O

Comptroller of the Currency

Administrator of National Banks

Northeastern District

1114 Avenue of the Americas, Suite 3900

New York, New York 10036

January 27, 2003 **Conditional Approval #575**

**February 2003**

Hal W. Taylor, Esq.

Morgan Stanley Trust, National Association

Harborside Financial Center

Plaza Two

Jersey City, NJ 07311-3977

Re: Application by Morgan Stanley (F/K/A Morgan Stanley Dean Witter &
Co.,) to charter a national CEBA trust bank with the title of Morgan
Stanley Trust, National Association, Wilmington, Delaware.

> Application Control Number: 2002-NE-01-0004

Dear Mr. Taylor:

The Comptroller of the Currency ("OCC") has reviewed your application to
establish a new national CEBA trust bank with the title of Morgan
Stanley Trust, National Association, ("Bank"). After a thorough
evaluation of all data available to the OCC, we found that your proposal
met the requirements for preliminary conditional approval.

This approval is granted based on a thorough review of all information
available, including the representations and commitments made in the
application and by the proposed Bank's representatives. We also made our
decision to grant preliminary conditional approval with the
understanding that the proposed national bank will apply for membership
in the Federal Reserve System and will not be FDIC-insured.

This preliminary conditional approval is subject to the following
conditions "imposed in writing by the agency in connection with the
granting of any application or other request\" within the meaning of 12
U.S.C. § 1818 and, as such, are enforceable under 12 U.S.C. § 1818.

1.  The Bank's initial paid-in capital, net of organizational and
    pre-opening expenses, shall be no less than \$8.4 million.

Hal W. Taylor, Esq.

Application Control Number: 2002-NE-01-0004

Page 2

2.  At all times, the Bank shall maintain a minimum of \$ 6 million in
    Tier 1 capital.

3.  If the Bank fails to maintain Tier 1 capital in the amount of \$6.0
    million, the Bank shall be deemed \"undercapitalized,\" for purposes
    of 12 U.S.C. § 1831o and 12 C.F.R. Part 6, and the OCC shall have
    the authority to take any action authorized under all provisions of
    12 U.S.C. § 1831o and 12 C.F.R. Part 6 applicable to an
    undercapitalized national bank. For purposes of section 1831o(e)(5),
    an action \"necessary to carry out the purpose of this section\"
    shall include restoration of the Bank\'s capital so that it is not
    \"undercapitalized,\" and any other action deemed advisable by the
    OCC to address the Bank\'s capital deficiency or the safety and
    soundness of its operations.

4.  The Bank (i) shall give the OCC's Metro New York Area Field Office
    at least sixty (60) days prior written notice of its intent to
    significantly deviate or change from the business plan or operations
    and (ii) shall obtain the OCC's written determination of no
    objection before the Bank engages in any significant deviation or
    change from the business plan or operations.

5.  All transactions between the Bank and any affiliates, domestic or
    foreign, shall be conducted subject to the applicable provisions of
    12 U.S.C. § 371c and c-1, or other applicable Federal law. The Board
    of Directors of the Bank annually shall review and approve the
    service agreements and any other transactions with domestic and
    foreign affiliates, including in particular any cost allocation,
    fee-sharing or tax-sharing provisions in such agreements or other
    transactions.

6.  The Bank must notify all potential vendors in writing of the OCC's
    examination and regulatory authority under 12 U.S.C. § 1867(c). All
    final vendor contracts must stipulate that the performance of
    services provided by the vendors to the Bank is subject to the OCC's
    examination and regulatory authority. The provisions of 12 C.F.R. 9
    would be applicable to any fiduciary activities contracted out to
    vendors.

The Bank is reminded that we expect it to maintain adequate capital and
liquidity as set forth in OCC Bulletin 2000-26, dated September 28,
2000. Please be advised that the OCC is currently reviewing its capital
and liquidity policy with respect to national trust banks. Should there
be a change to our policy as a result of the review, we will advise you
accordingly. In addition, if through future acquisitions, growth, or
otherwise, the Bank's trust assets increase significantly, or if the
Bank assumes additional risk, the OCC may require the Bank to hold
additional capital. In acting on future applications, we would expect to
raise the capital levels set forth in the above conditions if growth in
trust assets or risks warrant.

Hal W. Taylor, Esq.

Application Control Number: 2002-NE-01-0004

Page 3

Please refer to the \"Corporate Organization\" booklet (enclosed) in the
*Comptroller's Corporate Manual* for the instructions on organizing the
Bank. The booklet contains all of the steps you must take to receive
your charter. As detailed in the booklet, you may establish the
corporate existence of and begin organizing the Bank as soon as you
adopt and forward acceptable Articles of Association and the
Organization Certificate to this office. As a \"body corporate\" or
legal entity, you may begin taking those steps necessary for obtaining
final approval, but you may not begin the business of banking until you
fulfill all requirements for a bank in organization and you are granted
final approval by the OCC.

Enclosed are standard requirements that must be met before the Bank will
be allowed to commence business. Management must ensure that the
applicable policies and procedures are established and adopted by the
board of directors before the Bank begins operation. Applicable standard
requirements also must be satisfied before the Bank will be allowed to
commence business. In addition to the procedural requirements for all
new national banks, the following requirements must be satisfied prior
to the Bank's request for a pre-opening examination and before the OCC
will grant final charter approval.

Please be aware that the trust officers and staff should become
thoroughly familiar with \"Fiduciary Powers of National Banks and
Collective Investments\" at 12 C.F.R. 9 and 12 C.F.R. 5.26. Management
is reminded that 12 C.F.R. 5.26 requires a national bank which already
has approval to engage in fiduciary activities to provide written notice
to the OCC when commencing fiduciary activities in a new state. Also, in
addition to the independent annual audit requirement referenced in the
standard requirements, the Bank will need to develop and implement a
fiduciary audit program as required by 12 C.F.R. 9.

The OCC poses no objection to the following persons serving as executive
officers and directors as proposed in the application.

Hal W. Taylor Organizer/General Counsel

Ronald E. Robison Organizer

Raymond A. Harris Organizer/Director/CEO

Jonathan S. Thomas Organizer/Director

David W. Haynes Organizer

A. Thomas Smith III Organizer

Mitchell M. Merin Chairman of the Board

John A. Sabino President/Director/ Chief Operating Officer

Robert E. Murray Director

Frank K. Reilly Director

Charles F. Moran Director

Rajesh K. Gupta Director

Bruce F. Alonso Director

Hal W. Taylor, Esq.

Application Control Number: 2002-NE-01-0004

Page 4

Merle F. Gehman Vice President - Business Development

Gerald W. McEvoy Vice President - Legal

Philip R. Snow Manager - Marketing

Kenton Hinchliffe Chief Investment Officer

Anthony J. DeLuca Chief Financial Officer

All background checks requested by the OCC have not yet been received.
Although we have decided not to delay action pending receipt of those
responses, continued service of the affected individuals will be
dependent on satisfactory completion of the background investigation
process.

You are reminded that additional executive officers to be appointed
prior to opening are subject to the OCC's [prior]{.underline} review and
clearance. Also, for a period of two years after the Bank has opened for
business, the Bank must seek and receive no objection from the OCC prior
to any new executive officer or director assuming such position.

The OCC hereby grants a multiple waiver of the residency requirement of
12 U.S.C. 72 for a majority of the organizing and bank directors. Please
understand that this Office reserves the right to withdraw this waiver
at any time and, at our discretion, to request additional biographical
information on these directors. This waiver applies to the residency
provisions of 12 U.S.C. 72 and all other requirements in the statue
remain applicable.

Until final approval is granted, the OCC has the right to alter,
suspend, or revoke preliminary approval should any interim development
be deemed by the OCC to warrant such action.

This preliminary conditional approval, and the activities and
communications by OCC employees in connection with the filing, do not
constitute a contract, express or implied, or any other obligation
binding upon the OCC, the government of the United States of America

("U. S."), any agency or entity of the U.S., or an officer or employee
of the U.S, and do not affect the ability of the OCC to exercise its
supervisory, regulatory and examination authorities under applicable law
and regulations. The foregoing may not be waived or modified by any
employee or agent of the OCC or the U.S.

The OCC will send to you under separate cover an appropriate set of OCC
handbooks, manuals, issuances, and selected other publications.

Hal W. Taylor, Esq.

Application Control Number: 2002-NE-01-0004

Page 5

Please direct any questions concerning this preliminary conditional
approval to Sandya Reddy, Senior Licensing Analyst, at (212) 790-4055.

Sincerely,

Anthony DosSantos

Anthony DosSantos

Licensing Manager

Enclosures: Standard Requirements and Minimum Policies