely upon the members’
skill in determining the level of the market at any particular time. Best orders received during ring/kerb times may not result
in the client receiving the ‘best’ price achieved during the session if the price improves after the member has booked the
metal or plastic intended to fill the order. At any given time, the best price on LME Select will be displayed on the system
and by the information vendors. Clients should be aware that depending on market conditions, the best price may move
during the period from when the order was placed and when it was executed.
Close
Most orders placed ‘on the close’ are for either the close of the second ring (official LME prices) or the second kerb (closing
prices). Both these prices are demonstrable because of the publication of official and closing prices. Closing prices of other
sessions are harder to determine, although the LME does also publish unofficial prices which are established at the close of
the fourth ring. In all circumstances, clients and members need to agree the style of execution i.e. bid/ask, mean or traded
price. Members may not always be able to guarantee execution (price or volume) due to prevailing market conditions. A
closing price on LME Select is the last price traded before the system closes.
58
Open
Clients placing orders to trade on the opening of a market session must provide clear instructions to the LME member which
indicate how this order should be activated i.e. basis the opening bid/ask or basis the first trade in the session. Clients will
also need to inform their executor of their requirements if the executor is unable to fill the order basis the ‘opening’ price in
its entirety due to market constraints such as insufficient liquidity. Clients may place orders with members for LME Select
that can be placed into the system for activation when the market opens.
Resting Orders
When placing resting orders such as ‘good til cancelled’ (‘GTC’, or any derivations thereof) or stop loss orders, clients
should ensure that they are in agreement with their executor’s definition of the ‘trigger’ point of the order. Usually, this is
interpreted as being the point when the order price is seen to be trading in the market, but it is possible to request the order
be activated when the order level is either bid or asked as appropriate, via the prevailing market quote. Stop loss orders
become market orders when a trade, or a bid or an offer triggers the stop, with members then executing the order at the
current market price.
It is possible for a client not to receive a ‘fill’ on a resting order despite the ‘trigger’ point being ‘touched’. This could be due
to a number of circumstances such as order priority, illiquidity, prevailing market conditions etc. Whatever the reason, the
executor should be able to provide the client with a full explanation of why it was unable to fill the order.
Clients should be aware that resting orders might be activated during periods of illiquidity in the market. As previously
mentioned this could result in the trade not being filled, or for ‘stop’ orders, a worse fill than anticipated (‘slippage’). Clients
should ensure the executor is fully aware of their requirements regarding the execution of an order, and adheres to any
limitations, especially if the client is not in contact with the market/member when the trigger point is reached.
It is possible for clients to ask members to place resting orders in LME Select. Where the broker has an order routing system
into Select, clients will be able place orders more directly. The system accepts GTC and Good for Day (“DAY”) orders.
DAY orders are automatically deleted from the system at close of trading.
Conclusion
The above order styles do not represent all possible methods of order execution on the LME. Members and clients should
ensure that orders are communicated in meaningful terms that deliver the required execution in accordance with LME rules.
Part E - Contracts for Physical Settlement - Additional Provisions
1. Where any contract comprises a contract for physical delivery (a “Contract”), Client acknowledges and agrees that:
1.1 Unless otherwise agreed by Morgan Stanley, Morgan Stanley will not make or take delivery of any
commodities or other instruments in respect of any Contracts including but without limitation any EUA. The Client
agrees that, where any open positions consist of Contracts for physical settlement, the Client shall, prior to the
relevant deadline advised by Morgan Stanley to the Client from time to time (the “Morgan Stanley Cut-Off Time”),
either instruct Morgan Stanley to terminate such Contracts prior to expiry or instruct Morgan Stanley to transfer
such Contracts to an alternative clearing broker.
1.2 If the Client has not terminated or otherwise traded out of the relevant Contracts or provided instructions
for the transfer of such Contracts as set out in paragraph 1 above prior to the Morgan Stanley Cut Off Time, Morgan
Stanley shall be entitled to take such steps as it deems necessary in its sole discretion to terminate any open
Contracts as of the Morgan Stanley Cut Off Time. Any loss incurred as a result of closing such Contracts shall be
borne solely by the Client.
2. If Morgan Stanley agrees to take delivery of any EUA, the Client represents and warrants on a continuous basis that
each such EUA has been issued at source and are eligible for delivery on ICE at the time of settlement.
For the purposes of this paragraph 2, an EUA has been issued at source if the EUA has been issued to the Client
directly by the competent authority of a member state of the European Union pursuant to such member state's
National Allocation Plan.
3. If Morgan Stanley agrees to take delivery of any EUA or any commodities or other instruments in respect of any
Contract, funds sufficient to take delivery pursuant to any such Contract must be received by Morgan Stanley at
such time and in accordance with such procedures as Morgan Stanley may require in connection with any such
delivery. If the Client fails to comply with this obligation, Morgan Stanley may terminate any open position, make
or receive delivery of any commodities or instruments, or exercise the expiration of any options, in such manner and
on such terms as Morgan Stanley deems necessary or appropriate acting in its sole discretion.
59
4. For the purposes of this Part E, the following defined terms apply:
“Directive” means Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003
establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council
Directive 96/61/EC, as amended from time to time.
“EUA” means an "allowance" as defined in the Directive that has been issued by a competent authority pursuant to
Article 11(4) of the Directive.
"National Allocation Plan" means the plan for allocating allowances developed by a member state pursuant to
Article 9(1) of the Directive.
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SCHEDULE III - REQUIRED TERMS FOR STOCK EXCHANGES
Where Morgan Stanley transact business for the Client on the following Exchanges, the following additional terms
will apply:
1. Euronext
1.1 Morgan Stanley reserves the right to monitor all orders placed directly by the Client.
1.2 The Client agrees that Morgan Stanley is permitted to access and monitor the Client’s systems in respect of the
Client’s use of the Electronic Services as defined in Schedule I.
1.3 The Client agrees that Morgan Stanley is permitted to keep records of all relevant information relating to the Client’s
use of the Electronic Services as defined in Schedule I and, together with Euronext and/or the relevant regulatory
authority, perform any required checks so that Morgan Stanley is able to fulfill its responsibilities to Euronext and any
relevant regulatory authority.
1.4 The Client hereby agrees that Morgan Stanley may inform Euronext of each of the electronic order routing terminals
made available by Morgan Stanley to the Client.
1.5 Morgan Stanley is responsible to Euronext for any orders made by the Client.
2. Norex
2.1 The risk which Morgan Stanley accept in relation to the Client’s use of the Electronic Services as defined in Schedule I
is as set out in Schedule I. Morgan Stanley may also check that the Client has sufficient amounts in the Client’s
account with Morgan Stanley to support the Client’s trading activity.
2.2 Morgan Stanley may immediately suspend the Client’s access to the Electronic Services in accordance with Schedule
I.
2.3 Morgan Stanley may cancel trades which fail to meet Norex’s requirements concerning the quality and pricing for
Orders and Trades. Norex may also cancel trades in the circumstances set out in its Rules.
2.4 The Client hereby agree that the Client will not disseminate Public Market Information (as defined in the Norex Rules)
obtained from Norex’s electronic trading systems.
2.5 The Client hereby represents and warrants that the Client shall not place orders which, individually or together:
(a) are intended to improperly influence the price structure of the trading systems;
(b) which are devoid of commercial purpose; or
(c) which are intended to delay or prevent access to the trading systems by other members.
3. London Stock Exchange and Virt-X
All persons to whom the Client has made the Client’s Passwords available must undergo a training programme on the
use of the Services as defined in Schedule I.
4. Euronext.LIFFE Paris
4.1 Morgan Stanley shall inform the Client by e-mail, telephone or fax if an order is rejected by Morgan Stanley’s filtering
process.
4.2 In addition to paragraph 4(h) of Schedule I, the Client shall permit Euronext Paris SA to verify that the Client’s
equipment conforms to the requirements of the rules of Euronext.LIFFE as relevant.
5.International Petroleum Exchange
Any contracts entered into between Morgan Stanley shall be subject to the rules and regulations of the International
Petroleum Exchange.
6. MEFF
61
6.1 The Client understand that MEFF SOCIEDAD RECTORA DE PRODUCTOS FINANCIEROS DERIVADOS DE
RENTA VARIABLE, S.A. / MEFF SOCIEDAD RECTORADE PRODUCTOS FINANCIEROS DERIVADOS DE
RENTA FIJA, S.A. (“MEFF”) will act as counterparty to all Transactions taking place on this market for all orders
transmitted by Morgan Stanley in accordance with the requirements of MEFF.
6.2 MEFF excludes all liability for loss caused by force majeure or by suspension or disruption of the market.
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SCHEDULE IV - HONG KONG TRANSACTIONS
1 . HO N GKO N GSC H E D U L E
To the extent that the Client is dealing in any capacity with Morgan Stanley Asia Limited (“MSAL”) or Morgan Stanley
Hong Kong Securities Limited (“MSS”), the relevant terms of this Schedule will apply. Any capitalised term used herein
and not otherwise defined shall have the meaning given to it in the Agreement
This Schedule has been prepared to comply with the Hong Kong regulatory regime. The Hong Kong regulatory regime
requires MSS and MSAL to make the following regulatory disclosures which apply where the client deals with MSS or
MSAL. Such disclosures and agreements are contained in this Schedule.
To the extent that the provisions of this Schedule conflict with those of the Agreement, the provisions of this Schedule shall
prevail. This Schedule and any non-contractual obligations relating thereto shall be governed by English law
2 Introducing Broker
2.1 Clients dealing with Morgan Stanley’s Hong Kong office may have been introduced to the services of MSI plc and
other Morgan Stanley Companies by MSAL or, in the case of futures contracts (such as, but not limited to, futures
contracts over the Hang Seng Index, 3-month HIBOR or the S&P 500 Index), by MSS, each located at 46/F
International Commerce Centre, 1 Austin Road West, Kowloon, Hong Kong. Both MSAL and MSS are licensed
by the Securities and Futures Commission (the “SFC”) in Hong Kong, MSAL (CE Reference No. AAD291) is
licensed by the SFC to conduct, amongst others, the regulated activities of dealing in securities, advising on
securities, advising on futures contracts, advising on corporate finance and providing automated trading services.
MSS (CE Reference No. AAD401) is licensed by the SFC to conduct the regulated activities of dealing in
securities and dealing in futures contracts. Please refer to the SFC website at www.sfc.hk for updated details of the
licensing position. MSS is also regulated by the Stock Exchange of Hong Kong Limited (“SEHK”) and the Hong
Kong Futures Exchange Limited (“HKFE”) as their respective exchange participants.
2.2 The Client may continue to use us MSAL and MSS points of contact in connection with accounts with the Morgan
Stanley Companies. MSAL and MSS act as the agent of other Morgan Stanley Companies to facilitate the
provision of services to customers in the Asia Pacific region. When the Client trades futures contracts, our sales
persons in Hong Kong act as representatives of MSS. For all other products, our sales persons in Hong Kong act
as representatives of MSAL.
2.3 MSAL and MSS do not operate accounts for customers. Other Morgan Stanley Companies outside Hong Kong
maintain the Client’s accounts. Accordingly, the Client acknowledges that those other Morgan Stanley
Companies, and not MSAL and MSS, will be responsible for executing, clearing and settling transactions and for
the custody or safe-keeping of cash and investments in accordance with the terms of the relevant Customer
Document. The Client acknowledges that it has no right of recourse against MSAL or MSS in respect of its
transactions, cash and investments, save for matters arising from our own negligence, willful default or fraud.
3 Client Identity Rule
As part of the Hong Kong Government’s measures to strengthen the order and transparency of its securities and
futures markets, the SFC, The Stock Exchange of Hong Kong Limited (“SEHK”) and the HKFE (the “Hong
Kong Regulators”) have enacted the Client Identity Rules (the “Rules”).
The Rules require Hong Kong licensed or registered persons to ascertain and record identifying details of the
ultimate person(s) (i.e., the beneficial owner(s)) for whom a transaction is processed (except as provided below) as
well as the person(s) who give(s) instructions in relation to the transaction (these details together, the “Client
Information”). Under the Rules, as Hong Kong licensed persons, MSAL and MSS are required to provide such
Client Information to the Hong Kong Regulators within two business days of their request. MSAL and MSS are
expected to have a system in place whereby the required information can be provided to the Hong Kong
Regulators within the required time frame. In exceptional market circumstances, the information may have to be
available very shortly after the request.
MSAL and MSS understand that if a Client acts for third parties as an agent, that Client might not wish to disclose
such Client Information to MSAL or MSS. The Hong Kong Regulators have recognised this and have introduced
a policy whereby MSAL and MSS can comply with the Rules if you agree to provide the Client Information to the
Hong Kong Regulators directly.
In accordance with the Rules, counterparties who undertake transactions through the Morgan Stanley Companies
in securities or futures contracts listed or traded on one of the Hong Kong exchanges, or in derivatives of such
instruments, agree to conduct transactions on the following basis:
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3.1If the Client is not the ultimate beneficial owner of the assets which are the subject of such a transaction or if the
Client effects transactions for the account of its own clients, whether on a discretionary or non-discretionary basis,
and whether as agent or by entering into matching transactions as principal with your clients, the Client hereby
agrees that, in relation to a transaction where MSAL or MSS have received an enquiry from the Hong Kong
Regulators, the Client shall, immediately upon request by MSAL or MSS (which request shall include the relevant
contact details of the Hong Kong Regulators), inform the Hong Kong Regulators of the identity, address,
occupation and contact details of the client for whose account the transaction was effected and (so far as known to
you) of the person with the ultimate beneficial interest in the transaction. The Client shall also inform the Hong
Kong Regulators of the identity, address, occupation and contact details of any third party (if different from the
client/the ultimate beneficiary) who originated the transaction.
3.2If the Client effected the transaction for a collective investment scheme, discretionary account or discretionary
trust, the Client shall:
3.2.1immediately upon request by MSAL or MSS (which request shall include the relevant contact details of
the Hong Kong Regulators), inform the Hong Kong Regulators of the identity, address and contact details
of the scheme, account or trust; and
3.2.2as soon as practicable, inform MSAL or MSS when the Client’s discretion to invest on behalf of the
scheme, account or trust has been overridden. In the case where the Client’s investment discretion has
been overridden, the Client shall immediately upon request by MSAL and/or MSS (which request shall
include the relevant contact details of the Hong Kong Regulators), inform the Hong Kong Regulators of
the identity, address, occupation and contact details of the person(s) who has or have given the
instruction in relation to the transaction.
3.3If the Client is aware that it’s client is acting as intermediary for underlying client(s), and the Client does not know
the identity, address, occupation and contact details of the underlying client(s) for whom the transaction was
effected, the Client confirms that:
3.3.1the Client has arrangements in place with its client which entitles the Client to obtain the information set
out in paragraphs 3.1 and/or 3.2 above from its client immediately upon request, or procure that it be so
obtained; and
3.3.2the Client will, upon request from MSAL and/or MSS in relation to a transaction, promptly request the
information set out in paragraphs 3.1 and/or 3.2 above from the Client’s client on whose instructions that
transaction was effected, and provide the information to the Hong Kong Regulators as soon as received
from the Client’s client or procure that it be so provided.
3.4If the Client is in a jurisdiction with client secrecy laws, the Client confirms that it and its clients waive the benefit
of the secrecy laws, in relation to any enquiry by the Hong Kong Regulators. the Client confirms that such waivers
are valid and binding under the laws of such jurisdiction.
3.5The Client’s obligations under this paragraph 3 shall survive termination (howsoever caused) of any agreement the
Client has with MSAL, MSS or any of the Morgan Stanley companies.
4 Privacy
The following information is provided in accordance with the requirements of the Hong Kong Personal Data
(Privacy) Ordinance (the “Ordinance”) and only applies to living individuals.
4.1 Use of Personal Data
All personal data concerning the Client’s or any Agent’s directors, officers, employees, customers, contractors,
service providers and other contractual counterparties (each, a “Data Subject”) (whether provided by the Client or
any other person) may be used by any of the following companies or persons (each, a “User”):
4.1.1 MSAL, MSS and/or any Morgan Stanley Company;
4.1.2 any director, officer or employee of a Morgan Stanley Company, but only when carrying out the
business of a Morgan Stanley Company; and
4.1.3 any agent, contractor, third party service provider or other person (such as lawyers, advisers, etc.)
authorised by a Morgan Stanley Company, but only when carrying out the business of that Morgan
Stanley Company.
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4.2 Purposes
All personal data concerning Data Subjects may be used by any User for the following purposes:
4.2.1 ƒ new or existing client verification procedures;
ƒ credit and money laundering checking and fraud prevention;
ƒ marketing Morgan Stanley Company products and services to you, subject to any ‘opt out’ or
other rights you may have under the Ordinance;
ƒ any other purpose relating to or in connection with the business or dealings of any Morgan
Stanley Company.
4.2.2 Use of the Client’s personal data may include disclosure between Morgan Stanley Companies
including, without limitation, to persons providing Morgan Stanley Companies with professional or
other services; to third parties such as settlement agents, overseas banks or exchange or clearing
houses, intermediate brokers and sub-custodians to whom Morgan Stanley Companies disclose the
Client’s personal data in the course of providing the services to the Client; to any person for audit
purposes; to credit reference, fraud prevention and other similar agencies, and other financial
institutions, with whom information is shared for credit and money laundering checking and fraud
prevention purposes; to persons to whom Morgan Stanley Companies assign or novate rights or
obligations under any agreement with the Client; and to national and international regulatory,
enforcement or exchange bodies or courts anywhere in the world as required by applicable laws,
regulations, court orders or at their request or other persons if required by applicable laws or
regulations. These disclosures may involve overseas storage and other overseas transfer, processing
and use of your personal data, and disclosure to these third parties, including in or to countries or
territories which do not offer the same level of protection of personal information as is enjoyed within
Hong Kong other jurisdiction applicable to the Client;
4.3 Rights of Access and Correction
Under the Ordinance, the Client has a right to request access to, and to request correction of the Client’s personal
data. If the Client wishes to exercise these rights, it should address its request to MSAL Legal and Compliance
Division who will then supply the Client with a personal data access form for completion and return.
5 Other Provisions
The Client agrees and acknowledges the following:
5.1 Services
The services provided by MSAL and MSS are general investment and dealing services in securities, futures, where
relevant, and other investment instruments, together with related clearing and settlement and foreign exchange
facilities and any other services agreed between MSAL, MSS and the Client. The functions and activities
conducted by MSAL and/or MSS in relation to the above services include, but are not limited to, acting as agent
for the Morgan Stanley Companies in effecting or introducing investment transactions, preparing and dispatching
documentation and performing such additional activities and administrative functions as are necessary to effect the
Client’s activities and transactions.
5.2 Derivative products
In relation to derivative products, MSAL or MSS will provide upon request product specifications and any
prospectus or other offering document and an explanation of margin procedures and the circumstances under
which positions may be closed without the Client’s permission.
5.3 Short selling
The Client will comply with Hong Kong’s restrictions on short-selling. The Client warrants (on a continuing basis)
that, at the time it places an order with any Morgan Stanley Companies to sell securities at or through a Hong
Kong exchange, the Client has a presently exercisable and unconditional right to vest those securities in a
purchaser of them. The Client will inform Morgan Stanley if any order is a short selling order (as defined by the
SFO) and will provide an assurance as to that order within such time, in such form and with such information as
Morgan Stanley require.
5.4 Liability
Except to the extent permitted by applicable laws and regulations, nothing in this Schedule removes, excludes or
restricts any of the Client’s rights or MSAL’s or MSS’ obligations under the laws of Hong Kong. For the
avoidance of doubt, neither MSAL nor MSS is liable to the Client or anyone else for any default by any third
party, including (respectively) any other Morgan Stanley Company. Any Morgan Stanley Company may do or
omit to do anything which it believes is necessary or desirable to ensure compliance with any applicable law or
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regulatory requirement, guidance or request. The Client shall comply with all applicable law and regulatory
requirements and requests.
5.5 External dispute resolution
If you have made a written complaint and have not received a response, or if you are unhappy with the proposed
resolution, you may have the right to take your complaint to the Financial Dispute Resolution Centre Limited
(“FDRC”), subject to the eligibility criteria set out in the FDRC’s Terms of Reference. FDRC is an independent
complaints resolution body of which we are a member. Complaints made to FDRC by an eligible claimant are
subject to a monetary limit of HK$500,000. For more information relating to FDRC, please contact:
Financial Dispute Resolution Centre Limited
15/F, Stanhope House,
734 King's Road,
Quarry Bay,
Hong Kong
Tel: 3199 5100
Email:
fdrc@fdrc.org.hk
Internet: www.fdrc.org.hk/en/index.html
5.6 Trade capacity and execution information
Morgan Stanley companies may execute a trade with or for the Client, either as:
(a) principal,
(b) agent, or
(c) a combination of both agent and principal.
Where a Morgan Stanley Company agrees that a trade will be undertaken on a principal basis, Morgan Stanley
may put capital at risk. With regard to trades where a guaranteed price has been agreed, each Morgan Stanley
Company may realize a profit or loss on the principal transactions entered into to offset the risk of the guarantee
and that gain or loss will be allocated to such Morgan Stanley Company’s account.
In order to efficiently and effectively achieve the Client’s trading objectives, unless the Client instructs otherwise,
each Morgan Stanley Company may access internal sources of liquidity including, without limitation, crossing
against any of the following: (i) client order flow, (ii) client facilitation or market making books, or (iii) a
proprietary trading strategy. In these circumstances, such Morgan Stanley Companies may be trading as agent,
principal or both agent and principal.
Morgan Stanley puts great emphasis on client order handling and endeavour to achieve the best available terms for
clients in accordance with accepted client instructions. In certain circumstances, Morgan Stanley Companies may
work orders alongside other client or internal orders, fairly allocating executions between orders. Wherever
possible this will be discussed with the Client in advance, and where required, such Morgan Stanley Companies
will obtain prior approval. Where a Morgan Stanley Company is engaged to execute client orders in international
markets, such Morgan Stanley Companies may execute transactions through one or more of its foreign affiliates or
through unaffiliated third parties. The foreign affiliate or unaffiliated third party may act in a principal or agency
capacity. Further information regarding any charges levied by that foreign affiliate or third party will be provided
upon written request.
5.6 Material Interests
Neither our prime brokerage relationship nor the services MSAL, MSS and each Morgan Stanley Company
provide nor any other matter will give rise to any fiduciary or equitable duties which would prevent or hinder us or
each Morgan Stanley Company, in transactions with or for the Client or in other services provided to the Client,
acting as market maker/dealer or broker, principal or agent, doing business with or for you whether for our or its
own account or between ourselves and/or with affiliates, connected customers, and/or other customers or investors,
and generally acting as provided in this Notice.
MSAL, MSS and each Morgan Stanley Company are entitled to enter into any transaction for or with the Client or
provide any service to the Client notwithstanding that any of MSAL, MSS or a Morgan Stanley Company has or
may have a material interest in the transaction or any resulting transaction or a relationship which gives rise to a
conflict of interest. However, in any such case we may in our absolute discretion decline to act.
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5.7 Agreement
In dealing or continuing to deal with MSAL, MSS or any Morgan Stanley company, the Client is taken to have
agreed to, and undertakes on a continuing basis to comply with, the terms set out in this Schedule IV. The terms of
this Schedule IV shall supplement and amend the agreement (to the extent inconsistent) and shall apply to all
transactions effected through MSAL, MSS or with any Morgan Stanley Company.
5.8 Notice of Change
Morgan Stanley may rely on the accuracy and completeness of all information provided to any Morgan Stanley
Company. The Client will notify Morgan Stanley from time to time of any material changes to the information
provided by the Client to Morgan Stanley, including, but not limited to, investment objectives and financial
situation.
6 Position Limit and Large Open Position Reporting Requirements for Options and Futures Traded on the
Hong Kong Exchanges
The Hong Kong regulatory regime imposes position limit and reportable position requirements for stock options
and futures contracts traded on the SEHK and on the HKFE.
These requirements are set out in the Hong Kong Securities and Futures (Contracts Limits and Reportable
Positions) Rules (as amended) (the “Hong Kong Rules”) made by the SFC under the SFO. The Hong Kong Rules
impose monitoring and reporting obligations with regard to large open positions. For the purposes of the Hong
Kong Rules, a client is the person who is ultimately responsible for originating instructions the Client receives for
transactions, i.e. the transaction originator.
Further guidance on the Hong Kong Rules and what they require is set out in the SFC’s Guidance Note on Position
Limits and Large Open Position Reporting Requirements. Copies of the Hong Kong Rules and Guidance Note can
be downloaded from the SFC’s website (
www.sfc.hk).
Purpose of the Hong Kong Rules
The purpose of the Hong Kong Rules is to avoid potentially destabilizing market conditions arising from an over-
concentration of futures/options positions accumulated by a single person or group of persons acting in concert,
and to increase market transparency.
Some of the major requirements of the Hong Kong Rules and Guidance Note are summarised below. However, the
Client should review the Hong Kong Rules and Guidance Note in their entirety, and consult with the Client’s legal
counsel in order to ensure that the Client has a full understanding of the Client’s obligations in connection with
trading in Hong Kong.
Please note that the Hong Kong Rules make the Client responsible for ensuring that the Client complies with the
Hong Kong Rules. Section 8 of the Hong Kong Rules makes it a criminal offence not to comply with the Hong
Kong Rules (subject to a maximum fine of HK$100,000 and imprisonment for up to 2 years).
In 2004, the SFC investigated 6 breaches of the Hong Kong Rules, including a breach by a non-Hong Kong fund
manager which was referred to the fund manager’s overseas regulator. It should be noted that the SFC has
expressly stated that it is not sympathetic to claims by overseas persons that they are not aware of the Hong Kong
restrictions, and that a failure to trade within the limits or make reports reflects badly on a firm’s internal control
measures (which might itself lead to disciplinary action).
Position Limits
The Hong Kong Rules say that the Client may not hold or control futures contracts or stock options contracts in
excess of the prescribed limit, unless the Client has obtained the prior authorisation of the Hong Kong regulators.
For example, the prescribed limit for Hang Seng Index futures and options contracts and Mini-Hang Seng Index
futures and options contracts is 10,000 long or short position delta limit for all contract months combined, provided
the position delta for the Mini-Hang Seng Index futures contracts or Mini-Hang Seng Index options contracts shall
not at any time exceed 2,000 long or short for all contract months combined. For many futures contracts and stock
options contracts, the position limit is set at 5,000 contracts for any one contract/expiry month.
The prescribed limit for each contract traded on the Hong Kong exchanges is set out in the Hong Kong Rules.
Reportable Positions
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If the Client holds or controls an open position in futures contracts or stock options contracts in excess of the
specified level, the Hong Kong Rules require the Client to report that position in writing to the relevant Hong
Kong exchange (i) within one day (ignoring Hong Kong public holidays and Saturdays) of first holding or
controlling that position, and (ii) on each succeeding day on which the Client continues to hold or control that
position.
The specified reporting level for each contract traded on the Hong Kong exchanges is set out in the Hong Kong
Rules. The report must state:
(a)the number of contracts held or controlled in respect of the position in each relevant contract month; and
(b)if the position is held or controlled for a client, the identity of the client, and the number of contracts held
or controlled for such person in respect of the reportable position in each relevant contract month.
Scope of the Hong Kong Rules
The Client should note:
(a)The prescribed limits and reportable position requirements apply to all positions held or controlled by
any person, including positions in any account(s) that such person controls, whether directly or indirectly.
The SFC takes the view that a person is regarded as having control of positions if, for example, the
person is allowed to exercise discretion to trade or dispose of the positions independently without the
day-to-day direction of the owner of the positions. (Section 4 of the Hong Kong Rules and Para. 2.6 of
the Guidance Note).
(b) If a person holds or controls positions in accounts at more than one intermediary, the Hong Kong Rules
require him to aggregate the positions for the purposes of applying the prescribed limits and reportable
position requirements. (Para. 6.1 of the Guidance Note).
(c) The person holding or controlling a reportable position in accounts at more than one intermediary has the
sole responsibility to notify the relevant exchange of the reportable position. The person may request its
intermediary to submit the notice of the reportable position. If a firm agrees to submit the notice on his
behalf, the person should provide to the firm its total positions held at other intermediaries so that the
firm can submit the notice of the reportable position. Alternatively, the person should ask all of his
intermediaries to report the positions in each of the accounts separately to the exchange, even if the
positions in the individual accounts do not reach the reportable level. (Paras. 4.6 and 6.2 of the Guidance
Note).
(d)Where the Client is holding a reportable position for the Client’s client, the Hong Kong Rules state that
the Client must disclose the identity of the client. The SFC’s view is that, for the purposes of the Hong
Kong Rules, a client is the person who is ultimately responsible for originating the transaction
instructions - i.e., the transaction originator. (Para. 6.4 of the Guidance Note).
The Hong Kong Rules apply separately to the positions held by each of the underlying clients of an omnibus
account, except where the omnibus account operator has discretion over the positions in which case the account
operator must also aggregate these positions with his own positions. Positions held by different underlying clients
should not be netted off for purposes of calculating and reporting reportable positions or determining compliance
with the prescribed limits. (Para. 6.8 of the Guidance Note).
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HONG KONG RISK DISCLOSURE STATEMENT
This Risk Disclosure is provided in accordance with the Code of Conduct for Persons Licensed by or Registered
with the Securities and Futures Commission of Hong Kong.
(a) RISK OF SECURITIES TRADING
The prices of securities fluctuate, sometimes dramatically. The price of a security may move up or down,
and may become valueless. It is as likely that losses will be incurred rather than profit made as a result of
buying and selling securities.
(b) RISK OF TRADING FUTURES AND OPTIONS
The risk of loss in trading futures contracts or options is substantial. In some circumstances, you may
sustain losses in excess of your initial margin funds. Placing contingent orders, such as “stop-loss” or
“stop-limit” orders, will not necessarily avoid loss. Market conditions may make it impossible to execute
such orders. You may be called upon at short notice to deposit additional margin funds. If the required
funds are not provided within the prescribed time, your position may be liquidated. You will remain liable
for any resulting deficit in your account. You should therefore study and understand futures contracts and
options before you trade and carefully consider whether such trading is suitable in the light of your own
financial position and investment objectives. If you trade options you should inform yourself of exercise
and expiration procedures and your rights and obligations upon exercise or expiry.
(c) RISK OF TRADING IN LEVERAGED FOREIGN EXCHANGE CONTRACTS
The risk of loss in leveraged foreign exchange trading can be substantial. You may sustain losses in excess of your
initial margin funds. Placing contingent orders, such as "stop-loss" or "stop-limit" orders, will not necessarily limit
losses to the intended amounts. Market conditions may make it impossible to execute such orders. You may be
called upon at short notice to deposit additional margin funds. If the required funds are not provided within the
prescribed time, your position may be liquidated. You will remain liable for any resulting deficit in your account.
You should therefore carefully consider whether such trading is suitable in light of your own financial position and
investment objectives.
(d)
RISK OF TRADING GROWTH ENTERPRISE MARKET STOCKS
Growth Enterprise Market (GEM) stocks involve a high investment risk. In particular, companies may list
on GEM with neither a track record of profitability nor any obligation to forecast future profitability. GEM
stocks may be very volatile and illiquid.
You should make the decision to invest only after due and careful consideration. The greater risk profile
and other characteristics of GEM mean that it is a market more suited to professional and other
sophisticated investors.
Current information on GEM stocks may only be found on the internet website operated by The Stock
Exchange of Hong Kong Limited. GEM Companies are usually not required to issue paid announcements in
gazetted newspapers.
You should seek independent professional advice if you are uncertain of or have not understood any aspect
of this risk disclosure statement or the nature and risks involved in trading of GEM stocks.
(e) RISKS OF CLIENT ASSETS RECEIVED OR HELD OUTSIDE HONG KONG
Client assets received or held by a licensed person outside Hong Kong are subject to the applicable laws
and regulations of the relevant overseas jurisdiction which may be different from the Securities and Futures
Ordinance (Cap. 571) and the rules made thereunder. Consequently, such client assets may not enjoy the
same protection as that conferred on client assets received or held in Hong Kong.
(f) RISK OF PROVIDING AN AUTHORITY TO REPLEDGE YOUR SECURITIES COLLATERAL ETC.
There is risk if you provide the licensed or registered person with an authority that allows it to apply your
securities or securities collateral pursuant to a securities borrowing and lending agreement, repledge your securities
collateral for financial accommodation or deposit your securities collateral as collateral for the discharge and
satisfaction of its settlement obligations and liabilities.
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If your securities or securities collateral are received or held by the licensed or registered person in Hong Kong,
the above arrangement is allowed only if you consent in writing. Moreover, unless you are a professional investor,
your authority must specify the period for which it is current and be limited to not more than 12 months. If you are
a professional investor, these restrictions do not apply.
Additionally, your authority may be deemed to be renewed (i.e. without your written consent) if the licensed or
registered person issues you a reminder at least 14 days prior to the expiry of the authority, and you do not object
to such deemed renewal before the expiry date of your then existing authority.
You are not required by any law to sign these authorities. But an authority may be required by licensed or
registered persons, for example, to facilitate margin lending to you or to allow your securities or securities
collateral to be lent to or deposited as collateral with third parties. The licensed or registered person should explain
to you the purposes for which one of these authorities is to be used.
If you sign one of these authorities and your securities or securities collateral are lent to or deposited with third
parties, those third parties will have a lien or charge on your securities or securities collateral. Although the
licensed or registered person is responsible to you for securities or securities collateral lent or deposited under your
authority, a default by it could result in the loss of your securities or securities collateral.
A cash account not involving securities borrowing and lending is available from most licensed or registered
persons. If you do not require margin facilities or do not wish your securities or securities collateral to be lent or
pledged, do not sign the above authorities and ask to open this type of cash account.
(g) RISK OF PROVIDING AN AUTHORITY TO HOLD MAIL OR TO DIRECT MAIL TO THIRD PARTIES
If you provide a licensed person with an authority to hold mail or to direct mail to third parties, it is important for
you to promptly collect in person all contract notes and statements of your account and review them in detail to
ensure that any anomalies or mistakes can be detected in a timely fashion.
(h) RISK OF MARGIN TRADING
The risk of loss in financing a transaction by deposit of collateral is significant. You may sustain losses in excess
of your cash and any other assets deposited as collateral with the licensed or registered person. Market conditions
may make it impossible to execute contingent orders, such as "stop-loss" or "stop-limit" orders. You may be called
upon at short notice to make additional margin deposits or interest payments. If the required margin deposits or
interest payments are not made within the prescribed time, your collateral may be liquidated without your consent.
Moreover, you will remain liable for any resulting deficit in your account and interest charged on your account.
You should therefore carefully consider whether such a financing arrangement is suitable in light of your own
financial position and investment objectives.
(i) RISK OF TRADING NASDAQ-AMEX SECURITIES AT THE STOCK EXCHANGE OF HONG KONG
LIMITED
The securities under the Nasdaq-Amex Pilot Program (PP) are aimed at sophisticated investors. You should
consult your dealer and become familiarised with the PP before trading in the PP securities. You should be aware
that the PP securities are not regulated as a primary or secondary listing on the Main Board or the Growth
Enterprise Market of The Stock Exchange of Hong Kong Limited.
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SCHEDULE V – CASH PAYMENTS AND SECURITIES TRANSFERS AUTHORISATION
DATED [DATE]
Morgan Stanley & Co. International plc
International Prime Brokerage
25 Cabot Square
Canary Wharf
London E14 4QA
Re: [Fund name] (the “Client”)
This Cash Payments and Securities Transfers Authorisation (“CPSTA”) is notification from the Client to MSI
plc pursuant to Section G.7 of the International Prime Brokerage Agreement entered into between the parties
(the “Agreement”). Any capitalised term used herein and not otherwise defined shall have the meaning given to
it in the Agreement.
The Client hereby authorises MSI plc to accept and act on Cash Payments Instructions and Securities Transfers
Instructions in accordance with Section G of the Agreement, using one or more facilities mentioned below.
Cash Payments Instructions and Securities Transfers Instructions
The Client hereby authorizes the personnel designated herein as Authorised Persons to provide Cash Payments
Instructions and/or Securities Transfers Instructions (as the case may be) on behalf of the Client pursuant to the
Agreement.
The Client further authorizes the Designated Persons specified herein to enter into any agreement on behalf of
the Client in connection with this CPSTA (including any agreement to amend or terminate or replace this
CPSTA in whole or in part).
Application
This Cash Payments and Securities Transfers Authorisation shall benefit MSI plc and MSI plc’s successors and
assigns and shall replace any existing Cash Payments or Cash Payments and Securities Transfers
Authorisation(s). This Cash Payments and Securities Transfers Authorisation shall become effective from the
time MSI plc acknowledges the terms of such form by returning a copy executed by it to the Client or its Agent.
Designated Persons (optional)
(in the event that the client does not complete this section, only authorized signatories for the Client will be able
to amend the CPSTA from time to time)
[Any one person] / [Any two persons acting together] specified below as Designated Persons [is]/[are]
authorised on behalf of the Client to agree in writing (including by fax or e-mail (with pdf attachment) or post)
with MSI plc any amendment to the terms of any, Cash Payments and Securities Transfers Authorisation
(including, without limitation, a revised list of persons who are to be “Designated Persons” for the purpose of
this paragraph, a revised list of the persons who are to be “Authorised Persons” for the purpose of Section I
and/or Section IV, subject in each case to MSI plc agreeing the relevant revision or agreeing to provide the
requested functionality, if applicable).
MSI plc is entitled without further enquiry to act upon any instruction or notice or request from a Designated
Person on behalf of the Client.
Designated Persons:
Name:
Signature:
Name: Signature:
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Name:
Signature:
Any proposed amendment to the terms of the CPSTA shall be subject to the provisions hereof (including but not
limited to the section titled “Amendment of the CPSTA”)
Instructions from an Administrator/Service Provider of the Client
Where the Client wishes to authorise the Client’s administrator or third party service provider (an
“Administrator”) as an Authorised Person, the Client shall complete the relevant section(s)for each of the
methods for effecting Cash Payments Instructions and/or Securities Transfers Instructions of their choice
accordingly, and follow the appropriate instructions in each such section. References to the Client herein shall
include the Designated Person(s) acting on behalf of the Client.
Persons authorized to add, delete and categorise Mandatory Delivery Instructions (mandatory)
(defined as the details of accounts held with third parties to which transfers can be effected on behalf of the
Client, hereafter referred to as “MDIs”)
The Client confirms that [Any one person] / [Any two persons acting together] specified below [is]/[are]
authorised to instruct Morgan Stanley in writing (including by fax or e-mail (with pdf attachment) or post) to
add, delete and categorise MDIs that apply to the payment and transfer methods permitted under Section I and
Section IV of this Cash Payments and Securities Transfers Authorisation
Name:
Signature:
Name:
Signature:
Name:
Signature:
Name:
Signature:
The Client acknowledges and agrees that in the event that the Client has specified details of an Administrator to
instruct Cash Payments and/or Securities Transfers Instructions under Section I and/or Section IV, the
Administrator may from time to time add, amend and/or delete MDIs.
Amendment of the CPSTA
The Client may amend or supplement the CPSTA by completing a CPSTA amendment form provided by
Morgan Stanley upon request (or using such other form as may be accepted by MSI plc from time to time), and
sending such form to the Client’s account representative at Morgan Stanley. Any such amendment or
supplement shall become effective from the time MSI plc acknowledges the terms of such form by returning a
copy executed by it to the Client or its Agent.
References to the Client herein shall include the Designated Person(s) acting on behalf of the Client.
Regardless of the method of instruction, until MSI plc acknowledges receipt of written notice from or on behalf
of the Client in accordance with the foregoing provisions hereof in relation to amendment of this CPSTA, MSI
plc is entitled to assume that any Authorised Person has full and unrestricted power to give Cash Payments
Instructions or Securities Transfers Instructions on the Client’s behalf.
Termination
This Cash Payments and Securities Transfers Authorisation may be terminated by:
(a) written notice of termination from the Client, whereupon this authorization shall terminate at close of
business on the fifth business day following actual receipt of such notice from the Client by MSI plc;
(b) agreement in writing between MSI plc and the required number of Designated Persons on such date as
may be agreed in writing between MSI plc and the Designated Person(s).
72
Termination of this Cash Payments and Securities Transfers Authorisation shall not prejudice or otherwise
affect any right, obligation or liability of any party arising from any Cash Payments or Securities Transfers
Instructions prior to such termination.
Miscellaneous
The authorisations herein are in addition to (and in no way limit or restrict) any rights which any Morgan
Stanley Entity may have under any agreement with the Client.
This Cash Payments and Securities Transfers Authorisation and any non-contractual obligations arising out of or
in relation to it shall be governed by, and construed in accordance with, English law. MSI plc and the Client
each hereby submit to the exclusive jurisdiction of the courts of England in respect of any suit, action or
proceeding.
73
SECTION I – ONLINE CASH INSTRUCTIONS (CASH ENTRY)
For Cash Payments Instructions only
Complete this section to use Online Cash Instructions, hereafter referred to as “ Cash Entry”
Instructions from the Client’s Authorised Persons in accordance with paragraph G.7.3 of the Agreement.
Each online Cash Payments Instruction in respect of a Prime Brokerage Account must be input and approved as
follows
Access Levels Description of access supported
View Only Individual may only view all cash wires
Import Individual may import/upload a wire file
Entry Only Individual may use the Cash Entry function to enter cash wires
Authorise Only Individual may authorise cash wires; no entry permitted
Enter and Authorise Restricted Individual may enter and authorise any cash wire except those entered by themselves
Enter and Authorise Individual may enter and authorise any cash wires
Authorised Persons: First and
Last Name or Client Link id
e-mail address Access Level: Authorisation Group
Membership (optional): If
Authorisation Groups are
defined, list the Group or Groups
to which each Authoriser will
belong. NOTE: An authoriser
may belong to more than one
Group, but may only authorise
once.
[Name of Administrator]*
The Client requests each Cash Payments Instruction to be approved by the following number of Authorised
Persons:
1 2 3 4 5 (circle number)
* in the event that the Client has appointed the Administrator to instruct Cash Payments Instructions under this
Section I, the Client must insert the full legal name of the Administrator.
In the event that the full legal name of an Administrator has been inserted in this Section I, the Client
acknowledges and agrees that a list of Authorised Persons and any limits or approval requirements (including
without limitation the number of Authorised Persons or additional payment rules) will be separately provided
by the Administrator, and that such list, limits and approval requirements may be amended by the
Administrator from time to time.
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Additional Payment Rule Definitions (Optional):
PAYMENT CONDITIONS
APPROVAL LOGIC
Rule:
Threshold Cash Limit*: (e.g. 1,000,000).
Threshold Currency: The currency in which the limit is to be applied (e.g. USD,
EUR) NOTE: T
his limit will
be applied to all currencies using the equivalent in Currency stated.
MDI Category:
NOTE: If left
blank, the rule will apply to all
payment
instructions.
.
Authorisation
Group 1:
Number of Online ApproversRequired:
Sequence Logic:
And, Or, Followed By NOTE: By selecting
Followed By, users within Authorisation Group 2 will not be able to view the payment until approved by
Authorisation Group 1.
Authorisatio
n Group 2:
Number of Online Approvers Required:
e.g. 1
1,000,000
USD
3
rd
Party
A
1
And
B
1
[if Threshold Cash Limit and MDI Category do not ap
ply, insert “All
Payments” here]
* Authorisers may be optionally arranged to create
a Threshold Cash Limit. This can be helpful if the
Client wishes to further control authorisations bas
ed on cash limits
(e.g. User A within the Authorisation Group A will
be able to authorise USD wires over $1,000,000 whil
e User B within the Authorisation Group B will be a
ble to authorise
cash wires below $1,000,000, with $1,000,000 USD be
ing the currency limit).
Page 75
SECTION II - SWIFT CASH PAYMENTS INSTRUCTIONS
For Cash Payments Instructions only
Optional - complete this section to use SWIFT
Instructions using SWIFT in accordance with paragraph G.7.4 of the Agreement
The Client hereby authorises MSI plc to treat any entity with access to the Bank Identifier Code(s) specified
below (each a “BIC”) as an Authorised Person with authority to issue Cash Payments Instructions in
accordance with paragraph G.7.4 of the Agreement.
Bank Identifier Code*:
* Incorporate BIC (and in the event that the Client’s Administrator has been appointed by the
Client to perform this function, insert the Administrator’s BIC) or specify “Not Applicable”
SECTION III – FILE TRANSFER PROTOCOL (“FTP”)
For Cash Payments Instructions only
Optional - complete this section to use FTP
The Client hereby authorises any persons with authority to access and use the PGP encryption key(s)* provided
by the Client to MSI plc from time to time (each a “PGP”) as its agent and attorney-in-fact to issue cash
payments instructions with respect to the Client’s Prime Brokerage Account under the Agreement utilizing any
of the FTP cash payments instruction methods specified below which MSI plc has agreed may be utilized by the
Client. The Client authorises MSI plc to accept and act on cash payments instructions received from the PGP,
and may accept newly authorised PGPs from persons who Morgan Stanley reasonably believes to be an
authorised signatory of the Client. The Client agrees that FTP messages may not include the name of its
personnel and that MSI plc may treat any message from the PGP as a genuine instruction of the Client’s
authorised personnel. The Client further agrees that MSI plc shall not be responsible for any alterations or
deletions to instructions received from the PGP(s) or any delays, faulty encryption or decryption, or non-
delivery of instructions from the PGP(s), as well as any associated loss of market opportunity.
Authorisation Methods
Authorisation via Interactive Cash Entry
Auto-Authorisation: Straight through processing with no further
authorisation required
* in the event that the Client has appointed the Administrator to instruct Cash Payments Instructions by FTP,
the Client must provide the Administrator’s PGP encryption key
Page 76
SECTION IV - WRITTEN CASH PAYMENTS AND SECURITIES TRANSFERS INSTRUCTIONS
For Cash Payments Instructions and Securities Transfers Instructions
Required - please complete this section
For enhanced security the Client is required to instruct Cash Payments Instructions using Cash Entry, FTP
and/or SWIFT. However, as a backup, MSI plc may agree to accept Cash Payments Instructions and Securities
Transfers Instructions in writing. The Client hereby authorises the persons specified below as Authorised
Persons to issue Cash Payments Instructions or Securities Transfers Instructions in writing (including by fax or
e-mail (with pdf attachment) or post) in accordance with paragraph G.7.2 of the Agreement.
Authorised Persons
Name: Title: Signature: Authorised to
instruct Cash
Payments:
Yes, No
Authorised to
instruct Securities
Transfers:
Yes, No
[Name of Administrator
*]
Written Cash Payments Instructions or Securities Transfer Instructions must be signed by the following number
of Authorised Persons:
1 2 3 4 5 (circle number)
* in the event that the Client has appointed the Administrator to instruct Cash Payments and Securities
Transfers Instructions under this Section IV, the Client must insert the full legal name of the Administrator.
In the event that the full legal name of an Administrator has been inserted in this Section IV, the Client
acknowledges and agrees that a list of Authorised Persons and any limits or approval requirements
(including the number of Authorised Persons) may be separately provided by the Administrator and that
such list, limits and approval requirements may be amended by the Administrator from time to time.
The Client specified in the signature block below agrees to the terms of this Cash Payments and Securities
Transfers Authorisation.
Clients signature(s)
[Fund Name]
Authorised
signatory/signatories
Acknowledged by Morgan Stanley & Co. International plc
Signature:
Page 77
CLIENT SIGNATURE
The Client hereby agrees to the terms of this Agreement and has executed the Agreement as a deed. The Client’s signature
will constitute an authority for Morgan Stanley to date this Agreement following its signature and to deliver this Agreement
on behalf of the Client.
Please note, the required number of persons authorised to sign this Agreement as a deed on behalf of the Client must sign
below and all information must be completed before returning this Agreement
[name of client]
Signed as a Deed and delivered on behalf of
the Client by persons who in accordance with
the laws of the territory set out below are
acting under the authority of the Client
Signature:
...........................................................
................................................................
Name (print name): ........................................................... ................................................................
Title: ........................................................... ................................................................
For and on behalf of (Legal Entity Name): [name of client]
Registered Under the Laws of:
Registered Address:
Telephone:
Facsimile:
In the Presence of:
Name and address of Witness:
..............................................................
..............................................................
..............................................................
..............................................................
..............................................................
..............................................................
Signature of Witness:
.............................................................. ..............................................................
Details for Notices:
Telephone:
Facsimile:
Page 78
MO R G A NST A N L E Y SI G N A T U R E
Signed by Morgan Stanley & Co. International plc. for itself and as agent for the other Morgan Stanley Companies
listed below:
Signature: ....................................................................................
Name (print name): ....................................................................................
Title: ....................................................................................
Details for Notices:
Address 25 Cabot Square, Canary Wharf, London E14 4QA
Tel No: +44 (0) 207 425 8000
Fax No: +44 (0) 207 425 3985
Attention: International Prime Brokerage – Head of Client Services
The Morgan Stanley Companies
Morgan Stanley & Co. LLC Morgan Stanley Capital Group Inc.
Morgan Stanley Asia (Singapore) Securities Pte Ltd Morgan Stanley Bank AG
Morgan Stanley Securities Limited Morgan Stanley Capital Services LLC
Morstan Nominees Limited Morgan Stanley Asia Limited
MS Equity Finance Services I (Cayman) Ltd. Morgan Stanley Bank N.A.
Morgan Stanley Australia Securities Limited
Morgan Stanley Hong Kong Securities Limited
Morgan Stanley Bank International Limited
Morgan Stanley MUFG Securities Co., Ltd
and such other entities within the Morgan Stanley group of companies with
which the Client transacts or which provide execution or similar services to
the Client or provide custodial services in respect of the Client’s
Investments.
1
CUSTOMER PRIME BROKER
ACCOUNT AGREEMENT
This Customer Prime Broker Account Agreement is entered into by and between (i) the customer identified
on the signature page hereto (the “undersigned”) and (ii) Morgan Stanley & Co. LLC (“MSCO”) and each of its
affiliates that maintains an account for the undersigned, with which the undersigned has entered into a Contract, or
to which the undersigned owes an Obligation (individually or collectively, as appropriate, a “Morgan Stanley
Entity” or “Morgan Stanley”). In consideration of Morgan Stanley from time to time accepting an account or
receiving, holding or delivering any property of the undersigned, or entering into any Contract with the undersigned,
the undersigned and Morgan Stanley agree as follows:
1. DEFINITIONS
•“Agreement” means this Customer Prime Broker Account Agreement, together with any supplements or
annexes hereto.
•“Bankruptcy Event”: means the undersigned (l) is dissolved (other than pursuant to a consolidation,
amalgamation or merger); (2) becomes insolvent or is unable to pay its debts or fails or admits in writing its
inability generally to pay its debts as they become due; (3) makes a general assignment, arrangement or composition
with or for the benefit of its creditors; (4)(A) institutes or has instituted against it, by a regulator, supervisor or any
similar official with primary insolvency, rehabilitative or regulatory jurisdiction over it in the jurisdiction of its
incorporation or organization or the jurisdiction of its head or home office, a proceeding seeking a judgment of
insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting
creditors’ rights, or a petition is presented for its winding-up or liquidation by it or such regulator, supervisor or
similar official, or (B) has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any
other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is
presented for its winding-up or liquidation, and such proceeding or petition is instituted or presented by a person or
entity not described in clause (A) above and either (I) results in a judgment of insolvency or bankruptcy or the entry
of an order for relief or the making of an order for its winding-up or liquidation or (II) is not dismissed, discharged,
stayed or restrained in each case within 15 days of the institution or presentation thereof; (5) has a resolution passed
for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or
merger); (6) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator,
receiver, trustee, custodian or other similar official for it or for all or substantially all its assets; (7) has a secured
party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or
other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party
maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 15
days thereafter; (8) causes or is subject to any event with respect to it which, under the applicable laws of any
jurisdiction, has an analogous effect to any of the events specified in clauses (l) to (7) above (inclusive); or (9) takes
any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts.
•“Business Day” means any day other than Saturday or Sunday on which banking institutions are open for
business in New York, New York.
•“Contract” means all transactions, contracts or agreements between Morgan Stanley and the undersigned,
including securities purchase or sale contracts, agreements to lend cash or securities, commodity and currency
contracts, forward contracts, repurchase agreements, swap agreements or any other derivative or financial
transactions, without regard to the form of such agreement, which may include oral agreements or agreements
confirmed or signed by only one party to the agreement and agreements entered into or signed by Morgan Stanley
on behalf of the undersigned.
•“Collateral” means cash, securities, commodities, other financial assets, investment property and other property
and assets (including all security entitlements in respect thereof, all income and profits thereon, all dividends,
interest and other payments and distributions with respect thereto and all proceeds from any of the foregoing) which
2
from time to time may be deposited or credited to any account of the undersigned with Morgan Stanley, be held or
carried by Morgan Stanley for the undersigned, be due from Morgan Stanley to the undersigned, or be delivered to
or in Morgan Stanley’s possession or control for any purpose, including safekeeping.
•“Obligation” means any obligation or liability of a party arising at any time, whether or not fixed, matured or
contingent, including any obligation related to the purchase, sale, loan, clearing, custody or financing of any
securities, currencies, instruments, property or other assets under or in connection with any Contract, any
requirement to make a margin payment or satisfy margin requirements, or any obligation to pay damages, costs or
expenses.
•“Prime Brokerage Regulations” means the requirements applicable to prime brokerage activities set out in the
no-action letter of the Division of Market Regulation of the SEC dated January 25, 1994, as such letter may be
amended, modified or supplemented from time to time, regarding the performance of prime brokerage services, and
any other relevant regulations of the Securities and Exchange Commission or other governmental authorities or self-
regulatory organizations.
•“SEC” means the United States Securities and Exchange Commission.
2. APPLICABLE RULES AND REGULATIONS. All transactions and activities under this Agreement shall
be subject to the rules and regulations of all U.S. federal, state and local, and if applicable, non-U.S., laws, rules and
regulations, including any regulations or interpretations issued by governmental authorities, self-regulatory
organizations, exchanges, markets, clearing organizations or settlement systems, in each case as in effect from time
to time (collectively, “Applicable Law”).
3. SHORT AND LONG SALES. The undersigned agrees that when placing any sell order, the undersigned
will appropriately designate it as “long” or as “short” as required by Applicable Law The undersigned will
designate a sale as “long” only if the securities being sold are securities then owned by the undersigned and may be
sold without restriction and such securities are either in the undersigned’s account at Morgan Stanley or will be
delivered to Morgan Stanley in deliverable form, without undue inconvenience or expense to Morgan Stanley by
settlement date.
4. COMPLIANCE WITH PRIME BROKERAGE REGULATORY REQUIREMENTS. The undersigned
hereby acknowledges that it understands the Prime Brokerage Regulations and with the related provisions of this
Agreement, and hereby undertakes to comply with the Prime Brokerage Regulations as in effect at any time and
with the related provisions of this Agreement. The undersigned will inform Morgan Stanley promptly if this
undertaking is not satisfied. Without limiting the foregoing, the undersigned agrees that it shall maintain in its
account with Morgan Stanley at all times a minimum net equity in cash and securities as agreed upon, but in no
event less than that required by the Prime Brokerage Regulations. The undersigned further agrees that, in the event
its account falls below this minimum net equity, it shall bring its account into compliance in accordance with the
Prime Brokerage Regulations.
5. MORGAN STANLEY AS PRIME BROKER. In connection with any transaction where Morgan Stanley
acts as the undersigned’s prime broker:
(a)The undersigned maintains brokerage accounts with a number of other brokers (“Executing Brokers”) and,
from time to time, will place orders to be executed by one or more Executing Brokers. The undersigned
agrees to give Morgan Stanley notice of the names of all Executing Brokers with whom the undersigned
intends to place orders (which Executing Brokers must be acceptable to Morgan Stanley). Morgan Stanley
is authorized to enter into a prime brokerage agreement of the type described in the Prime Brokerage
Regulations (a “Form 150”) with all current or future Executing Brokers, to set up an account for the
undersigned’s benefit at any Executing Broker and to provide or obtain any information necessary to
establish or maintain a prime brokerage relationship. The undersigned acknowledges that Morgan Stanley
shall have no obligation to accept for clearance and settlement any order or transaction as prime broker
from any Executing Broker with which Morgan Stanley has not entered into a Form 150 with respect to the
undersigned’s account at Morgan Stanley. The undersigned will use its best efforts to assure that such
Executing Brokers comply with the terms set forth in the relevant Form 150. The undersigned
3
acknowledges that as between Morgan Stanley and any Executing Broker, the Executing Broker will be
acting as an agent of the undersigned, and not as Morgan Stanley’s agent, for the purpose of carrying out
the undersigned’s instructions with respect to the purchase, sale and settlement of securities.
(b)The undersigned shall advise Morgan Stanley on trade date of the details of all transactions effected by any
Executing Broker on the undersigned’s behalf (the “Trade Data”). The undersigned authorizes Morgan
Stanley to acknowledge, affirm, settle and clear all such transactions on the basis of the Trade Data. All
such transactions shall be for the sole account and risk of the undersigned, and Morgan Stanley shall have
no responsibility or liability to the undersigned, any Executing Broker or any other third party with respect
to such transactions. The undersigned agrees to pay all fees agreed upon with the Executing Brokers and
to make any necessary arrangements with the appropriate Executing Broker concerning the payment of any
such fees, including the deduction of any such amounts from commissions charged by the Executing
Brokers.
(c)Morgan Stanley shall send to the undersigned a notification of each trade placed with any Executing
Broker based on the Trade Data provided to Morgan Stanley by the undersigned. Any trade notifications
issued by Morgan Stanley as prime broker shall indicate the name of the Executing Broker involved and
such other information required by the Prime Brokerage Regulations. If the undersigned has instructed the
Executing Broker to send trade confirmations to the undersigned in care of Morgan Stanley, Morgan
Stanley agrees that electronic versions of such confirmations will be available to the undersigned without
charge upon request to Morgan Stanley.
(d)The undersigned understands that Morgan Stanley will not clear or settle any transaction for the
undersigned if: (i) sufficient funds or securities, as necessary, are not maintained in an account with
Morgan Stanley or if the undersigned has not made other arrangements for settlement that are satisfactory
to Morgan Stanley; (ii) the undersigned does not maintain, and does not have at the settlement of the
transaction, at least the minimum net equity required by the Prime Brokerage Regulations in its account
with Morgan Stanley, or (iii) a condition exists that would require Morgan Stanley to disaffirm on a non-
discretionary basis, as defined in the Form 150. Morgan Stanley’s customer account records may reflect
transactions as settled as of the projected settlement date (sometimes referred to as contractual settlement).
Morgan Stanley does not guarantee settlement, however, and therefore reserves the right to reverse
transaction settlement entries in the event of a settlement failure.
(e)The undersigned agrees to comply with Morgan Stanley’s requirements relating to short sales, including
the requirement that no short sale may be effected through an Executing Broker unless the undersigned has
first confirmed with Morgan Stanley that the securities are available for delivery. Such confirmation does
not guarantee that the securities will be available for delivery on settlement date or that the securities will
be available to support a short sale for any particular period of time. Accordingly, the short sale may fail
on settlement date or the undersigned may be asked to cover its short sale at any time, and undersigned will
be responsible for any Obligations that arise therefrom.
(f)Morgan Stanley is authorized to try to resolve any unmatched trade reports received from any Executing
Broker. However, the undersigned is responsible for the ultimate resolution of these trades and reports.
Morgan Stanley shall have no responsibility or liability with respect to Trade Data not correctly transmitted
to it on a timely basis by the undersigned, any Executing Broker, any market, exchange or clearing house,
or any other person or entity.
(g)In the event the undersigned’s account falls below the minimum net equity required by the Prime
Brokerage Regulations, the undersigned authorizes Morgan Stanley to notify promptly all Executing
Brokers of such event. If the undersigned fails to bring such account into compliance with the minimum
net equity, the undersigned further agrees that Morgan Stanley may, without notice to the undersigned,
disaffirm, DK or decline to affirm, clear and settle any transaction effected by an Executing Broker on the
undersigned’s behalf. Except as provided in the following paragraph, the undersigned understands that if
Morgan Stanley takes such action with respect to any transaction of the undersigned, Morgan Stanley shall
do so for all transactions of the undersigned that day. In any such case, Morgan Stanley shall send a
cancellation notification to the undersigned and the undersigned understands that the undersigned must
4
settle outstanding trades directly with the relevant Executing Broker and authorizes Morgan Stanley to
provide the Executing Broker with any information necessary to settle such trades. The undersigned
further agrees that Morgan Stanley will not be bound to make any investigation into the facts surrounding
any transaction to which the undersigned is a party and that, immediately upon notice to the undersigned
and, if required, to the Executing Brokers, Morgan Stanley may cease acting as prime broker for the
undersigned.
(h)If the undersigned’s account is managed on a discretionary basis by a third party (an “Adviser”), the
undersigned authorizes Morgan Stanley to commingle the undersigned’s prime brokerage transactions with
those of other accounts of its Adviser (“sub-accounts”), in accordance with the instructions of its Adviser,
for order placement and clearance in bulk. The undersigned understands that no part of any transaction
may be allocated to any sub-account where such sub-account’s net equity is below the minimum levels
established by the Prime Brokerage Regulations and, should any sub-account’s net equity fall below the
minimum levels established by the Prime Brokerage Regulations, Morgan Stanley would be required to
disaffirm the entire transaction. The undersigned agrees that, should such an event occur, its Adviser may
resubmit the bulk trade to the Executing Broker so as to exclude those sub-accounts with a net equity
deficiency or, if permissible, re-allocate the entire prime brokerage transaction to other sub-accounts. The
undersigned understands that such reallocation must be communicated to Morgan Stanley within any
required deadlines.
6. CURRENCY CONTRACTS. If the box entitled “Additional Provisions Related to Currency Contracts”
appearing at the end of this Agreement is checked, the undersigned, from time to time, may enter into spot and/or
forward currency Contracts with Morgan Stanley in connection with the settlement of other Contracts or otherwise
as the undersigned and Morgan Stanley may agree. The undersigned acknowledges that Morgan Stanley is under no
obligation to enter into any currency Contracts with, or on behalf of, the undersigned, and further agrees to furnish
to Morgan Stanley such documentation to indicate capacity and authority as Morgan Stanley may reasonably
request prior to entering into any such Contracts. Each currency Contract entered into under this Agreement shall
constitute an “FX Transaction”, as such term is defined in the 1998 FX and Currency Option Definitions, including
Annex A thereto, as published by the International Swaps and Derivatives Association, Inc., EMTA, and The
Foreign Exchange Committee (as may be amended, the “FX Definitions”), and shall be subject to the terms in this
Section 6 as well as those set forth in the “Additional Provisions Related to Currency Contracts” box. Any
confirmation, whether created by an exchange of facsimiles, SWIFT messages, or electronic messages on an
electronic messaging or matching system, between Morgan Stanley and the undersigned relating to an FX
Transaction, whether or not it is expressed to be, shall constitute a confirmation and, unless Morgan Stanley and the
undersigned expressly agree otherwise, will be deemed to incorporate the FX Definitions. Notwithstanding the
foregoing, Morgan Stanley shall have the right to convert currencies in connection with the exercise of Morgan
Stanley’s rights under Section 8 below in such manner as it may determine.
7. SECURITY INTEREST AND LIEN. The undersigned grants to each Morgan Stanley Entity a continuing
first priority security interest in and lien upon and assigns to each Morgan Stanley Entity all of its rights, title and
interests to any and all Collateral, as security for the payment, performance and discharge of all Obligations of the
undersigned to Morgan Stanley, irrespective of whether or not Morgan Stanley has made advances in connection
with such Collateral, the number of accounts the undersigned has with Morgan Stanley or which particular Morgan
Stanley Entity holds such Collateral. The undersigned and Morgan Stanley each acknowledge and agree that each
Morgan Stanley Entity that holds Collateral does so both for itself and also as an agent and bailee for all other
Morgan Stanley Entities which may be secured parties under any Contract. The undersigned hereby irrevocably: (i)
consents to each Morgan Stanley Entity, with respect to any account maintained by the undersigned with such
Morgan Stanley Entity, entering into any agreement to comply with entitlement orders and instructions originated
by any other Morgan Stanley Entity without further consent of the undersigned, (ii) ratifies any such existing
agreement, and (iii) agrees that each Morgan Stanley Entity is a third-party beneficiary of such consent and
ratification. The undersigned and Morgan Stanley agree that each item of Collateral held in or credited to any
account maintained by any Morgan Stanley Entity will be treated as “financial asset” under Article 8 of the Uniform
Commercial Code as in effect in the State of New York (the “UCC”), and that any account of the undersigned
maintained by any Morgan Stanley Entity shall be treated as a “securities account” under Article 8 of the UCC. In
the event of a breach or default by the undersigned, Morgan Stanley shall have in addition to the rights and remedies
provided in this Agreement, all rights and remedies available to a secured creditor under the UCC and any other
5
Applicable Law. All Collateral delivered to Morgan Stanley shall be free and clear of all prior liens, claims and
encumbrances and the undersigned will not cause or allow any of the Collateral to be subject to any liens, security
interests, mortgages or encumbrances of any nature other than the security interest created in Morgan Stanley’s
favor. Furthermore, Collateral consisting of securities shall be delivered in good deliverable form (or Morgan
Stanley shall have the unrestricted power to place such securities in good deliverable form) in accordance with the
requirements of the primary market for these securities. The undersigned shall execute such documents and take
such other action as Morgan Stanley shall reasonably request in order to perfect its rights with respect to any such
Collateral. In addition, the undersigned appoints Morgan Stanley as the undersigned’s attorney-in-fact to act on the
undersigned’s behalf to sign, seal, execute and deliver all documents, and do all such acts as may be required, to
realize upon any of Morgan Stanley’s rights in the Collateral.
8. RIGHTS OF MORGAN STANLEY. Upon the occurrence of an Event of Default (as defined below),
Morgan Stanley may, in its discretion, cancel any outstanding orders for the purchase or sale of any securities,
currencies, commodities or other property, foreclose, collect, sell or otherwise liquidate any Collateral and apply the
proceeds therefore to satisfy any of the undersigned’s Obligations, buy-in any securities, currencies, commodities or
other property which any account of the undersigned may be short, and take any other action permitted by law or in
equity to protect, preserve or enforce Morgan Stanley’s rights or to reduce any risk to any Morgan Stanley Entity of
loss or delay. Any such sale, purchase or cancellation may be made on any exchange or other market where such
business is then usually transacted, or at public auction or private sale, without advertising or notice of the time or
place of sale to the undersigned, and without prior tender, demand or call of any kind upon the undersigned, all of
which are expressly waived. Morgan Stanley may purchase the whole or any part thereof free from any right of
redemption and the undersigned shall remain liable to Morgan Stanley for any deficiency; it being understood that a
prior tender, demand or call of any kind from Morgan Stanley, or prior notice from Morgan Stanley, of the time and
place of such sale or purchase shall not be considered a waiver of Morgan Stanley’s right to sell or buy any
securities, commodities, or other property or asset held by Morgan Stanley, or which the undersigned may owe to
Morgan Stanley. In addition, Morgan Stanley may at any time in connection with its rights under this Section 8
without prior notice to the undersigned apply or transfer any and all Collateral interchangeably between Morgan
Stanley Entities in connection with accounts in which the undersigned has an interest. Each of the following events
shall constitute an “Event of Default” hereunder: (a) the undersigned’s death or incompetency (if applicable); (b) a
breach, repudiation, occurrence of a termination event or default (or similar event however so described) by the
undersigned of this Agreement or any other Contract; (c) any misrepresentation of any statement by the undersigned
when made or deemed to be made or repeated; (d) the failure of the undersigned to fulfill or discharge any of its
Obligations, including the failure to make any payment or delivery or to satisfy margin requirements; (e) the
occurrence of a Bankruptcy Event; (f) the levy of an attachment against any property or asset in any account of the
undersigned; (g) the failure by the undersigned to give adequate assurance of due performance pursuant to this
Agreement; or (h) the determination that such action is necessary for Morgan Stanley’s protection.
9. REPAYMENT OF OBLIGATIONS; ADEQUATE ASSURANCES. Unless otherwise expressly agreed in
writing, all debit balances, other extensions of credit, loans or other Obligations to Morgan Stanley are repayable or
terminable upon demand by Morgan Stanley. Upon receipt of notice from Morgan Stanley, which may be given
orally, you shall immediately transfer to Morgan Stanley such Collateral as Morgan Stanley may require in
connection with any Obligation. If at any time Morgan Stanley has reasonable grounds to doubt the undersigned’s
performance of any of the undersigned’s Obligations, Morgan Stanley may demand, and the undersigned shall give
within twenty-four hours or any reasonable shorter period of time Morgan Stanley specifies, adequate assurance of
due performance. The giving of adequate assurance of performance may require the delivery by the undersigned to
Morgan Stanley of additional Collateral. Any failure by the undersigned to give such adequate assurance of due
performance shall constitute an independent, material default under the terms of all Contracts and Morgan Stanley
may terminate, liquidate or accelerate any and all Contracts and exercise any right under or with respect to any
security relating to any Contract and any right to net or set off payments which may arise under any Contract or
other agreement or under Applicable Law.
10. EXPENSES AND OTHER CHARGES. The undersigned agrees to pay Morgan Stanley, or its designee,
any fees, commissions and charges with respect to the undersigned’s activities with Morgan Stanley, including:
(a)Morgan Stanley’s fees, commissions, markups and other charges with respect to the execution of
transactions, fails, buy-ins, conversion costs or the maintenance of positions or other related services;
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(b)any fees, fines, penalties or other charges imposed by any authority or body described in Section 2 of this
Agreement or any court or authority of competent jurisdiction on any account opened or transaction
executed for or with the undersigned, except any such charges as may be imposed due to Morgan Stanley’s
gross negligence or willful misconduct;
(c)any charges with respect to any of the undersigned’s transactions, including buy-ins, and applicable taxes
or interest on any of the foregoing, together with Morgan Stanley’s costs and reasonable attorney’s fees
incurred in collecting any such debit balance.
11. NETTING AND SET OFF RIGHTS. Morgan Stanley shall have the right, at any time and from time to
time, to set off any Obligations of Morgan Stanley to the undersigned against any Obligations of the undersigned to
Morgan Stanley, and to foreclose on any Collateral for the purpose of satisfying the Obligations of the undersigned
to Morgan Stanley. The undersigned acknowledges that the fulfillment by Morgan Stanley of its Obligations to the
undersigned is contingent upon there being no breach, repudiation, misrepresentation or default by the undersigned
which has occurred and is continuing under this Agreement or any Contract. The rights and remedies granted under
this Section 11 are in addition to any other rights and remedies which arise under any Contract or under Applicable
Law.
12. MAINTENANCE OF THE UNDERSIGNED’S COLLATERAL. Subject to the requirements of
Applicable Law, the undersigned authorizes Morgan Stanley, from time to time and without further notice to the
undersigned, to carry any such Collateral in Morgan Stanley’s general accounts, or to loan, pledge, hypothecate, re-
hypothecate, sell or otherwise use any and all Collateral, separately or in combination with the property of others for
any amounts due to Morgan Stanley or for a greater sum, and without Morgan Stanley’s retaining in its possession
or control a like amount of similar property. THE UNDERSIGNED ACKNOWLEDGES THAT MORGAN
STANLEY’S LOAN, REPO, PLEDGE, HYPOTHECATION, RE-HYPOTHECATION, SALE OR OTHER
USE OF THE COLLATERAL MAY INCLUDE THE TRANSFER TO MORGAN STANLEY OR A THIRD
PARTY OF ALL ATTENDANT RIGHTS OF OWNERSHIP, INCLUDING THE RIGHT TO VOTE ANY
SECURITIES OR EXERCISE ANY CORPORATE ACTION RIGHTS.
13. FAILURE OF DELIVERY. If the undersigned directs Morgan Stanley to make any delivery of any
security, commodity or other property or asset for its account for any reason and the undersigned fails to deliver that
item to Morgan Stanley in the time, place and manner required, or if Morgan Stanley is unable to borrow the
security, or in the case of a recall, Morgan Stanley is unable to re-borrow the security, the undersigned authorizes
Morgan Stanley to borrow or purchase that item (or to be deemed to have made such purchase at the market value
of the time of such deemed purchase) in such manner and time as Morgan Stanley in its sole discretion determines
to be commercially reasonable. The undersigned agrees to be responsible for any consequent loss which Morgan
Stanley may suffer and any related costs, premiums and losses to which Morgan Stanley may be subject.
14. CONFIRMATIONS, STATEMENTS AND OTHER COMMUNICATIONS. Trade notifications, account
statements of the undersigned and any other communication issued by Morgan Stanley shall be conclusive and
binding if not objected to within five days after transmittal by Morgan Stanley to the undersigned by mail,
electronic communication, or any other agreed means. Morgan Stanley may send communications to the
undersigned at the address maintained by Morgan Stanley in its records or such other addresses that are provided to
Morgan Stanley in writing from time to time. All communications, whether by mail, electronic communication, or
any other agreed means, shall be deemed to have been given to the undersigned personally as of the date sent,
whether actually received or not.
15. NO OBLIGATION. The undersigned agrees that Morgan Stanley shall be under no obligation whatsoever
to enter into any Contract with, or on behalf of, the undersigned.
16. PROVISION OF INFORMATION. (a) From time to time, Morgan Stanley may provide or make available
to the undersigned, or to others acting with or on behalf of the undersigned, research, opinions and other
information, including portfolio analyses and reports, regarding securities, commodities, other financial assets, and
market participants or events. The undersigned acknowledges that such information is provided, unless Morgan
Stanley agrees in writing otherwise, without regard to the undersigned’s personal financial situation, investment
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objectives or other circumstances and that the provision by Morgan Stanley of such information to the undersigned,
whether sent directly or made readily accessible, and whether in writing, in electronic form or the subject of a
taping, broadcast or narrowcast, does not imply that any asset or transaction discussed therein is suitable in light of
the undersigned’s particular circumstances. The undersigned agrees that no such information will be the primary
basis of any investment decision by the undersigned. While all information produced by Morgan Stanley is based
on sources believed to be reliable, the undersigned acknowledges that Morgan Stanley does not guarantee or
warrant the accuracy, reliability or timeliness of such information. Further, all information and opinions are current
only as of the time provided, and are subject to rapid change without prior notice. The undersigned also
acknowledges that Morgan Stanley may take positions in financial instruments discussed in the information
provided the undersigned (which positions may be inconsistent with the information provided), may execute
transactions for others in those instruments and may provide investment banking and other services to the issuers of
those instruments. From time to time, Morgan Stanley also may provide or make available to the undersigned, or to
others acting with or on behalf of the undersigned, information regarding parties that might provide goods or
services to the undersigned, including but not limited to fund administrators (“Vendors”). While all information
produced by Morgan Stanley is based on sources believed to be reliable, the undersigned acknowledges that Morgan
Stanley does not guarantee or warrant the accuracy, reliability or timeliness of such information, or the quality of
goods or services provided by any Vendors. The undersigned agrees to indemnify and hold Morgan Stanley
harmless from and against any and all losses, claims, damages and liabilities arising out of or relating to, actions or
omissions by the Vendors, Morgan Stanley’s provision or making available of such information, or the
undersigned’s selection or use of such Vendors.
(b) The undersigned hereby instructs Morgan Stanley to provide electronic access to data relating to the
undersigned to such third parties as are specified by the undersigned from time to time (the “Access”). Such Access
shall be provided by Morgan Stanley as advised by the undersigned to Morgan Stanley from time to time. The
undersigned hereby acknowledges that Morgan Stanley reserves the right to terminate such Access at any time. In
the event that the undersigned wishes to have Morgan Stanley cease providing the Access, Morgan Stanley shall do
so provided Morgan Stanley is given 14 days prior written notice by the undersigned, such notice to be sent to such
address of Morgan Stanley as specified in the Agreement. The undersigned hereby acknowledges that the Access
will allow the third party to view Morgan Stanley reports and systems that may contain the undersigned’s data
compiled and processed by the Morgan Stanley Portfolio Accounting (“MSPA”) or other risk or reporting systems
maintained by Morgan Stanley. These reports are prepared for informational purposes only, and do not reflect the
official books and records of Morgan Stanley. The undersigned acknowledges that Morgan Stanley makes no
representation regarding the accuracy and/or completeness of the information contained in such reports and they
should not be relied on for accounting, audit, tax and/or legal purposes. Morgan Stanley assumes no duty to update
the information contained in the reports. These reports may contain information that has been provided and/or
modified by the undersigned and/or its agents and for which Morgan Stanley is not responsible. The undersigned
acknowledges that in the case of any discrepancy between the reports and applicable customer statements, the
undersigned and any interested third parties should rely on the applicable customer statements.
17. USE OF THE INTERNET. Undersigned agrees that the Internet is not a secure network and that any
communications transmitted over the Internet may, among other things, be intercepted or accessed by unauthorized
or unintended parties and may not remain confidential, or that such transmissions may not arrive in a complete,
unaltered or timely manner, and the undersigned assumes the risk arising therefrom.
18. RESOLUTION OF DISPUTES. ANY DISPUTE BETWEEN THE UNDERSIGNED AND A
MORGAN STANLEY ENTITY THAT IS REGISTERED AS A BROKER-DEALER WITH THE U.S.
SECURITIES AND EXCHANGE COMMISSION ARISING OUT OF, RELATING TO OR IN
CONNECTION WITH MORGAN STANLEY’S BUSINESS, ANY TRANSACTION BETWEEN US OR
THIS AGREEMENT SHALL BE DETERMINED, AT THE ELECTION OF THE UNDERSIGNED, BY
LITIGATION IN A COURT WITH PROPER JURISDICTION OR BY ARBITRATION. SHOULD THE
UNDERSIGNED CHOOSE TO PROCEED BY ARBITRATION, UNDERSIGNED AND MORGAN
STANLEY AGREE TO FOLLOW THE PROCEDURES, AND ABIDE BY THE REQUIREMENTS,
LISTED IN SECTION 19 BELOW. SHOULD THE UNDERSIGNED CHOOSE TO PROCEED BY
LITIGATION, UNDERSIGNED AND MORGAN STANLEY AGREE TO FOLLOW THE PROCEDURES,
AND ABIDE BY THE REQUIREMENTS, LISTED IN SECTION 20 BELOW.
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19. IF THE UNDERSIGNED CHOOSES ARBITRATION, THE UNDERSIGNED ACKNOWLEDGES
THAT:
•ARBITRATION AWARDS ARE GENERALLY FINAL AND BINDING; A PARTY’S ABILITY TO
HAVE A COURT REVERSE OR MODIFY AN ARBITRATION AWARD IS VERY LIMITED.
•THE PARTIES ARE GIVING UP THE RIGHT TO SUE EACH OTHER IN COURT, INCLUDING
THE RIGHT TO A TRIAL BY JURY, EXCEPT AS PROVIDED BY THE RULES OF THE
ARBITRATION FORUM IN WHICH A CLAIM IS FILED.
•THE ABILITY OF THE PARTIES TO OBTAIN DOCUMENTS, WITNESS STATEMENTS AND
OTHER DISCOVERY IS GENERALLY MORE LIMITED IN ARBITRATION THAN IN COURT
PROCEEDINGS.
•THE ARBITRATORS DO NOT HAVE TO EXPLAIN THE REASON(S) FOR THEIR AWARD
UNLESS, IN AN ELIGIBLE CASE, A JOINT REQUEST FOR AN EXPLAINED DECISION HAS
BEEN SUBMITTED BY ALL PARTIES TO THE PANEL AT LEAST 20 DAYS PRIOR TO THE
FIRST SCHEDULED HEARING DATE.
•THE PANEL OF ARBITRATORS MAY INCLUDE A MINORITY OF ARBITRATORS WHO WERE
OR ARE AFFILIATED WITH THE SECURITIES INDUSTRY.
•THE RULES OF SOME ARBITRATION FORUMS MAY IMPOSE TIME LIMITS FOR BRINGING
A CLAIM IN ARBITRATION. IN SOME CASES, A CLAIM THAT IS INELIGIBLE FOR
ARBITRATION MAY BE BROUGHT IN COURT.
•THE RULES OF THE ARBITRATION FORUM IN WHICH THE CLAIM IS FILED, AND ANY
AMENDMENTS THERETO, SHALL BE INCORPORATED INTO THIS AGREEMENT.
•ANY ARBITRATION SHALL BE CONDUCTED BEFORE FINRA. THE AWARD OF THE
ARBITRATORS, OR THE MAJORITY OF THEM, SHALL BE FINAL AND JUDGMENT UPON
THE AWARD RENDERED MAY BE ENTERED IN ANY STATE OR FEDERAL COURT HAVING
JURISDICTION. NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS CONSENT BY
MORGAN STANLEY TO AN AWARD OF PUNITIVE DAMAGES.
NO PERSON SHALL BRING A PUTATIVE OR CERTIFIED CLASS ACTION TO ARBITRATION, NOR
SEEK TO ENFORCE ANY PRE-DISPUTE ARBITRATION AGREEMENT AGAINST ANY PERSON
WHO, IF THE UNDERSIGNED HAS INITIATED IN COURT A PUTATIVE CLASS ACTION, IS A
MEMBER OF A PUTATIVE CLASS WHO HAS NOT OPTED OUT OF THE CLASS WITH RESPECT
TO ANY CLAIMS ENCOMPASSED BY THE PUTATIVE CLASS ACTION UNTIL:
(i)THE CLASS CERTIFICATION IS DENIED;
(ii) THE CLASS IS DECERTIFIED; OR
(iii) THE UNDERSIGNED IS EXCLUDED FROM THE CLASS BY THE COURT.
SUCH FORBEARANCE TO ENFORCE AN AGREEMENT TO ARBITRATE SHALL NOT
CONSTITUTE A WAIVER OF ANY SUCH RIGHTS UNDER THIS AGREEMENT EXCEPT TO THE
EXTENT STATED HEREIN.
20. IF THE UNDERSIGNED CHOOSES LITIGATION IN COURT. (A) UNLESS THE PARTIES
OTHERWISE AGREE IN WRITING WHEN ANY DISPUTE ARISES, LITIGATION MUST BE
INSTITUTED IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
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NEW YORK OR THE SUPREME COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK
COUNTY. THE UNDERSIGNED IRREVOCABLY CONSENTS TO THE JURISDICTION OF EITHER
OF THOSE COURTS AND (B) ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM
OR ACTION IS HEREBY WAIVED BY ALL PARTIES TO THIS AGREEMENT.
21. APPLICABLE LAW AND ENFORCEABILITY. THIS AGREEMENT, ANY CONTRACT,
THEIR ENFORCEMENT AND ANY DISPUTE BETWEEN US, WHETHER ARISING OUT OF OR
RELATING TO THE UNDERSIGNED’S ACCOUNTS OR OTHERWISE, SHALL BE GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK, EXCLUDING ITS CONFLICT OF LAW RULES. The
provisions of this Agreement shall be continuous, shall cover individually and collectively all accounts which the
undersigned may open or reopen with Morgan Stanley and shall inure to the benefit of Morgan Stanley’s present
and any successor organizations, irrespective of any change at any time in the personnel thereof and of the assigns
of Morgan Stanley’s present organizations or any successor organizations. This Agreement shall be binding upon
the undersigned and the estate, executors, administrators, trustees, agents, officers, directors and assigns of the
undersigned.
22. MODIFICATION AND WAIVER. The undersigned agrees that Morgan Stanley may modify the terms of
this Agreement at any time upon prior written notice. If the modifications are unacceptable, the undersigned agrees
to notify Morgan Stanley in writing within twenty days of the transmittal of such written notice. Morgan Stanley
may then terminate any or all of the undersigned’s accounts. The undersigned also agrees that any transactions or
Contracts entered into after such notification shall be subject to the modifications. The undersigned may not modify
this Agreement without Morgan Stanley’s written consent. To the extent this Agreement is inconsistent with any
other agreement between us, the provisions of this Agreement shall govern. Morgan Stanley’s failure to enforce
this Agreement or any of its terms, or any continued course of such conduct on Morgan Stanley’s part, shall not be
considered a waiver of any of Morgan Stanley’s rights.
23. AUTHORIZED INSTRUCTIONS. (a) The undersigned authorizes Morgan Stanley to accept instructions
by telephone, facsimile transmission, electronic mail, electronically, in writing or any other method that undersigned
and Morgan Stanley may agree to use, including but not limited to any instructions set forth in any letter of
authorization delivered by the undersigned to Morgan Stanley. The undersigned also agrees (i) to be bound by all
instructions that Morgan Stanley believes are authorized, regardless of the means by which those instructions have
been transmitted to Morgan Stanley, and (ii) that Morgan Stanley shall not be liable for any loss, cost or expense for
acting upon instructions that Morgan Stanley believed to be authorized.
(b) To the extent that the undersigned instructs Morgan Stanley to transfer cash, securities or other assets via any
electronic method, including but not limited to Morgan Stanley’s Interactive Cash Entry system, and is provided
with user identifications, passwords, authentication codes or other security devices or procedures (collectively,
“Passwords”), the undersigned is solely responsible for maintaining the confidentiality of its Passwords and for
preventing unauthorized use of the Passwords. The undersigned agrees that Morgan Stanley may rely on any
transmissions, instructions, information or other communications attributable to the Passwords, whether or not such
communications are sent by the undersigned, and that all such communications shall be attributable to and binding
upon the undersigned. The undersigned shall notify Morgan Stanley immediately upon learning or suspecting that
any Password has or may have become known to a party who may not be authorized. Promptly after Morgan
Stanley’s acknowledgement of such notice, the relevant Password will be terminated. The undersigned represents
that any instructions it provides to Morgan Stanley are correct, and acknowledges that Morgan Stanley will not
check or monitor the instruction on behalf of the undersigned before it is sent to the relevant agent bank.
24. SEVERABILITY. If any provision of this Agreement is or becomes inconsistent with any applicable
present or future law, rule or regulation, that provision will be deemed modified or, if necessary, rescinded in order
to comply with the relevant law, rule or regulation. All other provisions of this Agreement will continue and remain
in full force and effect. To the extent that this Agreement is not enforceable as to any Contract, this Agreement shall
remain in full force and effect and be enforceable in accordance with its terms as to all other Contracts. To the
extent this Agreement contains any provision which is inconsistent with provisions in any other Contract or
agreement between us, or of which the undersigned is a beneficiary, the provisions of this Agreement shall control
with respect to transactions contemplated hereunder.
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25. EXTRAORDINARY EVENTS. The undersigned agrees that Morgan Stanley will not be liable for any
loss caused, directly or indirectly, by government restrictions, exchange or market rulings, suspension of trading,
war (whether declared or undeclared), terrorist acts, insurrection, riots, fires, flooding, strikes, failure of utility
services, central clearinghouses, depositories or unaffiliated agent banks, or accidents, adverse weather or other
events of nature (including earthquakes, hurricanes and tornadoes) or other events or conditions beyond Morgan
Stanley’s control. In the event that any communications network, data processing system, operational system or
computer system Morgan Stanley uses or relies upon, regardless of ownership, is impaired or rendered inoperable,
Morgan Stanley will not be liable to the undersigned for any loss, liability, claim, damage or expense resulting,
directly or indirectly, from such impairment or inoperability.
26. LIMITATION OF LIABILITY. Morgan Stanley shall not be liable in connection with the execution,
clearing, handling, purchasing or selling of securities, commodities or other property or assets, or other action,
except in the event of gross negligence or willful misconduct on Morgan Stanley’s part. The undersigned
acknowledges that certain of its assets may be held inside or outside the United States by unaffiliated agent banks,
central clearinghouses and securities depositories. Morgan Stanley shall not be liable to the undersigned for any
loss, liability or expense incurred by the undersigned in connection with these arrangements except to the extent that
any such loss, liability or expense results from Morgan Stanley’s gross negligence or willful misconduct.
27. TAXES. Any and all payments or crediting of amounts by or on account of the undersigned shall be made
free and clear of and without deduction or withholding for or on account of any taxes, levies, imposts, duties,
charges, assessments or fees of any nature, including interest, penalties and additions thereto that are imposed by
any taxing authority (“Taxes”) unless a deduction or withholding is required by law; provided that if any Taxes are
deducted or withheld, then (i) the sum payable shall be increased as necessary so that after making all such
deductions or withholdings (including deductions or withholdings applicable to additional sums payable under this
Section) Morgan Stanley receives an amount equal to the sum it would have received had no such deductions or
withholdings been made, (ii) the undersigned shall make or cause to be made such deductions or withholdings in the
minimum amount required by law and (iii) the undersigned shall timely pay or cause to be paid the full amount
deducted or withheld to the relevant taxing authority within the time allowed and in accordance with Applicable
Law. The undersigned shall pay any present or future stamp, transfer, transaction, financial transaction or
documentary taxes, or any other excise or property taxes, charges or similar levies, including interest, penalties and
additions thereto (“Other Taxes”), that may be imposed in connection with the undersigned’s accounts, any
transaction therein, this Agreement or any security interest hereunder. Morgan Stanley is hereby authorized to
withhold Taxes from any payment or crediting of amounts or delivery made hereunder and remit such Taxes to the
relevant taxing authorities to the extent required in the reasonable judgment of Morgan Stanley. The undersigned
shall provide Morgan Stanley with any forms, documentation or information reasonably requested by Morgan
Stanley in order to reduce or eliminate withholding Taxes on payments made to the undersigned with respect to this
Agreement. In addition to the remedies provided by Section 11 of this Agreement and without prejudice to Morgan
Stanley’s rights under Section 28 of this Agreement, the undersigned shall promptly indemnify Morgan Stanley for
the full amount of any Taxes and Other Taxes paid by Morgan Stanley, on or with respect to any payment or
crediting of amounts or delivery by or on account of any obligation of the undersigned (including Taxes and Other
Taxes imposed or asserted on or attributable to amounts payable under this Section) and any reasonable expenses
arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant taxing authority. A certificate as to the amount of such payment delivered to the
undersigned shall be conclusive absent manifest error. Morgan Stanley’s rights and protections under this paragraph
shall survive the termination of any transaction or this Agreement.
28. INDEMNIFICATION. In consideration of Morgan Stanley’s carrying one or more accounts for the
undersigned, the undersigned agrees to indemnify and hold each Morgan Stanley Entity and each of its parents,
subsidiaries, affiliates, divisions, officers, directors, employees and agents harmless from and against, and shall pay
Morgan Stanley on demand, any and all losses, claims, damages, liabilities, Taxes, Other Taxes, and expenses
(including costs of collection, attorneys’ fees, court costs and other expenses), incurred by Morgan Stanley in
connection with or arising out of the undersigned’s Obligations, the enforcement of this Agreement by Morgan
Stanley, the provision of Access pursuant to Section 16(b) hereof, or the execution, purchase, sale, assignment,
exercise, endorsement or handling of any transaction for the account of the undersigned, or in connection with or
arising out of Morgan Stanley acting or declining to act as prime broker, except for actions taken or omitted to be
taken by Morgan Stanley which are a result of, or constitute, willful misconduct or gross negligence. The
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undersigned also agrees that Morgan Stanley shall have no responsibility for the undersigned’s compliance with
Applicable Law and that Morgan Stanley shall not be liable for delays in the transmission of orders or instructions
due to the breakdown or failure of transmission or communication facilities or any other cause beyond Morgan
Stanley’s control, including any mistake, error, negligence or misconduct of any exchange, association or clearing
house or their respective officers, directors, employees or agents, nor any failure by any such exchange, association
or clearing house to enforce its rules or regulations. Morgan Stanley’s rights and protections under this paragraph
shall survive the termination of any transaction or this Agreement. Each of the parents, subsidiaries, affiliates,
divisions, officers, directors, employees and agents of each Morgan Stanley Entity shall be entitled to enforce the
provisions of this Section as if it were a party hereto.
29. ASSIGNMENTS. Neither party may assign any of its rights or obligations under this Agreement without
the express written consent of the other party, except that MSCO may, with notice to the undersigned, assign any of
its rights or obligations to any other Morgan Stanley Entity that is registered as a broker-dealer with the SEC.
30. REPRESENTATIONS AND WARRANTIES. The undersigned hereby represents and warrants as of the
date hereof, which representations and warranties will be deemed repeated on each date on which a transaction or
Contract is effected for any of the undersigned’s accounts, or any securities or other property if delivered to or from
any such account, that:
(a)The undersigned will at all times maintain such securities or other property or assets in the accounts of the
undersigned for margin purposes, as is required by Morgan Stanley from time to time in Morgan Stanley’s
sole discretion.
(b)The undersigned will not transact on the basis of, or in reliance on, material, non-public information.
(c)Except as disclosed in writing to Morgan Stanley, the undersigned is not an employee of any exchange, or
of any corporation of which any exchange owns a majority of the capital stock, or of a member of any
exchange, or of a securities broker or dealer, or of a bank, trust company, insurance company or of any
corporation, firm or individual engaged in the business of dealing, either as agent or as principal, in
securities, bills of exchange, acceptances or other forms of commercial paper.
(d)The undersigned represents (which representations will be deemed to be repeated by it at all times until
termination of this Agreement) that it is not (i) an employee benefit plan, as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), subject to Title I of ERISA
(an "ERISA Plan") or a plan subject to Section 4975 of the Internal Revenue Code of 1986, as amended, or
subject to any other statute, regulation, procedure or restriction that is materially similar to Section 406 of
ERISA or Section 4975 of the Code (together with ERISA Plans, "Plans"), (ii) a person any of the assets of
whom constitute assets of a Plan, or (iii) in connection with any contract or transaction under this
Agreement, a person acting on behalf of a Plan, or using the assets of a Plan. It will provide notice to
Morgan Stanley in the event that it is aware that it is in breach of any aspect of this representation or is
aware that with the passing of time, giving of notice or expiry of any applicable grace period it will breach
this representation.
(e)Except as disclosed in writing to Morgan Stanley, the undersigned is not, and will not be, an affiliate (as
defined in Rule 144(a)(1) under the Securities Act of 1933) of the issuer of any security held in the
undersigned’s accounts or sold to or through Morgan Stanley and undertakes to inform Morgan Stanley of
any changes in such representation.
(f)The undersigned has full power and authority to execute and deliver this Agreement and to perform and
observe the provisions thereof.
(g)The execution, delivery and performance of this Agreement has been or will be, prior to entering into the
Agreement, duly authorized by all necessary internal action and do not or will not contravene any
requirement of law or any contractual restrictions or agreement binding on or affecting the undersigned or
its assets.
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(h)This Agreement has been or will be at the time it is entered into properly executed and delivered by the
undersigned and constitutes and will constitute a legal, valid and binding obligation enforceable in
accordance with its terms.
(i)The undersigned will promptly furnish to Morgan Stanley appropriate financial statements or similar
documents ( “Financial Information”) upon Morgan Stanley’s request and any other information as
Morgan Stanley may reasonably request. Since the date of the most recent financial statements provided to
Morgan Stanley, if any, there has been no material adverse change in the information set forth therein, and,
if the undersigned is not a natural person, the business, financial condition, results, operations or prospects
of the undersigned. In the event Morgan Stanley and the undersigned have entered into an ISDA Master
Agreement (the “ISDA”), to the extent Financial Information is delivered to Morgan Stanley in accordance
with the ISDA, such Financial Information shall be deemed concurrently delivered hereunder.
(j)No one that is not a party to this Agreement has any interest in any account of the undersigned with
Morgan Stanley. The undersigned owns the Collateral assigned, or to be assigned, to Morgan Stanley
under each Contract free and clear of any lien, claims, encumbrances and transfer restrictions. Upon
Morgan Stanley obtaining possession or control of the Collateral or upon the filing of appropriate financing
statements, Morgan Stanley will have, as security for the undersigned’s Obligations, a perfected first-
priority security interest in the Collateral. No further filings or recordings with any governmental body,
agency or official are necessary to create or perfect the security interest in the Collateral.
(k)The undersigned acknowledges that it is acting as principal (and not as agent or in any other capacity,
fiduciary or otherwise) for its own account, and it has made its own independent decisions to enter into this
Agreement and Contracts and as to whether its activities and investments thereunder are appropriate or
proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary.
It is not relying on any communication (written or oral) of Morgan Stanley as investment advice or as a
recommendation to enter into any particular transaction; it being understood that information and
explanations related to the terms and conditions of a transaction shall not be considered investment advice
or a recommendation to enter into a transaction. No communication (written or oral) received from
Morgan Stanley shall be deemed to be an assurance or guarantee as to the expected results of a transaction.
It is capable of assessing the merits of and understanding (on its own behalf or through independent
professional advice), and understands and accepts, the terms, conditions and risks of its transactions, and is
capable of assuming, and assumes, such risks. Morgan Stanley is not acting as a fiduciary for an adviser to
it in any respect, and does not perform any analysis or make any judgment on any matters pertaining to the
suitability of any order or offer any opinion, judgment or other type of information pertaining to the nature,
value, potential or suitability of any particular transaction.
(l)The undersigned acknowledges and agrees that Morgan Stanley is not acting hereunder as a municipal
advisor within the meaning of Section 975 of the Dodd-Frank Wall Street Reform & Consumer Protection
Act.
31. ACKNOWLEDGMENTS. The undersigned hereby consents and acknowledges that:
(a)The undersigned has received, and agrees to be bound by, Morgan Stanley’s Credit Charge and Margin
Information Statement, which is incorporated herein by reference;
(b)The undersigned has received a copy of this Agreement and has read and understood its terms; and
(c)All conversations between us may be recorded on tape or otherwise.
32. COUNTRY-SPECIFIC TERMS. This Section 32 shall apply solely to transactions in the specified
securities and markets. In the event of any inconsistency between this Section 32 and the remainder of
this Agreement, the below shall govern with respect to the specific securities and markets referred to therein (but the
remainder of this Agreement shall govern with respect to all other securities and markets.)
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(a)Australia: Where Morgan Stanley has provided the undersigned with a locate in Australian Securities (for
the purpose of this Agreement, Australian Securities means securities that Morgan Stanley determines to
be Australian Securities), Morgan Stanley unconditionally commits to deliver or procure the delivery of
such securities for settlement. Such commitment will be limited to the amount of securities for which the
locate has been provided and is valid only for the date identified on such locate.
(b)Hong Kong: The parties confirm that the undersigned may from time to time obtain Hong Kong listed
securities (“HK Securities”) from Morgan Stanley to settle short sales by the undersigned.
The parties further confirm that under the terms of this Agreement, in the event that Morgan Stanley makes
delivery on behalf of the undersigned of HK Securities sold short by the undersigned, the undersigned will
be required to return equivalent securities, as well as to compensate Morgan Stanley for any payments that
would be received by Morgan Stanley assuming that the HK Securities delivered on the undersigned’s
behalf were retained by Morgan Stanley, including a specified payment as defined under section 19(16) of
the Stamp Duty Ordinance.
The parties further acknowledge and agree that, after the undersigned delivers Collateral (as defined in this
Agreement) to Morgan Stanley that consists of HK Securities, Morgan Stanley may decide in its discretion
that it requires that existing or substitute security be held by Morgan Stanley in another manner, in which
case Morgan Stanley may exercise its rights pursuant to Section
12 of this Agreement (“Maintenance of the
Undersigned’s Collateral”) by transferring such HK Securities into any of Morgan Stanley’s general
accounts. The undersigned hereby grants Morgan Stanley with a limited power of attorney for the purpose
of certifying, as the undersigned’s attorney in fact, this Agreement and submitting any required
documentation to the appropriate regulatory authority.
(c)South Africa: Where the undersigned, pursuant to this Agreement, establishes short positions on Morgan
Stanley’s books in South African securities (which shall include any listed security contemplated by the
South African Securities Transfer Tax Act No. 25, 2007 as amended or updated from time to time), the
undersigned hereby undertakes that:
The undersigned will redeliver listed securities of the same kind and quality to Morgan Stanley within a
period of twelve (12) months from the date of transfer of those South African securities by Morgan Stanley
on behalf of the undersigned. The undersigned will compensate Morgan Stanley for any distributions in
respect of South African securities that Morgan Stanley would have been entitled to receive had it not
made the stocks available to the undersigned.
Where Morgan Stanley rehypothecates or otherwise uses the undersigned’s South African securities (as
permitted pursuant to this Agreement), Morgan Stanley hereby undertakes that:
Morgan Stanley will redeliver listed securities of the same kind and quality to the undersigned within a
period of 12 months from the date of transfer of those South African securities by Morgan Stanley.
Morgan Stanley will compensate the undersigned for any distributions in respect of South African
securities that the undersigned would have been entitled to receive had it not made the stocks available to
Morgan Stanley.
33. COUNTERPARTS; THIRD PARTY BENEFICIARIES. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if such signatures were upon the same
instrument. A facsimile or photocopied signature (which may be delivered by facsimile, the exchange of PDF files
or other electronic means) shall be deemed to be the functional equivalent of an original for all purposes. The
execution by Morgan Stanley & Co. LLC of this Agreement shall be deemed to be on its own behalf and as agent on
behalf of each other Morgan Stanley Entity, with the same effect as if each other Morgan Stanley Entity had signed
the Agreement in its own name directly. Except as otherwise may be explicitly set forth herein, this Agreement is
not intended to confer any rights, benefits, remedies, obligations or liabilities to any person other than the parties
hereto (including each Morgan Stanley Entity) and their respective successors and assigns.
14
ADDITIONAL PROVISIONS RELATED TO CURRENCY CONTRACTS
1.COLLATERAL. Pursuant to Section 30(a), the undersigned shall at all times maintain with Morgan Stanley
Collateral in the amount and form of cash and securities acceptable to Morgan Stanley in order to secure the obligations
of the undersigned under all open FX Transactions entered into under Section 6 (the “Margin Requirement”). Morgan
Stanley shall settle all FX Transactions with the undersigned on a secured basis only, such that Morgan Stanley’s
payment obligations to the undersigned under the terms of an FX Transaction shall be made (a) prior to the receipt of the
undersigned’s counterpayment thereunder only to the extent that the amount by which Collateral posted by the
undersigned exceeds the Margin Requirement is greater than such counterpayment or the U.S. Dollar equivalent thereof,
or (b) after Morgan Stanley has confirmed receipt of the undersigned’s counterpayment.
In addition, if (i) Applicable Law requires Morgan Stanley to exchange variation margin with its counterparties with
respect to certain FX Transactions, or Morgan Stanley determines as a commercial matter that it will, in its reasonable
discretion, exchange variation margin with its counterparties with respect to certain FX Transactions, and (ii) the
undersigned enters into such FX Transactions with Morgan Stanley hereunder (“Applicable FX Transactions”), then the
following terms shall apply:
(a) Collateral Account. Morgan Stanley shall establish a separate collateral account on its books and records (the “FX
Collateral Account”) in order to process the daily bilateral exchange of Collateral (in the form of USD cash)
between the FX Collateral Account and your prime brokerage account at Morgan Stanley (the “PB Account”) in
connection with the Applicable FX Transactions.
(b) Transfers. On each Business Day, Morgan Stanley shall calculate the value of the Applicable FX Transactions
using such methods, procedures, rules, inputs and data sources that it deems appropriate in its commercially
reasonable discretion. To the extent there are unrealized gains on the Applicable FX Transactions, Morgan Stanley
shall credit the equivalent amount in USD cash to the PB Account, and make a corresponding debit in the FX
Collateral Account. To the extent there are unrealized losses on the Applicable FX Transactions (and to the extent
consistent with Applicable Law), Morgan Stanley shall debit the equivalent amount in USD cash from the PB
Account, and make a corresponding credit in the FX Collateral Account.
(c) Interest. The undersigned will pay interest on debits from, and will receive interest on credits to, the FX
Collateral Account, at such rates as are established by Morgan Stanley from time to time.
2.LIQUIDATION. If an Event of Default occurs, Morgan Stanley, in addition to the rights enumerated in
Section 8, shall have the right, to terminate and liquidate any or all outstanding FX Transactions between the
parties. Morgan Stanley shall achieve such liquidation by (A) closing out each relevant FX Transaction and
reasonably determining in good faith (i) market damages equal to the difference between the market value and the
contract value of such FX Transaction and (ii) a settlement payment in an amount equal to the net amount of such
damages; and (B) setting off the settlement payment, if any, that Morgan Stanley owes to the undersigned as a result
of such liquidation and all Collateral or Collateral held by or for Morgan Stanley against the settlement payment that
the undersigned owes to Morgan Stanley as a result of such liquidation, so that all such amounts are netted to a
single liquidated amount payable in U.S. Dollars by one party to the other party, as appropriate. Morgan Stanley
may, without limiting its rights hereunder, also set off amounts that the undersigned owes to any Morgan Stanley
Entity under any other Obligations or owed by any Morgan Stanley Entity to the undersigned. Any amounts owed
by the parties hereunder shall accrue interest or be discounted at such rates as Morgan Stanley shall determine.
3. FORCE MAJEURE EVENTS. (a) If a Force Majeure Event (as defined below) occurs with
respect to any Deliverable FX Transaction and is still in effect, then (but subject to clause (b) below) either party
may, by notice to the other party on any day or days after the Waiting Period (as defined below) expires, require the
close-out and liquidation of the Obligations under any or all of the Affected FX Transactions (as defined below) in
accordance with the provisions of Section 2 of these Additional Provisions Related to Currency Contracts and,
Morgan Stanley shall perform the calculation required under such Section 2 in respect of all Affected FX
Transactions which either party determines to liquidate. If a party elects to so liquidate less than all Affected FX
Transactions, it may liquidate additional Affected FX Transactions on a later day or days if the relevant Force
Majeure Event is still in effect.
15
(d)If the Settlement Date of a Deliverable FX Transaction which is an Affected FX Transaction under clause
(a) above falls during the Waiting Period of the relevant Force Majeure Event, then such Settlement Date will be
deferred to the first Business Day (or the first day which, but for such event, would have been a Business Day) after
the end of that Waiting Period (or, in the case of split settlement, the first Local Banking Day (as defined below) or
the first day which, but for such event, would have been a Local Banking Day, after the end of the Waiting Period).
Compensation for this deferral shall be at then current market rates as determined in a commercially reasonable
manner by Morgan Stanley under clause (a).
(e)If a Force Majeure Event has occurred, the Affected Party shall promptly give notice thereof to the other
party. If an event occurs that would otherwise constitute both a Force Majeure Event and an event that would give
Morgan Stanley rights under Section 8, that event will be treated as a Force Majeure Event.
(f)For purposes herein, “Force Majeure Event”, on any day determined as if such day were a Settlement Date
of a Deliverable FX Transaction (even if it is not), means (i) either party, by reason of force majeure or act of state,
is prevented from or hindered or delayed in delivering or receiving, or it is impossible to deliver or receive, any
currency in respect of an Obligation hereunder, and which event is beyond the control of such party and which such
party, with reasonable diligence, cannot overcome, or (ii) it is unlawful for either party to deliver or receive a
payment of any currency in respect of an Obligation hereunder. A party whose delivery or receipt of currency has
been or would be so prevented, hindered or delayed or made unlawful or impossible is an “Affected Party”, and a
Deliverable FX Transaction under which performance has been or would be so prevented, hindered or delayed or
made unlawful or impossible is an “Affected FX Transaction”. Notwithstanding anything to the contrary in this
Agreement or the FX Definitions, circumstances that may give rise, contractually or under law, to an illegality,
impossibility or other force majeure event with respect to the Reference Currency of a Non-Deliverable FX
Transaction shall have no effect on such transaction; provided, however, that such Non-Deliverable FX Transaction
will be subject to such Disruption Events or Disruption Fallbacks as set forth in the relevant confirmations.
(g)For purposes herein, “Waiting Period”, in respect of a Force Majeure Event, means the first three days after
such event occurs which are Business Days or which, but for such event, would have been Business Days.
(h)For purposes herein, “Local Banking Day” means (i) for any currency, a day on which commercial banks
effect deliveries of that currency in accordance with the market practice of the relevant foreign exchange market,
and (ii) for any party, a day in the location of the applicable office of such party on which commercial banks in that
location are not authorized or required by law to close.
4. NOTICES. The addresses for notices or communications relating to FX Transactions are:
For Morgan Stanley:
Morgan Stanley & Co. LLC
1585 Broadway, 3rd floor
New York, NY 10036-8293
Attention: Foreign Exchange Trading Department
Facsimile No.: 212-761-0296 Telephone No.: 212-761-2700
Swift Number: MSNYUS33FXO
Answerback: FXMS
5. MISCELLANEOUS. In the event of any inconsistency between the provisions of any confirmation
relating to an FX Transaction and these Additional Provisions Related to Currency Contracts, such confirmation
shall prevail for purposes of the relevant FX Transaction. In the event of any inconsistency between these
Additional Provisions Related to Currency Contracts and the FX Definitions, these Additional Provisions Related to
Currency Contracts shall prevail.
0
PROXY DISCLOSURE STATEMENT
Under the rules of the Securities and Exchange Commission, we are required, upon registrant’s request, to provide
your name, address and security positions to issuers of securities that you own. The issuer may use this information
exclusively for purposes of corporate communications. _____(Check) IF THIS BOX IS CHECKED, MORGAN
STANLEY WILL DISCLOSE THE NAME AND ADDRESS INFORMATION FOR THE ACCOUNT
ESTABLISHED BY THIS AGREEMENT TO ISSUERS OF SECURITIES WHICH I OWN.
_______(Check) YES, WE WOULD LIKE THE ADDITIONAL PROVISIONS RELATED TO CURRENCY
CONTRACTS TO APPLY.
NOTICE: THIS AGREEMENT CONTAINS A PRE-DISPUTE ARBITRATION CLAUSE IN SECTION
[19] ON PAGE [8] HEREIN.
DATE: [Date]
ENTITY NAME, by its authorized signatory MORGAN STANLEY & CO. LLC, on its own behalf
and on behalf of each Morgan Stanley Entity
By: ______________________________
Name:
Title:
[SIGNATURE1]
By: _______________________________
Name: [SIG_NAME1]
Title: [SIG_POSITION1]
Margin Disclosure Document
Morgan Stanley is required to furnish this document to non-institutional accounts
1
to provide some basic facts about
purchasing securities on margin, and to describe the risks involved with trading securities in a margin account. You
should carefully review this document and the margin agreement governing your account.
2
If you have any
questions, please consult with your account representative.
When you purchase securities, you may pay for the securities in full or you may borrow part of the purchase price
from us. If you choose to borrow funds from Morgan Stanley, you will open a margin account with us. The
securities in your account are the Firms collateral for the loan to you. If the securities in your account decline in
value, so does the value of the collateral supporting your loan. As a result, the Firm can take action such as issuing
a margin call and/or selling securities or other assets in any of your accounts held with the Firm in order to maintain
the required equity in the account.
It is important that you fully understand the risks in trading securities in margin. These risks include, but are not
limited to the following:
You can lose more funds than you deposit in the margin account.
The Firm can force the sale of securities or other assets in your account(s).
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The Firm can sell your securities or other assets without contacting you.
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1
Non-institutional accounts are defined as other than: (1) a bank, savings and loan association, insurance company, or registered
investment company; (2) an investment adviser registered either with the SEC under section 203 of the Investment Advisors Act
of 1940 or with a state securities commission (or agency or office performing similar functions); or (3) any other entity (whether
a natural person, corporation, partnership, trust, or otherwise) with total assets of at least $50 million. If you do not meet this
definition, Morgan Stanley is not required to send this notice to you.
2
In the event of any conflict between this document and any agreements that you have with Morgan Stanley, the latter will
govern.
MARGIN CUSTOMER ONLY
CREDIT CHARGE AND MARGIN INFORMATION
Dear Customer:
We wish to inform you of certain procedures regarding interest charges on credit extended for the financing of
margin and other securities transactions.
Interest charges and determination of debit balance. Interest will be charged on the net debit balance (as described
below) in your account which is comprised of all credit extended to or maintained for your account by us for the
purpose of purchasing, carrying or trading in any security or otherwise. Extension or maintenance of credit is
governed by, and loan value is based on Regulation T of the board of Governors of the Federal Reserve System and
any exchange or self-regulatory agency to whose jurisdiction we are subject. Each extension of credit creates or
increases the debit balance upon which interest is charged. Interest will be computed on the net debit balance in
your account across all types marked daily to market.
Net debit balances used for interest purposes. The net debit balance is calculated daily to include the credit
extended to you across your cash or margin account and 5% of the market value in the short account as that value
relates to the sale of non-U.S. securities. In effect, the interest is calculated off the total cash balance in your
account (including short sale proceeds) minus 100% of the short market value of your U.S. securities and 105% of
the short market value of your non-U.S. securities. Both of these short market values are rounded up to the nearest
nickel.
Interest rate. The annual rate of interest charged on your daily net debit balance consists of the base rate as agreed
upon between us, which may be a published rate (such as Fed Funds) or the Prime Broker Rate. The daily
determination of the Prime Broker Rate is at our sole discretion and may be affected by such rates as those
published by The Wall Street Journal, The New York Times and other sources recognized in the industry to be
reliable indications of comparable rates for such loans.
Any change in the base rates will result in a corresponding change in the interest rate charged in your account which
change will be made without notice to you. However, should we find it necessary to increase the interest rate for
any other reason, you will be given at least thirty days written notice prior to such change. The percentages that are
added to our base rate may be varied in individual situations at our discretion. Each affected customer will receive
prior notification thereof.
What your monthly statement will show. Your monthly statement will show all debit and credit entries for the
period and the dates of such entries, the actual debit balance upon which interest is computed, the daily interest
rates, the beginning and ending dates of the interest period, the opening and closing interest balances for the period,
and the total interest charged for the period. Your net debit balance includes interest charged to your account from
prior interest periods which you have not paid.
Interest, which is calculated daily and usually posted on the first Business Day of the following month, is reflected
in the monthly statement of account. You should retain the previous monthly statement in order to verify the
amount of interest payable on your account.
The following example is presented for the purpose of more clearly stating the method by which interest is
computed using the daily net debit balance for the interest period.
HOW TO COMPUTE INTEREST
From To
Net Debit
(Credit)
Effective
Rate
Number
of Days Total Interest
7/1 7/10 $ 10,000 7.00% 10 $19.44
7/11 7/28 $ 30,000 6.25% 18 $93.74
7/29 7/30 ($50,000) 5.75% 2 ($15.97)
7/31 ($100,000) 5.50% 1 ($15.27)
Total: 31 $81.94
Mark to the market. Where the aggregate market value of short positions increases, the balance in the short account
type will be increased accordingly by crediting that account and debiting the margin account. Such entries which
are processed periodically and commonly referred to as “mark to the market” affect the balance in the margin
account. For interest purposes, this balance is adjusted daily for the mark to market on the short securities, as
described above. Should the aggregate market value of the short positions later decrease, we would mark the
account to the market to reflect the decrease.
Other Charges. Separate interest charges may be made and debit balances can arise from payments we make to you
before the regular settlement date, or from your failure to pay for securities purchased in either a cash or margin
account by settlement date.
Liens, additional collateral and general policies. On all securities which this firm or any affiliate has or at any time
may hold or carry for you (either individually or jointly with others) or which may be deposited with us for any
purpose, including safekeeping , we, as pledgee, have a general lien for the discharge of all your obligations to
Morgan Stanley & Co. LLC (“Morgan Stanley”), however arising, irrespective of the number of accounts you
maintain with Morgan Stanley or its affiliates. You will be required to deposit collateral in accordance with the
rules and regulations of the Federal Reserve system, the New York Stock Exchange, Inc., or any other self -
regulatory agency under whose jurisdiction we fall. Morgan Stanley has established “house” margin policies which
generally require the maintenance of equity in your account above that required by applicable rules. Accordingly,
Morgan Stanley may but need not, require you to deposit additional collateral as Morgan Stanley, in its sole
discretion, determines is needed as security for your obligations to Morgan Stanley. In determining whether to
require additional collateral, Morgan Stanley reviews each account individually and considers factors such as, but
not limited to, marketability and volatility in relation to securities held, concentrations in particular issues, current
market conditions, frequency of activity, size of account and length of time the account has been open. Although in
your monthly statement Morgan Stanley may base the value of certain securities on pricing information supplied by
outside pricing services1, Morgan Stanley reserves the right in its sole discretion to value your securities at any time
and without prior notice by reference to prices that reflect current market conditions obtained directly from our
trading desks that deal in the securities, or from other sources. Please consult your broker or representative for
additional information regarding Morgan Stanley’s margin policies.
Very truly yours,
MORGAN STANLEY & CO. LLC
1 Morgan Stanley considers these services to be reliable, but we do not represent that they are accurate, complete or
timely and we are not responsible for any inaccuracies or errors in the pricing service reports.
Annexure C
(Multicurrency — Cross Border)
ISDA
“
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of ......................................
............................................................... and ......................................................................
have entered and/or anticipate entering into one or more transactions (each a “Transaction”) that are or will
be governed by this Master Agreement, which includes the schedule (the “Schedule”), and the documents
and other confirming evidence (each a “Confirmation”) exchanged between the parties confirming those
Transactions.
Accordingly, the parties agree as follows: —
1. Interpretation
(a) Definitions. The terms defined in Section 14 and in the Schedule will have the meanings therein
specified for the purpose of this Master Agreement.
(b) Inconsistency. In the event of any inconsistency between the provisions of the Schedule and the
other provisions of this Master Agreement, the Schedule will prevail. In the event of any inconsistency
between the provisions of any Confirmation and this Master Agreement (including the Schedule), such
Confirmation will prevail for the purpose of the relevant Transaction.
(c) Single Agreement. All Transactions are entered into in reliance on the fact that this Master
Agreement and all Confirmations form a single agreement between the parties (collectively referred to as
this “Agreement”), and the parties would not otherwise enter into any Transactions.
2. Obligations
(a) General Conditions.
(i) Each party will make each payment or delivery specified in each Confirmation to be made by
it, subject to the other provisions of this Agreement.
(ii) Payments under this Agreement will be made on the due date for value on that date in the place
of the account specified in the relevant Confirmation or otherwise pursuant to this Agreement, in
freely transferable funds and in the manner customary for payments in the required currency. Where
settlement is by delivery (that is, other than by payment), such delivery will be made for receipt on
the due date in the manner customary for the relevant obligation unless otherwise specified in the
relevant Confirmation or elsewhere in this Agreement.
(iii) Each obligation of each party under Section 2(a)(i) is subject to (1) the condition precedent
that no Event of Default or Potential Event of Default with respect to the other party has occurred
and is continuing, (2) the condition precedent that no Early Termination Date in respect of the
relevant Transaction has occurred or been effectively designated and (3) each other applicable
condition precedent specified in this Agreement.
Copyright
”
1992 by International Swap Dealers Association, Inc.
2
ISDA⁄ 1992
(b) Change of Account. Either party may change its account for receiving a payment or delivery by
giving notice to the other party at least five Local Business Days prior to the scheduled date for the payment
or delivery to which such change applies unless such other party gives timely notice of a reasonable objection
to such change.
(c) Netting. If on any date amounts would otherwise be payable:—
(i) in the same currency; and
(ii) in respect of the same Transaction,
by each party to the other, then, on such date, each party’s obligation to make payment of any such amount
will be automatically satisfied and discharged and, if the aggregate amount that would otherwise have been
payable by one party exceeds the aggregate amount that would otherwise have been payable by the other
party, replaced by an obligation upon the party by whom the larger aggregate amount would have been
payable to pay to the other party the excess of the larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount will be determined in respect
of all amounts payable on the same date in the same currency in respect of such Transactions, regardless of
whether such amounts are payable in respect of the same Transaction. The election may be made in the
Schedule or a Confirmation by specifying that subparagraph (ii) above will not apply to the Transactions
identified as being subject to the election, together with the starting date (in which case subparagraph (ii)
above will not, or will cease to, apply to such Transactions from such date). This election may be made
separately for different groups of Transactions and will apply separately to each pairing of Offices through
which the parties make and receive payments or deliveries.
(d) Deduction or Withholding for Tax.
(i) Gross-Up. All payments under this Agreement will be made without any deduction or
withholding for or on account of any Tax unless such deduction or withholding is required by any
applicable law, as modified by the practice of any relevant governmental revenue authority, then in
effect. If a party is so required to deduct or withhold, then that party (“X”) will:—
(1) promptly notify the other party (“Y”) of such requirement;
(2) pay to the relevant authorities the full amount required to be deducted or withheld
(including the full amount required to be deducted or withheld from any additional amount
paid by X to Y under this Section 2(d)) promptly upon the earlier of determining that such
deduction or withholding is required or receiving notice that such amount has been assessed
against Y;
(3) promptly forward to Y an official receipt (or a certified copy), or other documentation
reasonably acceptable to Y, evidencing such payment to such authorities; and
(4) if such Tax is an Indemnifiable Tax, pay to Y, in addition to the payment to which Y is
otherwise entitled under this Agreement, such additional amount as is necessary to ensure that
the net amount actually received by Y (free and clear of Indemnifiable Taxes, whether assessed
against X or Y) will equal the full amount Y would have received had no such deduction or
withholding been required. However, X will not be required to pay any additional amount to
Y to the extent that it would not be required to be paid but for:—
(A) the failure by Y to comply with or perform any agreement contained in
Section 4(a)(i), 4(a)(iii) or 4(d); or
(B) the failure of a representation made by Y pursuant to Section 3(f) to be accurate and
true unless such failure would not have occurred but for (I) any action taken by a taxing
authority, or brought in a court of competent jurisdiction, on or after the date on which a
Transaction is entered into (regardless of whether such action is taken or brought with
respect to a party to this Agreement) or (II) a Change in Tax Law.
3
ISDA⁄ 1992
(ii) Liability. If: —
(1) X is required by any applicable law, as modified by the practice of any relevant
governmental revenue authority, to make any deduction or withholding in respect of which X
would not be required to pay an additional amount to Y under Section 2(d)(i)(4);
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed directly against X,
then, except to the extent Y has satisfied or then satisfies the liability resulting from such Tax, Y
will promptly pay to X the amount of such liability (including any related liability for interest, but
including any related liability for penalties only if Y has failed to comply with or perform any
agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d)).
(e) Default Interest; Other Amounts. Prior to the occurrence or effective designation of an Early
Termination Date in respect of the relevant Transaction, a party that defaults in the performance of any
payment obligation will, to the extent permitted by law and subject to Section 6(c), be required to pay interest
(before as well as after judgment) on the overdue amount to the other party on demand in the same currency
as such overdue amount, for the period from (and including) the original due date for payment to (but
excluding) the date of actual payment, at the Default Rate. Such interest will be calculated on the basis of
daily compounding and the actual number of days elapsed. If, prior to the occurrence or effective designation
of an Early Termination Date in respect of the relevant Transaction, a party defaults in the performance of
any obligation required to be settled by delivery, it will compensate the other party on demand if and to the
extent provided for in the relevant Confirmation or elsewhere in this Agreement.
3. Representations
Each party represents to the other party (which representations will be deemed to be repeated by each party
on each date on which a Transaction is entered into and, in the case of the representations in Section 3(f), at
all times until the termination of this Agreement) that:—
(a) Basic Representations.
(i) Status. It is duly organised and validly existing under the laws of the jurisdiction of its
organisation or incorporation and, if relevant under such laws, in good standing;
(ii) Powers. It has the power to execute this Agreement and any other documentation relating to
this Agreement to which it is a party, to deliver this Agreement and any other documentation relating
to this Agreement that it is required by this Agreement to deliver and to perform its obligations
under this Agreement and any obligations it has under any Credit Support Document to which it is
a party and has taken all necessary action to authorise such execution, delivery and performance;
(iii) No Violation or Conflict. Such execution, delivery and performance do not violate or conflict
with any law applicable to it, any provision of its constitutional documents, any order or judgment
of any court or other agency of government applicable to it or any of its assets or any contractual
restriction binding on or affecting it or any of its assets;
(iv) Consents. All governmental and other consents that are required to have been obtained by it
with respect to this Agreement or any Credit Support Document to which it is a party have been
obtained and are in full force and effect and all conditions of any such consents have been complied
with; and
(v) Obligations Binding. Its obligations under this Agreement and any Credit Support Document
to which it is a party constitute its legal, valid and binding obligations, enforceable in accordance
with their respective terms (subject to applicable bankruptcy, reorganisation, insolvency,
moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to
equitable principles of general application (regardless of whether enforcement is sought in a
proceeding in equity or at law)).
4
ISDA⁄ 1992
(b) Absence of Certain Events. No Event of Default or Potential Event of Default or, to its knowledge,
Termination Event with respect to it has occurred and is continuing and no such event or circumstance would
occur as a result of its entering into or performing its obligations under this Agreement or any Credit Support
Document to which it is a party.
(c) Absence of Litigation. There is not pending or, to its knowledge, threatened against it or any of its
Affiliates any action, suit or proceeding at law or in equity or before any court, tribunal, governmental body,
agency or official or any arbitrator that is likely to affect the legality, validity or enforceability against it of
this Agreement or any Credit Support Document to which it is a party or its ability to perform its obligations
under this Agreement or such Credit Support Document.
(d) Accuracy of Specified Information. All applicable information that is furnished in writing by or on
behalf of it to the other party and is identified for the purpose of this Section 3(d) in the Schedule is, as of
the date of the information, true, accurate and complete in every material respect.
(e) Payer Tax Representation. Each representation specified in the Schedule as being made by it for
the purpose of this Section 3(e) is accurate and true.
(f) Payee Tax Representations. Each representation specified in the Schedule as being made by it for
the purpose of this Section 3(f) is accurate and true.
4. Agreements
Each party agrees with the other that, so long as either party has or may have any obligation under this
Agreement or under any Credit Support Document to which it is a party:—
(a) Furnish Specified Information. It will deliver to the other party or, in certain cases under
subparagraph (iii) below, to such government or taxing authority as the other party reasonably directs:—
(i) any forms, documents or certificates relating to taxation specified in the Schedule or any
Confirmation;
(ii) any other documents specified in the Schedule or any Confirmation; and
(iii) upon reasonable demand by such other party, any form or document that may be required or
reasonably requested in writing in order to allow such other party or its Credit Support Provider to
make a payment under this Agreement or any applicable Credit Support Document without any
deduction or withholding for or on account of any Tax or with such deduction or withholding at a
reduced rate (so long as the completion, execution or submission of such form or document would
not materially prejudice the legal or commercial position of the party in receipt of such demand),
with any such form or document to be accurate and completed in a manner reasonably satisfactory
to such other party and to be executed and to be delivered with any reasonably required certification,
in each case by the date specified in the Schedule or such Confirmation or, if none is specified, as soon as
reasonably practicable.
(b) Maintain Authorisations. It will use all reasonable efforts to maintain in full force and effect all
consents of any governmental or other authority that are required to be obtained by it with respect to this
Agreement or any Credit Support Document to which it is a party and will use all reasonable efforts to obtain
any that may become necessary in the future.
(c) Comply with Laws. It will comply in all material respects with all applicable laws and orders to
which it may be subject if failure so to comply would materially impair its ability to perform its obligations
under this Agreement or any Credit Support Document to which it is a party.
(d) Tax Agreement. It will give notice of any failure of a representation made by it under Section 3(f)
to be accurate and true promptly upon learning of such failure.
(e) Payment of Stamp Tax. Subject to Section 11, it will pay any Stamp Tax levied or imposed upon
it or in respect of its execution or performance of this Agreement by a jurisdiction in which it is incorporated,
5
ISDA⁄ 1992
organised, managed and controlled, or considered to have its seat, or in which a branch or office through
which it is acting for the purpose of this Agreement is located (“Stamp Tax Jurisdiction”) and will indemnify
the other party against any Stamp Tax levied or imposed upon the other party or in respect of the other party’s
execution or performance of this Agreement by any such Stamp Tax Jurisdiction which is not also a Stamp
Tax Jurisdiction with respect to the other party.
5. Events of Default and Termination Events
(a) Events of Default. The occurrence at any time with respect to a party or, if applicable, any Credit
Support Provider of such party or any Specified Entity of such party of any of the following events constitutes
an event of default (an “Event of Default”) with respect to such party:—
(i) Failure to Pay or Deliver. Failure by the party to make, when due, any payment under this
Agreement or delivery under Section 2(a)(i) or 2(e) required to be made by it if such failure is not
remedied on or before the third Local Business Day after notice of such failure is given to the party;
(ii) Breach of Agreement. Failure by the party to comply with or perform any agreement or
obligation (other than an obligation to make any payment under this Agreement or delivery under
Section 2(a)(i) or 2(e) or to give notice of a Termination Event or any agreement or obligation
under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied with or performed by the party in accordance
with this Agreement if such failure is not remedied on or before the thirtieth day after notice of
such failure is given to the party;
(iii) Credit Support Default.
(1) Failure by the party or any Credit Support Provider of such party to comply with or
perform any agreement or obligation to be complied with or performed by it in accordance
with any Credit Support Document if such failure is continuing after any applicable grace
period has elapsed;
(2) the expiration or termination of such Credit Support Document or the failing or ceasing
of such Credit Support Document to be in full force and effect for the purpose of this Agreement
(in either case other than in accordance with its terms) prior to the satisfaction of all obligations
of such party under each Transaction to which such Credit Support Document relates without
the written consent of the other party; or
(3) the party or such Credit Support Provider disaffirms, disclaims, repudiates or rejects, in
whole or in part, or challenges the validity of, such Credit Support Document;
(iv) Misrepresentation. A representation (other than a representation under Section 3(e) or (f))
made or repeated or deemed to have been made or repeated by the party or any Credit Support
Provider of such party in this Agreement or any Credit Support Document proves to have been
incorrect or misleading in any material respect when made or repeated or deemed to have been made
or repeated;
(v) Default under Specified Transaction. The party, any Credit Support Provider of such party or
any applicable Specified Entity of such party (1) defaults under a Specified Transaction and, after
giving effect to any applicable notice requirement or grace period, there occurs a liquidation of, an
acceleration of obligations under, or an early termination of, that Specified Transaction, (2) defaults,
after giving effect to any applicable notice requirement or grace period, in making any payment or
delivery due on the last payment, delivery or exchange date of, or any payment on early termination
of, a Specified Transaction (or such default continues for at least three Local Business Days if there
is no applicable notice requirement or grace period) or (3) disaffirms, disclaims, repudiates or
rejects, in whole or in part, a Specified Transaction (or such action is taken by any person or entity
appointed or empowered to operate it or act on its behalf);
(vi) Cross Default. If “Cross Default” is specified in the Schedule as applying to the party, the
occurrence or existence of (1) a default, event of default or other similar condition or event (however
6 ISDA⁄ 1992
described) in respect of such party, any Credit Support Provider of such party or any applicable
Specified Entity of such party under one or more agreements or instruments relating to Specified
Indebtedness of any of them (individually or collectively) in an aggregate amount of not less than
the applicable Threshold Amount (as specified in the Schedule) which has resulted in such Specified
Indebtedness becoming, or becoming capable at such time of being declared, due and payable under
such agreements or instruments, before it would otherwise have been due and payable or (2) a default
by such party, such Credit Support Provider or such Specified Entity (individually or collectively)
in making one or more payments on the due date thereof in an aggregate amount of not less than the
applicable Threshold Amount under such agreements or instruments (after giving effect to any
applicable notice requirement or grace period);
(vii) Bankruptcy. The party, any Credit Support Provider of such party or any applicable Specified
Entity of such party: —
(1) is dissolved (other than pursuant to a consolidation, amalgamation or merger); (2) becomes
insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay
its debts as they become due; (3) makes a general assignment, arrangement or composition
with or for the benefit of its creditors; (4) institutes or has instituted against it a proceeding
seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or
insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its
winding-up or liquidation, and, in the case of any such proceeding or petition instituted or
presented against it, such proceeding or petition (A) results in a judgment of insolvency or
bankruptcy or the entry of an order for relief or the making of an order for its winding-up or
liquidation or (B) is not dismissed, discharged, stayed or restrained in each case within 30 days
of the institution or presentation thereof; (5) has a resolution passed for its winding-up, official
management or liquidation (other than pursuant to a consolidation, amalgamation or merger);
(6) seeks or becomes subject to the appointment of an administrator, provisional liquidator,
conservator, receiver, trustee, custodian or other similar official for it or for all or substantially
all its assets; (7) has a secured party take possession of all or substantially all its assets or has
a distress, execution, attachment, sequestration or other legal process levied, enforced or sued
on or against all or substantially all its assets and such secured party maintains possession, or
any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days
thereafter; (8) causes or is subject to any event with respect to it which, under the applicable
laws of any jurisdiction, has an analogous effect to any of the events specified in clauses (1)
to (7) (inclusive); or (9) takes any action in furtherance of, or indicating its consent to, approval
of, or acquiescence in, any of the foregoing acts; or
(viii) Merger Without Assumption. The party or any Credit Support Provider of such party
consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets
to, another entity and, at the time of such consolidation, amalgamation, merger or transfer: —
(1) the resulting, surviving or transferee entity fails to assume all the obligations of such party
or such Credit Support Provider under this Agreement or any Credit Support Document to
which it or its predecessor was a party by operation of law or pursuant to an agreement
reasonably satisfactory to the other party to this Agreement; or
(2) the benefits of any Credit Support Document fail to extend (without the consent of the
other party) to the performance by such resulting, surviving or transferee entity of its
obligations under this Agreement.
(b) Termination Events. The occurrence at any time with respect to a party or, if applicable, any Credit
Support Provider of such party or any S
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Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.
Other issuers discussed similar conditions around this time
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“Disclosure of beginning to have substantial holding Section 276, Financial Markets Conduct Act 2013 To New Zealand Exchange And To Mainfreight Limited Date this disclosure made: 07 December 2022 Date on which substantial holding began: 06 December 2022 Substantial prod…”