EXHIBIT 10.1

January 3, 2013

Paul J. Taubman

New York, New York

RE: Change of Employment Status and Release Agreement

Dear Paul:

This letter sets forth our agreement (the “Agreement”) concerning the change of
your employment status with Morgan Stanley. For purposes of the Agreement,
Morgan Stanley shall include Morgan Stanley and any and all former and existing
parents, subsidiaries, predecessors, and successors (“Morgan Stanley” or the
“Firm”).

We have mutually agreed that your active employment with Morgan Stanley ended on
December 31, 2012, and that you, except as provided below, will remain on the
payroll at your current base salary through May 5, 2013 (the “Termination Date”)
(the period from November 5, 2012 through the Termination Date, the “Transition
Period”). Through December 31, 2012, you remained a member of the Firm’s
Operating Committee and an Executive Officer with all of the obligations and
responsibilities associated with those positions. Further, you will also be
eligible for continued participation in all welfare and other benefit and
retirement plans and programs through the Termination Date or the Accelerated
Termination Date, as applicable, with further participation in the medical plan
through the last day of the month in which you terminate. Your employment will
terminate for all purposes effective on the Termination Date or the Accelerated
Termination Date, as applicable.

The Agreement becomes effective and enforceable seven (7) days after you execute
and do not revoke it. The signed Agreement must be returned to the undersigned
on the next business day immediately following the end of the twenty-one
(21) day period provided for in the Agreement.

 

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Payments and Benefits

We have also mutually agreed that in exchange for executing and not revoking
this Agreement, Morgan Stanley will:

 

  (1) Provide you with 2012 Above Base Compensation (the “Bonus”) in a form and
on terms and conditions consistent with the bonuses paid or granted to active
Operating Committee members to the extent reasonably practicable and in
accordance with applicable law and regulations and shall be awarded at such time
as bonuses are awarded to active employees in 2013; provided, however, that,
notwithstanding the distribution schedule that may apply to active Operating
Committee members, your award of deferred compensation, if any, shall be vested
on the Termination Date or the Accelerated Termination Date, as applicable, and
subject to the cancellation terms until the applicable distribution or
conversion date only in accordance with the terms set forth in Attachment A, and
be converted, and distributed or delivered, in four equal installments on each
of June 1, 2013; December 15, 2013; June 1, 2014 and December 15, 2014;
provided, further, that the rule of construction for timing of distribution and
conversion and the special distribution and conversion provisions for death,
Governmental Service Termination, and employment at a Governmental Employer
following termination of employment, each as set forth in the award certificate
for your 2011 Awards, shall apply.

 

  (2) It also is agreed that you will receive your accrued benefit through the
Termination Date or the Accelerated Termination Date, as applicable, under the
Firm’s Supplemental Executive Retirement and Excess Plan (“SEREP”), in
accordance with the terms of the SEREP, determined as if you were eligible for
early retirement and payable upon attainment of age 55.

 

  (3)

We have further agreed that all outstanding equity and deferred cash incentive
compensation awards (the “Awards”) granted to you by Morgan Stanley (other than
Awards with respect to which “Scheduled Conversion Date”, “Scheduled
Distribution Date”, “Earliest Distribution Date” or other similar term or
concept (such concept, a “Conversion Date”) has occurred), shall be subject to
cancellation until the applicable Conversion Date only in accordance with the
terms set forth in Attachment A. Other than as expressly modified herein, all
other terms of your Awards will not be deemed modified by this Agreement and you
understand and agree that you remain subject to

 

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  all conditions and risks inherent in the Awards. We also acknowledge that:
(i) the Awards will vest on the Termination Date or the Accelerated Termination
Date, as applicable, and, except as otherwise set forth herein with respect to
the Bonus, if any, be converted, distributed and/or paid out in accordance with
the schedule previously associated with any such Award; and (ii) no cancellation
provisions shall apply to those awards with respect to which a Conversion Date
has occurred. We have further agreed that your outstanding options shall remain
outstanding and exercisable until the expiration of the original option term.

As of the date of this Agreement, Morgan Stanley’s Chairman & Chief Executive
Officer, Chief Legal Officer and Chief Human Resources Officer are not aware of
any acts or omissions by you that would constitute or trigger a cancellation
event.

We agree that, if during the Transition Period, your employment terminates in a
Governmental Service Termination (and not involving a cancellation event), as
that term is defined with respect to your 2011 Awards, then subject to the
conditions set forth in your 2011 Award certificates, all of your unvested
Awards will vest and distribute on the date of your Governmental Service
Termination.

You acknowledge that any payments or awards under the Agreement are subject to
any applicable tax withholding requirements. You agree to fully abide by
employee trading policies with respect to the sale of Morgan Stanley stock and
any window period or other restrictions which may apply, or become applicable to
you, through the Termination Date.

Morgan Stanley considers you to be one of its “specified employees” for purposes
of Section 409A of the Internal Revenue Code of 1986, as amended (“Section
409A”). Therefore, pursuant to Section 409A and the terms and conditions of your
Morgan Stanley long-term incentive compensation awards, payment of any
cash-based long-term incentive awards and conversion of any stock units that
would otherwise occur on account of your “Separation from Service” (as defined
in Section 409A, and generally the date on which you cease performing services
for Morgan Stanley) during the period commencing on your Separation from Service
and ending on the date that is six months thereafter, including, without
limitation, payments or stock unit conversions that were delayed due to
Section 162(m) of the Internal Revenue Code, will instead be paid or convert, as
applicable, on the first business day following the date that is six months
after your Separation from Service.

 

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You acknowledge and agree that your receipt of any and all additional payments
and benefits provided in this Agreement is contingent upon: (a) your adherence
to the terms of this Agreement and your not being terminated for cause (as
defined in Attachment A) before the Termination Date or the Accelerated
Termination Date, as applicable; and (b) your execution and non-revocation
thereafter and receipt by Morgan Stanley of an effective and enforceable
Agreement. Except as otherwise authorized by Morgan Stanley in connection with
the performance of your duties for the benefit of Morgan Stanley, you further
agree that, after December 31, 2012, you will not hold yourself out to be an
active officer, director, manager or agent of Morgan Stanley or otherwise
attempt to bind or contract on behalf of Morgan Stanley. You do, however, remain
an employee of Morgan Stanley through the Termination Date or the Accelerated
Termination Date whichever the case may be.

For the sake of clarity, you agree that you will not provide services of any
kind on an employee or consultant basis whether or not for remuneration on
behalf of any competitor entity previously identified and specifically agreed to
by and between you and Morgan Stanley (a “Competitor”) through May 5, 2013
unless expressly authorized to do so by Morgan Stanley. In addition, you agree
that neither you nor any entity with which you may become employed with, provide
services to or associate with after the date hereof will make any announcement
or permit any announcement of your new employment, provision of services or
other association until after February 5, 2013. The parties agree that you shall
not be subject to a non-competition agreement or customer or client
non-solicitation agreement after May 5, 2013.

In the event you obtain or secure new employment, provide service to or
otherwise seek to become associated with in any capacity any entity other than a
Competitor during the Transition Period, Morgan Stanley will and hereby does
agree to waive the balance of the Transition Period and accelerate your
termination date (“Accelerated Termination Date”) to permit your immediate
engagement with such entity. You understand and agree that all salary for which
you are otherwise eligible for under the Agreement and by virtue of your
employment with Morgan Stanley will end on the Accelerated Termination Date,
provided, however, if you elect an Accelerated Termination Date to engage in
discrete advisory work, you will receive a lump sum payment within 45 days of
May 5, 2013 in an amount equal to the base salary you would have been paid
through the earlier of (1) the Termination Date or (2) your commencement of
employment with a new employer or engagement for services for remuneration of
any kind.

 

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Morgan Stanley agrees that if you obtain or secure new employment, provide
service to or otherwise seek to become associated with in any capacity any
entity other than a Competitor during the Transition Period, Morgan Stanley will
not deem this activity to be a violation of this Agreement or any notice period
requirement and the Accelerated Termination Date shall be treated as your
Termination Date for purposes hereof. For the sake of clarity, in the event you
elect an Accelerated Termination Date, Morgan Stanley will not treat your
election as a basis for cancellation or clawback of any outstanding deferred
compensation awards.

In addition, in exchange for the payments and other benefits provided to you
hereunder by the Firm, we agree that, through and including November 5, 2013,
you will not directly or indirectly in any capacity (including through any
person, corporation, partnership or business entity of any kind), hire or
solicit, recruit, induce, entice, influence, or encourage any Morgan Stanley
employee to leave Morgan Stanley for or to otherwise become hired or engaged by
any entity (“Wrongful Solicitation”). The restrictions in this paragraph shall
apply only to employees with whom you worked or had professional or business
contact, or who worked in or with your business unit, at any point from May 5,
2012 through the Termination Date or the Accelerated Termination Date, as
applicable.

You also understand and agree that all outstanding claims for expenses incurred
properly in the performance of your duties must be submitted as soon as possible
but in no event later than six (6) weeks after the Termination Date or the
Accelerated Termination Date, as applicable. All expenses eligible for
reimbursement under this Agreement and all in-kind benefits shall be paid or
provided to you promptly in accordance with Morgan Stanley’s customary practices
applicable to the reimbursement of expenses of such type and the provision of
such benefits, but in no event later than December 31 of the calendar year
following the calendar year in which such expenses were incurred or such in-kind
benefits were to be provided; provided, however, any payment to be made to you
under the “Future Dealings” paragraph below to reimburse you for any lost wages
shall be made no later than December 31 of the calendar year in which you
otherwise would have received such wages. The expenses incurred by you in any
calendar year that are eligible for reimbursement under this Agreement and the
in-kind benefits provided to you in any other calendar year shall not affect the
expenses incurred by you in any other calendar year that are eligible for
reimbursement hereunder or the in-kind benefits to be provided to you in any
other calendar year. Your right to receive any reimbursement or in-kind benefits
hereunder shall not be subject to liquidation or exchange for any other benefit.

 

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You understand and agree that the foregoing consideration provided to you under
the terms of this Agreement is in addition to anything of value to which you are
otherwise entitled. You represent, warrant and acknowledge that Morgan Stanley
owes you no wages, commissions, bonuses, sick or other medical or
disability-related pay, personal or other leave-of-absence pay, severance pay,
notice pay, vacation pay, or other compensation or payments or form of
remuneration of any kind or nature, other than that specifically provided for in
this Agreement or your vested or accrued benefits under any compensation or
benefit plan (including but not limited to the retiree medical plan, in which
Morgan Stanley acknowledges that you are entitled to participate) or program of
Morgan Stanley in which you participate.

In addition, you understand and agree that if any provision of this Agreement
fails to comply with Section 409A, or would result in your recognizing income
for United States federal income tax purposes with respect to any amount payable
under this Agreement before the date of payment, or to incur interest or
additional tax pursuant to Section 409A, you understand and agree that Morgan
Stanley will confer with you regarding a reasonable recommendation to reform
such provision in a manner which shall maintain, to the maximum extent
practicable, the original intent of the applicable provision; provided, however,
if you do not agree to such modification of the provision to bring it into
compliance with Section 409A, that you are solely and exclusively responsible
for any resulting income tax liability and agree to hold Morgan Stanley harmless
for any Section 409A compliance failure, other than if such noncompliance or
income tax liability resulted from Morgan Stanley’s breach of the terms of this
Agreement.

General information about continuing benefit coverage will be sent to your home
address by the Benefit Center two to three weeks following the Termination Date
or the Accelerated Termination Date, as applicable. Specific information
regarding continuation of your medical benefits will be sent to your home
address by Hewitt Associates two to three weeks following termination of
coverage. You have sixty (60) days from the date of receipt to elect COBRA
coverage. Inquiries about your benefits should be directed to the Benefit Center
at 1-877-674-7411.

 

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Release of Claims

In exchange for providing you with these enhanced payments and benefits, you
agree to waive all claims against Morgan Stanley and its affiliate corporations
and its and their respective and current and former directors, officers,
employees, agents, managers, shareholders, successors, assigns and other
representatives in connection with their relationship to Morgan Stanley (such
entities and individuals together with Morgan Stanley, the “Morgan Stanley
Releasees”), and to release and forever discharge the Morgan Stanley Releasees,
from any and all liability for any claims, rights or damages of any kind,
whether known or unknown to you, that you may have against the Morgan Stanley
Releasees as of the date of your execution of this Agreement including, but not
limited to, any claim arising under any federal, state or local law or
ordinance, any tort, any employment contract, express or implied, any public
policy waivable by law, or arising under Title VII of the Civil Rights Act of
1964, as amended, the Civil Rights Act of 1866, as amended, the Equal Pay Act,
as amended, the Uniform Services Employment and Re-employment Rights Act
(“USERRA”), as amended, the Age Discrimination in Employment Act of 1967
(“ADEA”), as amended, the Americans with Disabilities Act (“ADA”), as amended,
the Family And Medical Leave Act (“FMLA”), as amended, the Employee Retirement
Income Security Act (“ERISA”), as amended, the Civil Rights Act of 1991, as
amended, the Rehabilitation Act of 1973, as amended, the Older Workers Benefit
Protection Act (“OWBPA”), as amended, the Worker Adjustment and Retraining
Notification Act (“WARN”), as amended, the Occupational Safety and Health Act of
1970 (“OSHA”), as amended, the New York State Human Rights Law, as amended, New
York City Human Rights Law, as amended, New York Labor Act, as amended, New York
Equal Pay Law, as amended, New York Civil Rights Law, as amended, New York
Rights of Persons With Disabilities Law, as amended, New York Equal Rights Law,
as amended, New York Worker Adjustment and Retraining Notification Act, as
amended, or any other claim which you have or may have against the Morgan
Stanley Releasees (each of whom may enforce the waiver given to them by you in
this clause personally) and, whether arising under the laws of the United
States, or any other jurisdiction or country in the world, all claims for
invasion of privacy, defamation, intentional infliction of emotional distress,
injury to reputation, pain and suffering, constructive and wrongful discharge,
retaliation, wages, monetary or equitable relief, vacation pay, award(s),
grant(s), or separation and/or severance pay under any separation or severance
pay plan maintained by Morgan Stanley, any other employee fringe benefits plans,
medical plans, or attorneys’ fees or any demand to seek discovery of any of the
claims, rights or damages previously enumerated herein.

 

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You acknowledge, affirm and agree that during your employment you were not and
currently are not, aware of any violations of Morgan Stanley’s Code of Conduct
or any legal obligations of Morgan Stanley or its employees, including any
obligations under federal securities laws or any Securities and Exchange
Commission or the Financial Industry Regulatory Authority rule or regulation or
any applicable regulation of the Board of Governors of the Federal Reserve
System or the Sarbanes-Oxley Act or the False Claims Act that have not been
disclosed in accordance with Morgan Stanley policy.

This Agreement is not intended to, and does not, release rights or claims that
may arise after the date of your execution hereof and any rights or claims that
you may have to secure enforcement of the terms and conditions of this
Agreement. To the extent any claim, charge, complaint or action covered by the
Release of Claims is brought by you, for your benefit or on your behalf, you
expressly waive any claim to any form of monetary or other damages, including
attorneys’ fees and costs, or any other form of personal recovery or relief in
connection with any such claim, charge, complaint or action. You further agree
to dismiss with prejudice any pending civil lawsuit covered by the Release of
Claims. For purposes of this Agreement, “you” shall include your heirs,
executors, administrators, attorneys, representatives, successors and assigns.

This Agreement, however, does not waive any rights you may have been granted
under the Certificate of Incorporation or Bylaws of Morgan Stanley relating to
your actions on behalf of Morgan Stanley in the scope of and during the course
of your employment by Morgan Stanley and any rights you may have to coverage
under D&O insurance policies, indemnification and/or advancement of expenses
under any applicable insurance policy or indemnification policy or agreement
(including any D&O insurance policy). Nor does anything in this Agreement impair
your rights: (i) in any of your Morgan Stanley Wealth Management brokerage or
customer accounts; (ii) to vested benefits and entitlements such as retirement,
pension or 401(k) benefits); (iii) in any investment partnership managed by
Morgan Stanley or any of its affiliates that is in effect as of the date of this
Agreement in which you have an investment interest; (iv) as a shareholder of
Morgan Stanley; or (v) to obtain contribution as permitted by law in the event
of any judgment against you as a result of any act or failure to act for which
you and Morgan

 

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Stanley or any of its affiliated entities are jointly liable. Nor shall any
elections, notices or benefits for which you are eligible as a separated
employee of Morgan Stanley be impaired by this Agreement.

Confidentiality, Firm Property, Non-Disclosure and Non-Disparagement

You also agree that in the course of your employment with Morgan Stanley you
have or may have acquired non-public privileged or confidential information and
trade secrets concerning Morgan Stanley’s business, operations, legal matters
and resolution or settlement thereof, internal investigations, customer and
employee information and lists, hiring, staffing and compensation practices,
studies and analyses, plans, funding, financing and methods of doing business
whether in hard copy, electronic or other format (“Confidential and Proprietary
Information”), and you further agree that it would be damaging to Morgan Stanley
if such Confidential and Proprietary Information were disclosed to any
competitor of Morgan Stanley or any third party or person. For purposes of this
Agreement, “Confidential and Proprietary Information” shall not include
information which is or becomes generally known to the public or within the
relevant trade or industry other than due to any violation of your obligation to
Morgan Stanley, including under this Agreement, and shall not include your own
compensation and personnel records. You understand and agree that all
Confidential and Proprietary Information has been divulged to you in confidence
and you agree to not disclose or cause to be disclosed directly or indirectly
any Confidential and Proprietary Information to any third party or person and
further agree to keep all Confidential and Proprietary Information secret and
confidential without limitation in time. Your use of Confidential and
Proprietary Information will stop immediately upon the cessation of your work
responsibilities for Morgan Stanley but no later than the Termination Date or
the Accelerated Termination Date, as applicable. You will not remove
Confidential and Proprietary Information from any Morgan Stanley facility in
either original, electronic or copied form and prior to the Termination Date or
the Accelerated Termination Date, as applicable, you agree to deliver to Morgan
Stanley any Confidential and Proprietary Information in your possession or
control. You will not at any time assert any claim of ownership or other
property interest in any such Confidential and Proprietary Information. You will
permit Morgan Stanley to inspect any material to be removed from Morgan Stanley
offices when you cease to work at any Morgan Stanley facility. For the sake of
clarity, to the

 

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extent that you continue to perform authorized services during the Transition
Period or to the extent that you are called upon to cooperate with Morgan
Stanley in connection with any legal matter, you may disclose or permit to be
disclosed, use or remove Confidential and Proprietary Information as authorized
by Morgan Stanley and in connection with the performance of your duties for or
obligations to Morgan Stanley.

Prior to the Termination Date or the Accelerated Termination Date, as
applicable, you further agree to return any Morgan Stanley equipment and
property including, but not limited to, identification materials, computers,
laptops, tablets, printers, facsimile machines, corporate credit cards, and
wireless devices (e.g., mobile phones, SecurIDs, BlackBerry and similar
devices), that you possess or control but that are not in Morgan Stanley’s
offices. Anything in this Agreement to the contrary notwithstanding, you shall
be entitled to retain (i) papers and other materials of a personal nature,
including but not limited to, photographs, personal correspondence, personal
diaries, personal calendars, and rolodexes) and personal files, (ii) information
showing your awards, compensation, or relating to expense reimbursements,
(iii) information that you reasonably believe may be needed for tax purposes,
(iv) copies of plans, programs and agreements relating to your employment, or
termination thereof, with Morgan Stanley. Morgan Stanley retains the right under
this paragraph to retain copies of any items included in the exceptions above
which it deems related to the performance of your duties on behalf of Morgan
Stanley.

Unless permitted under the “Exceptions” provision in this Agreement, both Morgan
Stanley and you also agree not to disclose, or cause, or permit to be disclosed
(if circumstances place either party in a position to reasonably prevent the
disclosure) in any way the terms of this Agreement without limitation in time,
except that you may disclose such information: (i) to your legal
representatives, (ii) to your immediate family, (iii) for the purpose of
enforcing this Agreement, should that ever be necessary or (iv) as may be
required by law or any proceeding, and further you may disclose: (x) the
financial aspects of this Agreement to your financial representatives or
accountants or for the purpose of qualifying for a loan; or (y) the restrictive
covenants of this Agreement to future employers (including prospective
employers) or partners or members of an LLC (including prospective partners or
members) to verify the terms of such restrictive covenants and to the extent
necessary to avoid violating this Agreement, and Morgan Stanley may disclose
such information: (i) to its legal representatives; (ii) for the purpose of

 

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enforcing this Agreement, should that ever be necessary, or (iii) as may be
required by law, including but not limited to filings or disclosures required by
the Securities and Exchange Commission, or any proceeding provided that any
private parties to whom disclosure is permitted under this paragraph are
informed of the confidentiality provisions of this Agreement and agree to be
bound thereby. This provision shall cease to apply to the extent this Agreement
becomes publicly known other than as a result of a violation of this Agreement
by you. Further, this provision is expressly not intended in any way to limit
you from disclosing the financial structure and tax aspects of this Agreement
(or, if reasonably necessary, other provisions of this Agreement) to the
Internal Revenue Service.

You agree to give prompt notice to Morgan Stanley in writing, addressed to Alexa
Pappas, Managing Director, Morgan Stanley, Legal and Compliance Division,
[contact information redacted], of any subpoena or judicial, administrative or
regulatory inquiry or proceeding, or lawsuit in which you are required or
requested to disclose information relating to Morgan Stanley prior to such
disclosure unless any such prior notice is prohibited by law or fiduciary or
contractual obligations. To the extent reasonably practicable, such written
notice must be given to Ms. Pappas within five (5) business days of your
knowledge of receipt of any such request or order so that Morgan Stanley may
take whatever action it may deem necessary or appropriate to prevent such
assistance or testimony. You also agree that to the extent reasonably
practicable you will, within five (5) business days of your knowledge of
receipt, provide to Ms. Pappas by facsimile or overnight delivery to the above
address, a copy of all legal papers and documents served upon you, unless such
provision is prohibited by law or contractual or fiduciary obligation or by
order of a court or another body with jurisdiction to issue an order.
Additionally, you agree that in the event you are served with such subpoena,
court order, directive or other process, you will make all reasonable efforts
(subject to your personal and professional obligations) to meet with Ms. Pappas
or her designee in advance of giving such testimony or information unless any
such prior meeting requirement is prohibited by law or contractual or fiduciary
obligation or by order of a court or another body with jurisdiction to issue
such order.

 

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You also agree that, without limitation in time, you will not make any
Unauthorized Comments which are defined as:

 

  (1) public statements, written or oral, which are intended to defame or
disparage Morgan Stanley’s current members of the Board of Directors, Executive
Officers, Management Committee members (all in their capacity as such), or its
business or its strategic plans, products, practices, policies, or any other
internal Morgan Stanley matter or otherwise publicly speak of any of the
foregoing in a disparaging manner in any medium or to any person or entity (all
up through and including the Termination Date). For the sake of clarity,
comments made directly or indirectly to any person or entity which are
reasonably intended to or understood may be used “on background” as that term is
used commonly in the public media shall be a violation of this provision.
Notwithstanding the foregoing, nothing in this Agreement shall prevent you from:
(i) responding publicly to incorrect or disparaging press releases or other
official statements issued by the Firm about you to the extent reasonably
necessary to correct or refute such statements; or (ii) making any truthful
statement to the extent (A) required by law or by any court, arbitrator,
mediator, administrative or legislative body with actual or apparent
jurisdiction to order disclosure or (B) necessary in any litigation or other
proceeding between the parties, including in connection with this Agreement or
its enforcement; and

 

  (2) written or oral statements which are intended to defame or disparage:
(i) Morgan Stanley’s current (up through and including the Termination Date):
(a) members of the Board of Directors, Executive Officers, Management Committee
members (all in their capacity as such), or (b) legal matters involving Morgan
Stanley and resolution or settlement thereof, or (ii) the termination of your
employment with Morgan Stanley, to any reporter, author, producer or similar
person or entity, or take any other action likely to result in such negative
information being made available by such person acting in such capacity to the
general public in any form, including, without limitation, books, articles or
writings of any other kind, as well as film, videotape, television or other
broadcasts, audio tape, electronic/Internet or blog format or any other medium.

Nothing in sub-paragraphs (1) and (2) above is intended to limit in any way your
ability to confer in confidence with your legal representatives or advisors.
Moreover, nothing in this Agreement is intended to restrict your ability to
speak of your career or employment with Morgan Stanley so long as you do so in a
manner that is consistent with your obligations set forth in this Agreement.
Likewise, nothing in this Agreement is intended to restrict your ability

 

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to compete fairly with Morgan Stanley in the future or to provide accurate
commentary about market or other events occurring after the Termination Date
without breaching this Agreement so long as you do not in any way suggest or
imply that you have any information about Morgan Stanley other than what is
publicly available or that you have any current affiliation with or association
with Morgan Stanley (formal or otherwise) and so long as you do so in a manner
that is consistent with your obligations set forth in this Agreement.

Morgan Stanley agrees to instruct the members of the Firm’s Operating Committee
as of the date of this Agreement that they may not, for so long as they remain
employed by Morgan Stanley, defame or disparage you to any person or entity.
Notwithstanding the foregoing, nothing in this Agreement shall prevent Morgan
Stanley from: (i) responding publicly to incorrect or disparaging public
statements made by you to the extent reasonably necessary to correct or refute
such statements; or (ii) making any truthful statement to the extent
(A) required by law or by any court, arbitrator, mediator, administrative or
legislative body with actual or apparent jurisdiction to order disclosure or
(B) necessary in any litigation or other proceeding between the parties,
including in connection with this Agreement or its enforcement.

You further agree that you will not use or take any action likely to result in
the use of any of Morgan Stanley’s names or any abbreviation thereof in
connection with any publication to the general public in any medium in a manner
that suggests, directly or indirectly, endorsement by or a then-current business
connection to Morgan Stanley.

Morgan Stanley agrees that it will provide you with reasonable prior notice of
any filings with the Securities and Exchange Commission made by Morgan Stanley
in which you are identified by name and/or title and your compensation is
disclosed. You understand and agree that to the extent you are provided with
advance notice, such notice will be limited to those portions of the filing
which make specific and express reference to your compensation. In addition, you
understand and agree that Morgan Stanley is not obligated to obtain your consent
or authorization prior to making any such filing.

Nothing in this Agreement shall preclude you from disclosing or permitting to be
disclosed the fact of your employment with Morgan Stanley, positions held and
job duties or other information that would typically appear on a resume or
curriculum vitae or otherwise be required in the course of a job search or a job
interview or is otherwise customary in that context so long as you do so in a
manner that is consistent with your obligations set forth in this Agreement.

 

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Exceptions

This Agreement does not prohibit or restrict you from lawfully (A) communicating
or cooperating with, providing relevant information to or otherwise assisting in
an investigation by: (i) any governmental or regulatory body or official(s) or
self regulatory organization regarding a possible violation of any federal law
relating to fraud or any rule or regulation of the Securities and Exchange
Commission or any other law or regulation; or (ii) the EEOC or any other
governmental authority with responsibility for the administration of fair
employment practices laws regarding a possible violation of such laws;
(B) responding to any inquiry from such authority, including an inquiry about
the existence of this Agreement or its underlying facts; (C) testifying,
participating or otherwise assisting in an action or proceeding relating to a
possible violation of any such law, rule or regulation or (D) making any
disclosure otherwise required by law or in order to enforce this Agreement. Nor
does this Agreement require you to notify Morgan Stanley of such communications
or inquiry described in the preceding sentence. In addition, nothing in this
Agreement precludes you from benefiting from classwide injunctive relief awarded
in any fair employment practices case brought by any governmental agency,
provided such relief does not result in your receipt of any monetary benefit or
equivalent thereof. You acknowledge and agree, however, that you are waiving any
right to recover any monetary damages or any other form of personal relief in
connection with any such action, investigation or proceeding.

Any non-disclosure provision in this Agreement does not prohibit or restrict you
or your attorneys from responding to any inquiry about this Agreement or its
underlying facts and circumstances by the Securities and Exchange Commission,
the Financial Industry Regulatory Authority or any other self-regulatory
organization.

Future Dealings

In addition, you agree to reasonably cooperate with and assist Morgan Stanley in
connection with any investigation, regulatory matter, lawsuit or arbitration in
which Morgan Stanley is a subject, target or party and as to which you may have
pertinent information as a direct result of your employment with Morgan Stanley.
Your cooperation hereunder shall include making yourself reasonably available
(subject to your personal and professional

 

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obligations) for preparation for hearings, proceedings or litigation and for
attendance at any pre-trial discovery and trial sessions. Morgan Stanley agrees
to make every reasonable effort to provide you with reasonable notice in the
event your participation is required. Morgan Stanley agrees to reimburse
reasonable out-of-pocket costs incurred by you as the direct result of your
participation, provided that such out-of-pocket costs are supported by
appropriate documentation and have prior authorization of Morgan Stanley. Such
expenses and costs may include, without limitation, demonstrably lost wages,
travel costs and legal fees to the extent that separate legal representation is
reasonably warranted.

Further Promises

In the event you breach or threaten to breach any of the provisions in this
Agreement regarding Confidential and Proprietary Information, Unauthorized
Comments or Wrongful Solicitation, you acknowledge that such breach or
threatened breach shall cause irreparable harm to Morgan Stanley, entitling
Morgan Stanley, at its option, to seek immediate injunctive relief from a court
of competent jurisdiction, without waiver of any other rights or remedies from a
court of law or equity.

You also acknowledge that this Agreement has been executed voluntarily by you.
You are urged to and acknowledge that you have had the opportunity to obtain the
advice of any attorney or other representative of your choice, unrelated to
Morgan Stanley, prior to executing this Agreement. Further, you acknowledge that
you have a full understanding of the terms of this Agreement which may not be
changed or altered except by a writing signed by Morgan Stanley and you.

You acknowledge that you have been given at least twenty-one (21) days within
which to consider executing this Agreement (the “twenty-one (21) day Period”)
and seven (7) days from the date of your execution of this Agreement within
which to revoke it (the seven (7) day period defined as the “Agreement
Revocation Period”). Your executed Agreement must be returned to the undersigned
at the above address. If you execute the Agreement prior to the end of the
twenty-one (21) day period that Morgan Stanley has provided for you, you agree
and acknowledge that: (i) your execution was a knowing and voluntary waiver of
your right to consider this Agreement for the full twenty-one (21) days; and
(ii) you had sufficient time in which to consider and understand the Agreement,
and to review it with your attorney or other representative of your choice. Any
revocation of this Agreement must be in writing and returned

 

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to the undersigned at the above address via certified U.S. Mail, return receipt
requested. In the event that you revoke this Agreement, you acknowledge that you
will not be entitled to receive, and agree not to accept, any payments or
benefits under this Agreement. You agree that your acceptance of any such
payments or benefits will constitute an acknowledgment that you did not revoke
the Agreement. This Agreement will not become effective or enforceable until the
Agreement Revocation Period has expired. Your release of claims and obligations
hereunder shall not become enforceable until the Committee has approved this
Agreement.

BY SIGNING THIS AGREEMENT AND RELEASE YOU ACKNOWLEDGE THAT YOU ARE KNOWINGLY AND
VOLUNTARILY WAIVING AND RELEASING ANY AND ALL RIGHTS YOU MAY HAVE AGAINST MORGAN
STANLEY UP TO THE DATE OF YOUR EXECUTION OF THIS AGREEMENT UNDER THE AGE
DISCRIMINATION IN EMPLOYMENT ACT, THE OLDER WORKERS BENEFIT PROTECTION ACT AND
ALL OTHER APPLICABLE DISCRIMINATION LAWS, STATUTES, ORDINANCES OR REGULATIONS.

The Agreement and the documents governing the Awards (as modified herein) are
the entire agreement between you and Morgan Stanley with respect to the subject
matter hereof and the Agreement supersede any and all oral and written
agreements between Morgan Stanley and you regarding the topics covered herein.
No one shall be bound by anything not expressed herein. This Agreement is
intended solely for the purpose stated herein and does not constitute and should
not be construed to be an admission of liability by Morgan Stanley or you. This
Agreement shall be binding on both Morgan Stanley and you.

This Agreement shall be governed by and construed in accordance with the laws of
the State of New York, without regard to the conflict of laws principles
thereof. If any clause or portion of any clause of this Agreement should ever be
determined to be unenforceable, it is agreed that this will not affect the
enforceability of the remainder of such clause or of any other clause or the
remainder of this Agreement.

This Agreement may be amended, modified or changed only by a written instrument
executed by you and Morgan Stanley. Any waiver to be effective must be in
writing and signed by the party against whom it is being enforced.

 

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All notices and other communications hereunder shall be in writing and shall be
delivered by hand, by PDF or facsimile to the other party or mailed by overnight
mail or registered or certified mail to the other party, return receipt
requested, postage prepaid; shall be deemed delivered upon actual receipt or in
the case of registered or certified mail, upon the earlier of the actual receipt
or two business days following the date postmarked; and shall be addressed as
follows:

 

If to you:   Paul J. Taubman   New York, New York If to Morgan Stanley:   Alexa
B. Pappas   Legal & Compliance Division   [address redacted]

or to such other address as either party shall have furnished to the other in
writing in accordance herewith.

 

Very truly yours,

/s/ Jeffrey Brodsky

Jeffrey Brodsky, Managing Director Chief Human Resources Officer

 

AGREED AND ACCEPTED:

/s/ Paul J. Taubman

Paul J. Taubman Date: January 3, 2013

 

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Attachment A

CANCELLATION PROVISIONS APPLICABLE TO OUTSTANDING DEFERRED

CASH AND EQUITY AWARDS

If any of the following events occur at any time before the applicable Scheduled
Conversion or Distribution Date, your Stock Units and entire Applicable Account
Value (whether or not vested) will be canceled immediately, subject to
applicable law:

Your Employment is terminated for Cause or you engage in conduct constituting
Cause (either during or following Employment and whether or not your Employment
has been terminated as of the applicable Scheduled Distribution Date);

Following the termination of your Employment, the Firm determines that your
Employment could have been terminated for Cause (for these purposes, “Cause”
will be determined without giving consideration to any “cure” period included in
the definition of “Cause”);

“Cause” means:

any act or omission which constitutes a breach of your obligations to the Firm,
including, without limitation, (A) your failure to comply with any notice or
non-solicitation restrictions that may be applicable to you or (B) your failure
to comply with the Firm’s compliance, ethics or risk management standards, or
your failure or refusal to perform satisfactorily any duties reasonably required
of you, which breach, failure or refusal (if susceptible to cure) is not
corrected (other than failure to correct by reason of your incapacity due to
physical or mental illness) within ten (10) business days after written
notification thereof to you by the Firm;

your commission of any dishonest or fraudulent act, or any other act or
omission, which has caused or may reasonably be expected to cause injury to the
interest or business reputation of the Firm; or

your violation of any securities, commodities or banking laws, any rules or
regulations issued pursuant to such laws, or rules or regulations of any
securities or commodities exchange or association of which the Firm is a member
or of any policy of the Firm relating to compliance with any of the foregoing.

You disclose Confidential and Proprietary Information to any unauthorized person
outside the Firm, or use or attempt to use Confidential and Proprietary
Information other than in connection with the business of the Firm; or you fail
to comply with your obligations (either during or after your Employment) under
the Firm’s Code of Conduct (and any applicable supplements), or otherwise
existing between you and the Firm, relating to Confidential and Proprietary
Information or an assignment, procurement or enforcement of rights in
Confidential and Proprietary Information;

You engage in a Wrongful Solicitation;

You make any Unauthorized Comments;

 

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You fail or refuse, following your termination of Employment, to cooperate with
or assist the Firm in a timely manner in connection with any investigation,
regulatory matter, lawsuit or arbitration in which the Firm is a subject, target
or party and as to which you may have pertinent information; or

You resign from your employment with the Firm without having provided the Firm
180 days prior notice of your resignation except as permitted by the Agreement
attached herewith.

The terms “Confidential and Proprietary Information”, “Wrongful Solicitation”
and “Unauthorized Comments” shall be defined consistent with the definitions of
those terms in the Agreement.

CLAWBACK CANCELLATION EVENT APPLICABLE TO DEFERRED CASH

AWARDS

Clawback Cancellation Event. Your entire Applicable Account Value (whether or
not vested) will be cancelled immediately, subject to applicable law, if before
the applicable Scheduled Distribution Date you take any action, or omit to take
any action (including with respect to direct supervisory responsibilities),
where such action or omission: (i) causes a restatement of the Firm’s
consolidated financial results; (ii) constitutes a violation by you of the
Firm’s risk policies and standards (where prior authorization and approval of
appropriate senior management was not obtained) whether such action results in a
favorable or unfavorable impact to the Firm’s consolidated financial results; or
(iii) causes, or is reasonably expected to cause, a substantial financial loss
on a trading strategy, investment, commitment or other holding originating
either in the current year or in any prior year (without the prior understanding
of the possibility and magnitude of such loss by appropriate senior management)
and such trading strategy, investment, commitment or other holding was a factor
in your award determination.

CLAWBACK CANCELLATION EVENT APPLICABLE TO EQUITY AWARDS

Clawback Cancellation Event. All of your stock units (whether or not vested)
will be cancelled immediately, subject to applicable law, if before the
applicable Scheduled Conversion Date you take any action, or omit to take any
action (including with respect to direct supervisory responsibilities), where
such action or omission: (i) causes a restatement of the Firm’s consolidated
financial results or (ii) constitutes a violation by you of the Firm’s risk
policies and standards (where prior authorization and approval of appropriate
senior management was not obtained) whether such action results in a favorable
or unfavorable impact to the Firm’s consolidated financial results.

 

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For Performance Stock Units Only:

In the event and to the extent the Committee reasonably determines that the
performance certified by the Committee, and on the basis of which PSUs were
converted to shares of Morgan Stanley common stock, was based on materially
inaccurate financial statements or other performance metric criteria, you will
be obligated to repay to the Firm: the number of shares that were delivered upon
conversion of your PSUs, less the number of shares that would have been
delivered had your PSUs converted to shares based on accurate financial
statements or other performance metric criteria (such number of shares
determined in each case by the Committee and before satisfaction of tax or other
withholding obligations pursuant to Section 12) (the “Repayment Shares”);
provided, however, that to the extent that any of the Repayment Shares have been
transferred, you shall repay to the Firm an amount equal to the number of
Repayment Shares so transferred multiplied by the fair market value, determined
using a valuation methodology established by Morgan Stanley, of Morgan Stanley
common stock on the date your PSUs converted to shares of Morgan Stanley common
stock; plus any dividend equivalents that were paid on the Repayment Shares when
your PSUs converted to shares; plus interest on the amounts described in the
preceding clauses at the average rate of interest Morgan Stanley paid to borrow
money from financial institutions during the period from the date of such
conversion through the date preceding the repayment date.

For the avoidance of doubt, your PSUs will not be deemed “earned” if payment of
such award is based on materially inaccurate financial statements or other
performance metric criteria.

 

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