EXHIBIT 10.1

 

MORGAN STANLEY

 

EQUITY INCENTIVE COMPENSATION PLAN

 

[FISCAL YEAR] DISCRETIONARY RETENTION

AWARDS

 

MANAGEMENT COMMITTEE

 

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TABLE OF CONTENTS FOR AWARD CERTIFICATE

 

PART I:

   TERMS OF STOCK UNITS    3 1.      Stock units generally    3 2.      Vesting
schedule and conversion    3 3.      Special provision for certain employees   
4 4.      Dividend equivalent payments    4

PART II:

   TERMS OF STOCK OPTIONS    4 5.      Stock options generally    4 6.     
Vesting schedule    5 7.      Expiration date    5 8.      Exercise    5 9.     
Restoration option rights    6 10.    Restrictions on transfer of shares issued
upon exercise of stock options    6

PART III:

   GENERAL TERMS OF STOCK UNITS AND STOCK OPTIONS    7 11.    Death, Disability
and Full Career Retirement    7 12.    Change in Control and Change in Ownership
   8 13.    Cancellation of awards under certain circumstances    9 14.    Tax
and other withholding obligations    11 15.    Satisfaction of obligations    12
16.    Nontransferability    12 17.    Designation of a beneficiary    13 18.   
Ownership and possession    13 19.    Securities law compliance matters    14
20.    Compliance with laws and regulation    14 21.    No entitlements    15
22.    Consents under local law    15 23.    Award modification    15 24.   
Severability    16 25.    Governing law    16 26.    Defined terms    16

 

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MORGAN STANLEY

 

MANAGEMENT COMMITTEE

AWARD CERTIFICATE FOR DISCRETIONARY RETENTION AWARD

OF STOCK UNITS AND STOCK OPTIONS

FISCAL YEAR [        ]

 

Morgan Stanley has awarded you retention stock units and stock options as your
discretionary long-term incentive compensation for services provided during
Fiscal Year [        ] and as an incentive for you to continue to remain in
Employment and provide services to the Firm, as provided in this Award
Certificate.1 This Award Certificate sets forth the general terms and conditions
of your Fiscal Year [        ] award. The number of stock units and stock
options in your award has been communicated to you independently.

 

If you are employed outside the United States, you will also receive an
“International Supplement” that contains supplemental terms and conditions for
your Fiscal Year [        ] award. This Award Certificate should be read in
conjunction with the International Supplement, if applicable, in order for you
to understand the terms and conditions of your award.

 

Your award is made pursuant to the EICP. References to “stock units” and “stock
options” in this Award Certificate mean only those stock units and stock options
included in your Fiscal Year [        ] award, and the terms and conditions
herein only apply to such award. If you receive any other award under the EICP
or another equity compensation plan, it will be governed by the terms and
conditions of the applicable award documentation, which may be different from
those herein.

 

The purpose of the award is, among other things, to align your interests with
the interests of the Firm, to reward you for your continued employment and
service to the Firm in the future, and to protect the Firm’s interests in
non-public, confidential and/or proprietary information, products, trade
secrets, customer relationships, and other legitimate business interests. In
view of these purposes, you will earn each portion of your Fiscal Year
[        ] stock unit and stock option award only if you do not engage in any
activity that is a cancellation event set forth in Section 13 below. Therefore,
even if your award has vested, you will have no right to your award if a
cancellation event occurs.

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1 For certain years or certain participants, awards may consist exclusively of
stock units or stock options. In such cases, only the provisions of this form of
Award Certificate that relate to the type of award granted will be included.

 

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You will be required to provide Morgan Stanley with such written certification
or other evidence as Morgan Stanley deems appropriate, from time to time in its
sole discretion, to confirm that no cancellation event has occurred. If you fail
to provide such certification or evidence, Morgan Stanley may cancel your award.

 

Capitalized terms used in this Award Certificate that are not defined in the
text have the meanings set forth in Section 26 below, or in the EICP.

 

PART I: TERMS OF STOCK UNITS

 

1. Stock units generally.

 

Each of your stock units corresponds to one share of Morgan Stanley common
stock. A stock unit constitutes an unsecured promise of Morgan Stanley to pay
you one share of Morgan Stanley common stock on the conversion date for the
stock unit. As the holder of stock units, you have only the rights of a general
unsecured creditor of Morgan Stanley. You will not be a stockholder with respect
to the shares of Morgan Stanley common stock underlying your stock units unless
and until your stock units convert to shares.

 

2. Vesting schedule and conversion.

 

(a) Vesting schedule. Your stock units will vest according to the following
schedule: (i) 50% of your stock units will vest on the First Scheduled Vesting
Date, and (ii) the remaining 50% of your stock units will vest on the Second
Scheduled Vesting Date.2 Any fractional stock units resulting from the
application of the vesting schedule will be aggregated and will vest on the
First Scheduled Vesting Date. The special vesting terms set forth in Part III of
this Award Certificate apply (i) if your Employment terminates by reason of your
death or Disability, (ii) upon your Full Career Retirement, or (iii) upon a
Change in Control or a Change in Ownership. Vested stock units are subject to
the cancellation and withholding provisions set forth in this Award Certificate.

 

(b) Conversion. Except as otherwise provided in this Award Certificate, each of
your vested stock units will convert to one share of Morgan Stanley common stock
on the Scheduled Conversion Date.3

 

The shares delivered upon conversion of stock units will not be subject to any
transfer restrictions, other than those that may arise under the securities laws
or the

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2 The vesting schedule presented in this form of Award Certificate is
indicative. The vesting schedule applicable to awards may vary.

 

3 The conversion schedule presented in this form of Award Certificate is
indicative. The conversion schedule applicable to awards may vary.

 

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Firm’s employee trading policy, or to cancellation under the circumstances set
forth in Section 13.

 

(c) Accelerated conversion. Morgan Stanley reserves the right to accelerate the
conversion of any or all of your stock units. If any stock units are converted
to shares of Morgan Stanley common stock prior to the Scheduled Conversion Date
pursuant to this Section 2(c), these shares will not be transferable and will
remain subject to the vesting provisions set forth above and to the cancellation
and withholding provisions set forth in this Award Certificate to the same
extent that such provisions would have applied to the stock units had they not
been converted.

 

3. Special provision for certain employees.

 

Notwithstanding the other provisions of this Award Certificate, the conversion
of your vested stock units into Morgan Stanley common stock will be deferred if,
at the time scheduled for conversion (whether on the Scheduled Conversion Date
or some other time), Morgan Stanley considers you to be one of its executive
officers and your compensation may not be fully deductible by virtue of Section
162(m) of the Internal Revenue Code. This deferral will continue until Morgan
Stanley no longer considers you to be an executive officer or such earlier date
as the Chairman may determine if, in his sole discretion, an earlier payment is
likely to be deductible to the Firm.

 

4. Dividend equivalent payments.

 

Until your stock units convert to shares, if Morgan Stanley pays a dividend on
its common stock, you will be paid a dividend equivalent for your vested and
unvested stock units. No dividend equivalents will be paid to you, however, on
any canceled stock units. Regular dividends will be paid on the shares of Morgan
Stanley common stock following conversion of your stock units.

 

Morgan Stanley may pay dividend equivalents in shares of Morgan Stanley common
stock, in cash, in additional stock units or in a combination of any of these.
Morgan Stanley will decide on the form of payment, and may make these amounts
subject to deferral, vesting or restrictions on transfer. Because dividend
equivalent payments are considered part of your compensation for income tax
purposes, they will be subject to applicable tax and other withholding
obligations.

 

PART II: TERMS OF STOCK OPTIONS

 

5. Stock options generally.

 

Each of your stock options gives you the right to purchase one share of Morgan
Stanley common stock at an exercise price of $[        ] per share.

 

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6. Vesting schedule.

 

Your stock options will vest according to the following schedule: (i) 50% of
your stock options will vest on the First Scheduled Vesting Date, and (ii) the
remaining 50% of your stock options will vest on the Second Scheduled Vesting
Date.4 Your stock options will become exercisable upon vesting. Any fractional
stock options resulting from the application of the vesting schedule will be
aggregated and will vest on the First Scheduled Vesting Date. The special
vesting terms set forth in Part III of this Award Certificate apply (i) if your
Employment terminates by reason of your death or Disability, (ii) upon your Full
Career Retirement, or (iii) upon a Change in Control or a Change in Ownership.
Vested stock options and any Net Option Shares remain subject to the transfer
restrictions and cancellation and withholding provisions set forth in this Award
Certificate.

 

7. Expiration date.

 

Your stock options will expire on the Expiration Date. Special expiration and
cancellation provisions apply if your Employment terminates under certain
circumstances. See Section 13 below for details.

 

8. Exercise.

 

When you exercise your stock options, you may pay the exercise price in the
following ways: in cash, in shares of Morgan Stanley common stock that you have
owned for at least six months, or in a combination of cash and shares. Any
shares that you tender to pay the exercise price will be valued at their fair
market value on the exercise date, using a valuation methodology established by
Morgan Stanley. Morgan Stanley may also allow you to make a “cashless” exercise
of stock options (in which the payment of the exercise price is funded by a sale
of shares by a broker) or to exercise your stock options through a net-share
settlement.

 

Morgan Stanley may implement policies and procedures regarding the availability
of any of the foregoing exercise methods or to facilitate cashless exercises.
Your exercise and payment must conform to the policies and procedures that
Morgan Stanley implements from time to time.

 

Your stock options are considered to be exercised in the order in which they
vested.

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4 The vesting schedule presented in this form of Award Certificate is
indicative. The vesting schedule applicable to awards may vary.

 

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9. Restoration option rights.5

 

Each of your stock options includes a “Restoration Option Right”. A Restoration
Option Right entitles you to receive a “Restoration Option” when you exercise
your stock options through net-share settlement or by tendering previously owned
shares of Morgan Stanley common stock. The Restoration Option entitles you to
purchase a number of shares of Morgan Stanley common stock equal to the number
of shares that you tender or have withheld to pay the exercise price or
withholding taxes upon exercise of the underlying stock option (any tender or
withholding of shares for these purposes must conform to the Firm’s rules and
procedures in effect at exercise), provided, that the Compensation Committee may
unilaterally cancel the Restoration Option Right feature. You will receive
Restoration Options only when you exercise stock options during your Employment.
The exercise price of a Restoration Option will be the fair market value of a
share of Morgan Stanley’s common stock on the date of exercise of the underlying
stock option, using a valuation methodology established by Morgan Stanley. The
Restoration Options will be fully vested and exercisable upon grant and will
expire on the Expiration Date of the underlying stock option. No Restoration
Options will be granted to the extent that the grant would cause the aggregate
limit on option grants, or the individual limits on option grants, set forth in
the EICP or any other equity plan of Morgan Stanley to be used for the issuance
of the Restoration Options to be exceeded. All other terms and conditions of a
Restoration Option will be substantially identical to the terms and conditions
of the underlying stock options, except that no Restoration Option shall include
a Restoration Option Right.

 

10. Restrictions on transfer of shares issued upon exercise of stock options.

 

Shares of Morgan Stanley common stock that you acquire upon exercise of your
stock options may not be transferred prior to the Transfer Restriction Date,
except as otherwise provided in this Award Certificate. However, you may sell
shares in connection with exercises occurring more than six months after the
Date of the Award to the extent required to cover the exercise price and tax or
other withholding obligations arising upon exercise.

 

If you pay the exercise price of your stock options by tendering shares of
Morgan Stanley common stock that you already own and that are not subject to
transfer restrictions, the transfer restrictions set forth in this Section 10
apply only to the Net Option Shares that are issued upon exercise.

 

After the Transfer Restriction Date, you may transfer any shares that you
acquired from exercising stock options (whether the exercise occurs before or
after the Transfer Restriction Date), but your transfers must comply with the
securities laws and the Firm’s employee trading policy as in effect from time to
time.

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5 Some awards may not include Restoration Option Rights. Section 9 will be
included only for awards that include Restoration Option Rights.

 

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For purposes of this Award Certificate, a “transfer” of shares includes, without
limitation, any sale, assignment, pledge, mortgage, encumbrance or other
disposition, direct or indirect, whether or not for value, and whether or not
voluntary, but does not include a transfer after your death by will or the laws
of descent and distribution.

 

PART III: GENERAL TERMS OF STOCK UNITS AND STOCK OPTIONS

 

11. Death, Disability and Full Career Retirement.

 

The following special vesting and payment terms apply to your stock units and
stock options:

 

(a) Death during Employment. If your Employment terminates due to death, all of
your unvested stock units and stock options will immediately vest. Your stock
units will convert to shares of Morgan Stanley common stock as soon as
practicable after Morgan Stanley receives notice of your death and such shares
will be delivered to the beneficiary you have designated pursuant to Section 17
or the legal representative of your estate, as applicable. Your stock options
will remain outstanding until the Expiration Date, and your beneficiary or the
legal representative of your estate, as applicable, may exercise them until the
Expiration Date.

 

Your Net Option Shares will not be subject to transfer restrictions, other than
those that may arise under the securities laws or the Firm’s employee trading
policy, and the cancellation provisions set forth in Section 13 will no longer
apply.

 

(b) Death after termination of Employment. If you die after the termination of
your Employment, but prior to the Scheduled Conversion Date, your stock units
will convert to shares of Morgan Stanley common stock, and such shares will be
delivered to the beneficiary you have designated pursuant to Section 17 or the
legal representative of your estate, as applicable, as soon as practicable after
Morgan Stanley receives notice of your death.

 

Your beneficiary or the legal representative of your estate, as applicable, may
exercise your vested stock options after your death to the extent and for the
period of time that you would have been permitted to exercise your stock options
at the time of your death.

 

After your death, your Net Option Shares will not be subject to transfer
restrictions, other than those that may arise under the securities laws or the
Firm’s employee trading policy, and the cancellation provisions set forth in
Section 13 will no longer apply.

 

(c) Disability. If your Employment terminates due to Disability, all of your
unvested stock units and unvested stock options will immediately vest.

 

Subject to rules and procedures adopted by Morgan Stanley from time to time, you
may elect at the time of the termination of your Employment to have all of your

 

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stock units convert to Morgan Stanley common stock on the last trading day of
the month in which occurs the first anniversary of the termination of your
Employment if such date is prior to the Scheduled Conversion Date. The
cancellation and withholding provisions set forth in this Award Certificate will
continue to apply until your stock units convert to shares of Morgan Stanley
common stock.

 

You may exercise your stock options until the Expiration Date. The transfer
restrictions that apply to your Net Option Shares (other than restrictions that
may arise under the securities laws or the Firm’s employee trading policy) and
the cancellation provisions set forth in Section 13 that apply to your stock
options and Net Option Shares will expire on the earlier of (i) the Transfer
Restriction Date and (ii) the last trading day of the month in which occurs the
first anniversary of the termination of your Employment.

 

(d) Full Career Retirement. If your Employment terminates in a Full Career
Retirement, then subject to Section 13(a) below:

 

(1) All of your unvested stock units will vest as of, and your unvested stock
options will vest five business days prior to, the termination of your
Employment.

 

(2) Subject to rules and procedures adopted by Morgan Stanley from time to time,
you may elect at the time of the termination of your Employment to have all of
your vested stock units convert to Morgan Stanley common stock on the last
trading day of the month in which occurs the first anniversary of the
termination of your Employment if such date is prior to the Scheduled Conversion
Date. The cancellation and withholding provisions set forth in this Award
Certificate will continue to apply until your stock units convert to Morgan
Stanley common stock.

 

(3) You may exercise your stock options until the Expiration Date. The transfer
restrictions that apply to your Net Option Shares (other than restrictions that
may arise under the securities laws or the Firm’s employee trading policy) and
the cancellation provisions set forth in Section 13 that apply to your stock
options and Net Option Shares will expire on the earlier of (i) the Transfer
Restriction Date and (ii) the last trading day of the month in which occurs the
first anniversary of the termination of your Employment.

 

12. Change in Control and Change in Ownership.

 

If there is a Change in Control or a Change in Ownership, all of your stock
units and stock options will immediately vest.

 

If the Change in Control is not also a Change in Ownership, your stock units
will convert to shares of Morgan Stanley common stock on the Scheduled
Conversion Date, and your Net Option Shares will remain subject to transfer
restrictions until the Transfer Restriction Date. The cancellation and
withholding provisions set forth in this Award Certificate will remain in effect
as provided herein.

 

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Your stock units will convert to shares of Morgan Stanley common stock as soon
as practicable after a Change in Ownership. The transfer restrictions applicable
to your Net Option Shares, other than those that may arise under the securities
laws or the Firm’s employee trading policy, and the cancellation provisions set
forth in Section 13, will no longer apply after a Change in Ownership.

 

13. Cancellation of awards under certain circumstances.

 

The cancellation events set forth in this Section 13 are designed, among other
things, to protect the Firm’s interests in non-public, confidential and/or
proprietary information, trade secrets, customer relationships, and other
legitimate business interests, and to ensure an orderly transition of
responsibilities. This Section 13 shall apply notwithstanding any other terms of
this Award Certificate (except where sections in this Award Certificate
specifically provide that the cancellation events set forth in this Section 13
no longer apply).

 

Your stock units and stock options, even if vested, and Net Option Shares are
not earned until the Scheduled Conversion Date (in the case of stock units) or
the Transfer Restriction Date (in the case of stock options and Net Option
Shares), and will be terminated and canceled prior to these respective dates in
any of the following circumstances:

 

(a) Competition. If you engage in Competition either during your Employment or
prior to the first anniversary of the voluntary termination of your Employment,
the following shall apply:

 

(1) If your Competition occurs before the Second Scheduled Vesting Date, then
all of your stock units, stock options, and Net Option Shares will terminate and
be canceled immediately.

 

(2) If your Competition occurs on or after the Second Scheduled Vesting Date but
before the first anniversary of the Second Scheduled Vesting Date, then:

 

(i) 50% of your stock units and stock options (including Net Option Shares
acquired upon exercise of such stock options) will terminate and be canceled
immediately; and

 

(ii) (a) The remaining 50% of your stock options will expire on the earlier to
occur of (x) the Expiration Date, and (y) the date that is 90 days after your
Employment termination date, and any Net Option Shares that you acquired upon an
exercise occurring after such 90-day period will be canceled; (b) the remaining
50% your stock units will remain outstanding and continue to be subject to all
the other terms and conditions set forth in this Award Certificate and will
convert to Morgan Stanley common stock on the Scheduled Conversion Date; and (c)
the cancellation and withholding provisions set forth in this Award Certificate
will continue to apply to the remaining 50% of your stock units and stock

 

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options (including Net Option Shares acquired upon exercise of such stock
options) until the Scheduled Conversion Date or the Transfer Restriction Date,
respectively.

 

(3) If your Competition occurs on or after the first anniversary of the Second
Scheduled Vesting Date, then:

 

(i) All of your stock options will expire on the earlier to occur of (x) the
Expiration Date, and (y) the date that is 90 days after your termination date,
and any Net Option Shares that you acquired upon an exercise occurring after
such 90-day period will be canceled;

 

(ii) All of your stock units will remain outstanding and continue to be subject
to all the other terms and conditions set forth in this Award Certificate and
will convert to Morgan Stanley common stock on the Scheduled Conversion Date;
and

 

(iii) The cancellation and withholding provisions set forth in this Award
Certificate will continue to apply to your stock units, stock options and Net
Option Shares until the Scheduled Conversion Date or the Transfer Restriction
Date, respectively.

 

(4) Your stock options are considered to be exercised in the order in which they
vested.

 

(b) Competition following a Change in Control. If any portion of your award
vests before the Second Scheduled Vesting Date as the result of a Change in
Control that is not also a Change in Ownership, then this clause shall apply in
lieu of the foregoing Section 13(a).

 

(1) If the Change in Control occurs before the First Scheduled Vesting Date and
you engage in Competition (either during your Employment or following the
voluntary termination of your Employment) during the one year period ending on
the first anniversary of the date of the Change in Control, all of your stock
units, stock options and Net Option Shares will terminate and be canceled
immediately.

 

(2) If the Change in Control occurs on or after the First Scheduled Vesting Date
but before the Second Scheduled Vesting Date and you engage in Competition
(either during your Employment or following the voluntary termination of your
Employment) during the one year period ending on the first anniversary of the
date of the Change in Control, the following shall apply:

 

(i) If your Competition occurs before the Second Scheduled Vesting Date, all of
your stock units, stock options and Net Option Shares will terminate and be
canceled immediately; and

 

(ii) If your Competition occurs on or after the Second Scheduled Vesting Date,
only those stock units and stock options that

 

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vested as a result of the Change in Control (including Net Option Shares
acquired upon exercise of such stock options) will terminate and be canceled
immediately and all of your stock units and stock options that vested on the
First Scheduled Vesting Date (including Net Option Shares acquired upon exercise
of such stock options) will continue to be subject to all the other terms and
conditions set forth in this Award Certificate.

 

(c) Other Events. If any of the following events occur at any time before the
Scheduled Conversion Date or the Transfer Restriction Date, as applicable, all
of your stock units and stock options (whether or not vested), and any Net
Option Shares, will terminate and be canceled immediately:

 

(1) The Firm terminates your Employment for Cause;

 

(2) 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”);

 

(3) You disclose Proprietary Information to any unauthorized person outside the
Firm, or use Proprietary Information other than in connection with the business
of the Firm, where such disclosure or use may be adverse to the interests of the
Firm;

 

(4) You engage in a Wrongful Solicitation;

 

(5) You make any Unauthorized Comments; or

 

(6) You resign from your Employment without having provided the Firm written
notice at least 30 days prior to the termination of your Employment.

 

14. Tax and other withholding obligations.

 

Pursuant to rules and procedures that Morgan Stanley establishes, you may elect
to satisfy the tax or other withholding obligation arising upon conversion of
your stock units or exercise of your stock options by having Morgan Stanley
withhold shares of Morgan Stanley common stock or by tendering shares of Morgan
Stanley common stock that you have owned for at least six months, in each case
in an amount sufficient to satisfy the tax or other withholding obligations.
Shares withheld or tendered will be valued using the fair market value of Morgan
Stanley common stock on the date your stock units convert or your stock options
are exercised, using a valuation methodology established by Morgan Stanley.

 

Morgan Stanley may limit the amount of shares that you may have withheld or that
you may tender in order to comply with applicable accounting standards or the
Firm’s policies in effect from time to time.

 

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15. Satisfaction of obligations.

 

Notwithstanding any other provision of this Award Certificate, Morgan Stanley
may, in its sole discretion, take various actions affecting your stock units or
stock options in order to collect amounts sufficient to satisfy any obligation
that you owe to the Firm and any tax or other withholding obligations. These
actions include the following:

 

(a) Upon conversion of stock units, including any accelerated conversion
pursuant to Sections 2(c), 11 or 12 above, or exercise of stock options, Morgan
Stanley may withhold a number of shares sufficient to satisfy any obligation
that you owe to the Firm and any tax or other withholding obligations. The Firm
shall determine the number of shares to be withheld by dividing the dollar value
of your obligation to the Firm and any tax or other withholding obligations by
the fair market value of Morgan Stanley common stock on the date of conversion
or exercise.

 

(b) Morgan Stanley may, at any time, cancel any of your unexercised stock
options or any Net Option Shares that remain subject to transfer restrictions in
a quantity sufficient to satisfy any obligation that you owe to the Firm and any
tax or other withholding obligations. Any canceled stock options will be
considered to have a value equal to the difference between the fair market value
of the underlying shares of Morgan Stanley common stock, determined on the date
of cancellation, and the exercise price. Any canceled Net Option Shares will be
considered to have a value equal to the fair market value of Morgan Stanley
common stock determined on the date of cancellation. Such amount, less any
applicable withholding taxes, will be credited against your obligation.

 

(c) Morgan Stanley may withhold the payment of dividend equivalents on your
stock units, or subject dividend equivalents to deferral, vesting conditions or
restrictions on transfer, on such terms as it considers appropriate, to ensure
satisfaction of any obligation that you owe the Firm or any tax or other
withholding obligations.

 

(d) Morgan Stanley’s determination of the amount that you owe the Firm shall be
conclusive. The fair market value of Morgan Stanley common stock for purposes of
the foregoing provisions shall be determined using a valuation methodology
established by Morgan Stanley.

 

16. Nontransferability.

 

You may not sell, pledge, hypothecate, assign or otherwise transfer your stock
units or stock options, other than as provided in Section 17 (which allows you
to designate a beneficiary or beneficiaries in the event of your death) or by
will or the laws of descent and distribution. This prohibition includes any
assignment or other transfer that purports to occur by operation of law or
otherwise. During your lifetime, payments relating to the stock units will be
made only to you, and stock options may be exercised only by you.

 

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Your personal representatives, heirs, legatees, beneficiaries, successors and
assigns, and those of Morgan Stanley, shall all be bound by, and shall benefit
from, the terms and conditions of your award.

 

17. Designation of a beneficiary.

 

You may make a written designation of beneficiary or beneficiaries to receive
all or part of the shares to be paid under this Award Certificate in the event
of your death or, following your death, to exercise any stock options that have
become exercisable and have not expired or been canceled. To make a beneficiary
designation, you must complete and file the form attached hereto as Appendix A
with the Executive Compensation Department in New York.

 

Any shares that become payable upon your death, and as to which a designation of
beneficiary is not in effect, will be distributed to your estate. Any stock
options that remain exercisable following your death, and as to which a
designation of beneficiary is not in effect, will be exercisable by the legal
representative of your estate.

 

If you previously filed a designation of beneficiary form for your EICP awards
with the Executive Compensation Department, such form will also apply to the
stock units and stock options granted pursuant to this award. You may replace or
revoke your beneficiary designation at any time. If there is any question as to
the legal right of any beneficiary to receive shares or exercise stock options
under this award, Morgan Stanley may determine in its sole discretion to deliver
the shares in question to your estate or to allow the representative of your
estate to exercise the stock options in question. Morgan Stanley’s determination
shall be binding and conclusive on all persons and it will have no further
liability to anyone with respect to such shares or stock options.

 

18. Ownership and possession.

 

(a) Stock units. Generally, you will not have any rights as a stockholder in the
shares of Morgan Stanley common stock corresponding to your stock units prior to
conversion of your stock units.

 

Prior to conversion of your stock units, however, you will receive dividend
equivalent payments, as set forth in Section 4 of this Award Certificate. In
addition, if Morgan Stanley contributes shares of Morgan Stanley common stock
corresponding to your stock units to a grantor trust it has established, you may
be permitted to direct the trustee how to vote the shares in the trust
corresponding to your stock units. Voting rights, if any, are governed by the
terms of the grantor trust and may be amended by Morgan Stanley, in its sole
discretion, at any time. Morgan Stanley is under no obligation to contribute
shares corresponding to stock units to a trust. If Morgan Stanley elects not to
contribute shares corresponding to your stock units to a trust, you will not
have voting rights with respect to shares corresponding to your stock units
until they convert to shares.

 

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(b) Stock options. You will not have any rights as a stockholder in the shares
of Morgan Stanley common stock subject to your stock options until you are
issued shares following the exercise of your stock options.

 

(c) Following conversion or exercise. Subject to Sections 10 and 13 with respect
to Net Option Shares, following conversion of your stock units or exercise of
your stock options you will be the beneficial owner of the shares issued to you,
and you will be entitled to all rights of ownership, including voting rights and
the right to receive cash or stock dividends or other distributions paid on the
shares.

 

(d) Custody of shares. Morgan Stanley may maintain possession of the shares
subject to your award until such time as your shares are no longer subject to
restrictions on transfer.

 

19. Securities law compliance matters.

 

Morgan Stanley may affix a legend to the stock certificates representing shares
of Morgan Stanley common stock issued upon conversion of your stock units or
exercise of your stock options (and any stock certificates that may subsequently
be issued in substitution for the original certificates). The legend will read
substantially as follows:

 

THE SHARES REPRESENTED BY THIS STOCK CERTIFICATE WERE ISSUED PURSUANT TO MORGAN
STANLEY’S 1995 EQUITY INCENTIVE COMPENSATION PLAN AND ARE SUBJECT TO THE TERMS
AND CONDITIONS THEREOF AND OF AN AWARD CERTIFICATE FOR STOCK UNITS AND STOCK
OPTIONS AND ANY SUPPLEMENT THERETO.

 

THE SECURITIES REPRESENTED BY THIS STOCK CERTIFICATE MAY BE SUBJECT TO
RESTRICTIONS ON TRANSFER BY VIRTUE OF THE SECURITIES ACT OF 1933.

 

COPIES OF THE PLAN, THE AWARD CERTIFICATE FOR STOCK UNITS AND STOCK OPTIONS AND
ANY SUPPLEMENT THERETO ARE AVAILABLE THROUGH THE EXECUTIVE COMPENSATION
DEPARTMENT.

 

Morgan Stanley may advise the transfer agent to place a stop order against such
shares if it determines that such an order is necessary or advisable.

 

20. Compliance with laws and regulation.

 

Any sale, assignment, transfer, pledge, mortgage, encumbrance or other
disposition of shares issued upon conversion of your stock units or exercise of
your stock options (whether directly or indirectly, whether or not for value,
and whether or not voluntary) must be made in compliance with any applicable
constitution, rule, regulation, or policy of any of the exchanges or
associations or other institutions with which the Firm or a Related Employer has
membership or other privileges, and any applicable law, or

 

14

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applicable rule or regulation of any governmental agency, self-regulatory
organization or state or federal regulatory body.

 

21. No entitlements.

 

(a) No right to continued Employment. This award is not an employment agreement,
and nothing in this Award Certificate, the International Supplement, if
applicable, or the EICP shall alter your status as an “at-will” employee of the
Firm or your employment status at a Related Employer. None of this Award
Certificate, the International Supplement, if applicable, or the EICP shall be
construed as guaranteeing your employment by the Firm or a Related Employer, or
as giving you any right to continue in the employ of the Firm or a Related
Employer, during any period (including without limitation the period between the
Date of the Award and any of the First Scheduled Vesting Date, the Second
Scheduled Vesting Date, the Scheduled Conversion Date, the Transfer Restriction
Date, the Expiration Date or any portion of any of these periods), nor shall
they be construed as giving you any right to be reemployed by the Firm or a
Related Employer following any termination of Employment.

 

(b) No right to future awards. This award, and all other awards of stock units,
stock options and other equity-based awards, are discretionary. This award does
not confer on you any right or entitlement to receive another award of stock
units, stock options or any other equity-based award at any time in the future
or in respect of any future period.

 

(c) No effect on future employment compensation. Morgan Stanley has made this
award to you in its sole discretion. This award does not confer on you any right
or entitlement to receive compensation in any specific amount for any future
fiscal year, and does not diminish in any way the Firm’s discretion to determine
the amount, if any, of your compensation. In addition, this award is not part of
your base salary or wages and will not be taken into account in determining any
other employment-related rights you may have, such as rights to pension or
severance pay.

 

22. Consents under local law.

 

Your award is conditioned upon the making of all filings and the receipt of all
consents or authorizations required to comply with, or required to be obtained
under, applicable local law.

 

23. Award modification.

 

Morgan Stanley reserves the right to modify or amend unilaterally the terms and
conditions of your stock units and stock options, without first asking your
consent, or to waive any terms and conditions that operate in favor of Morgan
Stanley. These amendments may include (but are not limited to) changes that
Morgan Stanley considers necessary or advisable as a result of changes in, or
the adoption of any new law, regulation, ruling, judicial decision or changes in
accounting standards. Morgan Stanley may not modify your stock units or stock
options in a manner that would materially impair your rights in your stock units
or stock options without your consent;

 

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provided, however, that Morgan Stanley may, without your consent, amend or
modify your stock units or stock options in any manner that Morgan Stanley
considers necessary or advisable to comply with any legal requirement or to
ensure that your stock units or stock options are not subject to federal, state
or local income tax prior to payment or exercise, as applicable. Morgan Stanley
will notify you of any amendment of your stock units or stock options that
affects your rights.

 

24. Severability.

 

In the event Morgan Stanley determines that any provision of this Award
Certificate would cause you to be in constructive receipt for federal or state
income tax purposes of any portion of your award, then such provision will be
considered null and void and this Award Certificate will be constructed and
enforced as if the provision had not been included in this Award Certificate as
of the date such provision was determined to cause you to be in constructive
receipt of any portion of your award.

 

25. Governing law.

 

This Award Certificate and the legal relations between you and Morgan Stanley
will be governed by and construed in accordance with the laws of the State of
New York, without regard to any conflicts or choice of law, rule or principle
that might otherwise refer the interpretation of the award to the substantive
law of another jurisdiction.

 

26. Defined terms.

 

For purposes of this Award Certificate, the following terms shall have the
meanings set forth below:

 

(a) “Board” means the Board of Directors of Morgan Stanley.

 

(b) “Cause” means:

 

(1) any act or omission which constitutes a breach of your obligations to the
Firm or your failure or refusal to perform satisfactorily any duties reasonably
required of you, which breach (if susceptible to cure), failure or refusal 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;

 

(2) 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

 

(3) 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

 

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the Firm is a member or of any policy of the Firm relating to compliance with
any of the foregoing.

 

(c) “Chairman” means the Chairman of the Board.

 

(d) A “Change in Control” shall be deemed to have occurred if any of the
following conditions shall have been satisfied:

 

(1) any person (as defined in Section 3(a)(9) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), as such term is modified in Sections
13(d) and 14(d) of the Exchange Act), other than (i) any employee plan
established by Morgan Stanley or any of its Subsidiaries (as defined in the
EICP), (ii) any group of employees holding shares subject to agreements relating
to the voting of such shares, (iii) Morgan Stanley or any of its affiliates (as
defined in Rule 12b-2 promulgated under the Exchange Act), (iv) an underwriter
temporarily holding securities pursuant to an offering of such securities, or
(v) a corporation owned, directly or indirectly, by stockholders of Morgan
Stanley in substantially the same proportions as their ownership of Morgan
Stanley, is or becomes the beneficial owner, directly or indirectly, of
securities of Morgan Stanley (not including in the securities beneficially owned
by such person any securities acquired directly from Morgan Stanley or its
affiliates other than in connection with the acquisition by Morgan Stanley or
its affiliates of a business) representing 25% or more of either the then
outstanding shares of Morgan Stanley common stock or the combined voting power
of Morgan Stanley’s then outstanding voting securities;

 

(2) a change in the composition of the Board such that individuals who, as of
the Date of the Award, constitute the Board (the “Incumbent Board”) cease for
any reason to constitute at least a majority of the Board; provided, however,
that any individual becoming a member of the Board subsequent to the Date of the
Award whose election, or nomination for election by Morgan Stanley’s
stockholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Board;

 

(3) the consummation of a merger or consolidation of Morgan Stanley with any
other corporation or other entity, or the issuance of voting securities in
connection with a merger or consolidation of Morgan Stanley (or any direct or
indirect subsidiary of Morgan Stanley) pursuant to applicable stock exchange
requirements, other than (A) a merger or consolidation which results in the
voting securities of Morgan Stanley outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or any parent thereof), in

 

17

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combination with the ownership of any trustee or other fiduciary holding
securities under an employee benefit plan of Morgan Stanley or any of its
Subsidiaries, at least 66-2/3% of the combined voting power of the voting
securities of Morgan Stanley or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (B) a merger or
consolidation effected to implement a recapitalization of Morgan Stanley (or
similar transaction) in which no person (determined pursuant to clause (1)
above) is or becomes the beneficial owner, directly or indirectly, of securities
of Morgan Stanley (not including in the securities beneficially owned by such
person any securities acquired directly from Morgan Stanley or its affiliates
other than in connection with the acquisition by Morgan Stanley or its
affiliates of a business) representing 25% or more of either the then
outstanding shares of Morgan Stanley common stock or the combined voting power
of Morgan Stanley’s then outstanding voting securities; or

 

(4) the stockholders of Morgan Stanley approve a plan of complete liquidation of
Morgan Stanley or an agreement for the sale or disposition by Morgan Stanley of
all or substantially all of Morgan Stanley’s assets, other than a sale or
disposition by Morgan Stanley of all or substantially all of Morgan Stanley’s
assets to an entity, at least 66-2/3% of the combined voting power of the voting
securities of which are owned by persons in substantially the same proportions
as their ownership of Morgan Stanley immediately prior to such sale.

 

Notwithstanding the foregoing, no Change in Control shall be deemed to have
occurred if there is consummated any transaction or series of integrated
transactions immediately following which the record holders of Morgan Stanley
common stock immediately prior to such transaction or series of transactions
continue to have substantially the same proportionate ownership in an entity
which owns substantially all of the assets of Morgan Stanley immediately prior
to such transaction or series of transactions.

 

(e) A “Change in Ownership” shall be deemed to have occurred if the conditions
for a Change in Control have been satisfied, with the following modifications to
such conditions:

 

(1) the reference to “25% or more” in condition (1) of the definition of Change
in Control shall be changed to “more than 50%”;

 

(2) the first reference to “a majority” in condition (2) of the definition of
Change in Control shall be changed to “50%”;

 

(3) the references to “66-2/3%” and “25% or more” in condition (3) of the
definition of Change in Control shall be changed to “50%” and “more than 50%”,
respectively; and

 

(4) the reference to “66-2/3%” in condition (4) of the definition of Change in
Control shall be changed to “50%”.

 

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(f) “Compensation Committee” means the Compensation Committee of the Board.

 

(g) “Competition” means that you (1) enter into a relationship as an employee,
officer, partner, member, director, independent contractor, consultant, advisor
or agent of, or in any similar relationship, with a Competitor where you will be
responsible for providing services which are similar or substantially related to
the services that you provided during any of the last three years of your
Employment with the Firm, or (2) either alone, or in concert with others,
acquire beneficial ownership (within the meaning of Section 13(d) of the
Exchange Act) of 5% or more of any class of equity securities of a Competitor.

 

(h) “Competitor” means:

 

(1) the following entities [insert list6]:

 

(2) “Competitor” also includes, for each entity listed in clause (1) above, that
entity’s parent entities, subsidiaries and other affiliates, and such entity’s
successor or surviving entities (e.g., as a result of merger, consolidation,
sale of business, reincorporation or any similar transaction).

 

(3) “Competitor” shall also include any other entity that the Compensation
Committee, in order to account for changes in the business of the Firm or in the
market for the services provided by its employees or in the market for the
services and products it provides to its customers and clients, determines from
time to time, in its sole discretion, to be a Competitor.

 

The Firm will notify you of any adjustment to the list of entities that are
considered Competitors. Notification may be made to you electronically (by
e-mail or otherwise) and may direct you to consult the copy of the Competitor
list that will be maintained on the Firm’s Executive Compensation intranet site.

 

(i) “Date of the Award” means [insert grant date, which typically will coincide
approximately with the end of the fiscal year in respect of which the award is
made].

 

(j) “Disability” means any condition that would qualify for a benefit under any
group long-term disability plan maintained by the Firm and applicable to you.

 

(k) “EICP” means the 1995 Equity Incentive Compensation Plan, as amended.

--------------------------------------------------------------------------------

6 The list will include specified companies in the financial services industry
(United States and global). Additional specified companies may be included in
the definition of Competitor applicable to awards made to Participants in
specific business units. The companies identified as Competitors may be modified
from time to time pursuant to Section 26(h)(3).

 

19

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(l) “Employed” and “Employment” refer to employment with the Firm and/or Related
Employment.

 

(m) “Expiration Date” means [tenth anniversary of January 2 following the Date
of the Award].

 

(n) The “Firm” means Morgan Stanley (including any successor thereto) together
with its subsidiaries and other affiliates.

 

(o) “First Scheduled Vesting Date” means [second anniversary of January 2
following the Date of the Award].

 

(p) “Fiscal Year [             ]” means the fiscal year beginning on December 1,
[        ] and ending on November 30, [        ].

 

(q) “Full Career Retirement” means the termination of your Employment by you or
by the Firm for any reason other than for Cause (or any other cancellation event
described in Section 13) and other than due to your death or Disability.7

 

(r) “Internal Revenue Code” means the Internal Revenue Code of 1986, as amended,
and the regulations thereunder.

 

(s) “Net Option Shares” means the number of shares of Morgan Stanley common
stock acquired upon exercise of all or a portion of your stock options less the
aggregate number of shares of common stock, if any, tendered, withheld or
disposed of to pay the exercise price and tax or other withholding obligation
arising upon such exercise; provided, however, that solely for purposes of
Section 13, “Net Option Shares” shall mean, in the case of a stock option for
which you pay the exercise price and/or tax or other withholding obligation in
cash, the number of shares of Morgan Stanley common stock acquired upon exercise
of all or a portion of your stock option less the number of shares calculated by
dividing (i) the aggregate amount of exercise price and tax or other withholding
obligation paid in connection with such exercise by (ii) the closing price of
Morgan Stanley common stock on the New York Stock Exchange Consolidated
Transaction Reporting System on the date of exercise, and rounding such result
down to the nearest whole share.

 

(t) “Proprietary Information” means any information that may have intrinsic
value to the Firm, the Firm’s clients or other parties with which the Firm has a
relationship, or that may provide the Firm with a competitive advantage,
including, without limitation, any trade secrets; formulas; flow charts;
computer programs; access codes or other systems information; algorithms;
business, product, or marketing plans; sales and other forecasts; financial
information; client lists; and information relating to

--------------------------------------------------------------------------------

7 Some awards may include age and/or service conditions in order for a
termination of Employment to qualify as Full Career Retirement.

 

20

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compensation and benefits, provided that such Proprietary Information does not
include any information which is available to the general public or is generally
available within the relevant business or industry other than as a result of
your action. Proprietary Information may be in any medium or form, including,
without limitation, physical documents, computer files or disks, videotapes,
audiotapes, and oral communications.

 

(u) “Related Employment” means your employment with an employer other than the
Firm (such employer, herein referred to as a “Related Employer”), provided: (i)
you undertake such employment at the request or with the consent of the Firm;
(ii) immediately prior to undertaking such employment you were an employee of
the Firm or were engaged in Related Employment (as defined herein); and (iii)
such employment is recognized by the Compensation Committee in its discretion as
Related Employment; and, provided further that the Firm may determine at any
time in its sole discretion that employment that was recognized by the Firm as
Related Employment no longer qualifies as Related Employment.

 

(v) “Scheduled Conversion Date” means the fifth business day of the fourth
fiscal quarter of [fifth year following the Date of the Award] or as soon
thereafter as practicable.

 

(w) “Second Scheduled Vesting Date” means [third anniversary of January 2
following the Date of the Award].

 

(x) “Scheduled Vesting Date” means the First Scheduled Vesting Date and/or the
Second Scheduled Vesting Date, as the context requires.

 

(y) “Transfer Restriction Date” means [fifth anniversary of January 2 following
the Date of the Award].

 

(z) You will be deemed to have made “Unauthorized Comments” about the Firm if,
while employed by the Firm or following the termination of your Employment you
make, directly or indirectly, any negative, derogatory, or disparaging comment,
whether written, oral or in electronic format, to any reporter, author, producer
or similar person or entity or to any general public media in any form
(including, without limitation, books, articles or writings of any other kind,
as well as film, videotape, audio tape, computer/Internet format or any other
medium) that concerns directly or indirectly the Firm, its business or
operations, or any of its current or former agents, employees, officers,
directors, customers or clients.

 

(aa) A “Wrongful Solicitation” occurs upon either of the following events:

 

(1) while employed by the Firm or within 180 days following termination of your
Employment, you directly or indirectly hire or attempt to hire any person who
is, or during the 90 days preceding termination of your Employment was, employed
by the Firm; or

 

21

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(2) while employed by the Firm or within 90 days following termination of your
Employment, you solicit any business of any person or entity who is or was a
customer or client of the Firm, or works for, or on behalf of, any such customer
or client, provided, however, that you had worked on a project or assignment for
such customer or client during the 90 days preceding the termination of your
Employment.

 

22

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IN WITNESS WHEREOF, Morgan Stanley has duly executed and delivered this Award
Certificate as of the [    ] day of [month] [year].

 

MORGAN STANLEY /s/    

[Name]

[Title]

 

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APPENDIX A

 

Designation of Beneficiary(ies) Under

the Equity Incentive Compensation Plan (EICP)

 

This Designation of Beneficiary shall remain in effect with respect to all
awards issued to me under the EICP, including any awards that may be issued to
me after the date hereof, unless and until I modify or revoke it by submitting a
later dated beneficiary designation. This Designation of Beneficiary supersedes
all my prior beneficiary designations with respect to all my EICP awards.

 

I hereby designate the following beneficiary(ies) to receive any survivor
benefits with respect to all my awards under the Equity Incentive Compensation
Plan:

 

Beneficiary(ies) Name

--------------------------------------------------------------------------------

 

Relationship

--------------------------------------------------------------------------------

 

Percentage

--------------------------------------------------------------------------------

(1)                                                             
                                                               
                                                                  
(2)                                                             
                                                               
                                                                  
(3)                                                             
                                                               
                                                                  
(4)                                                             
                                                               
                                                                  

 

Address(es) of Beneficiary(ies):

 

(1)

(2)

(3)

(4)

 

       Name: (please print)    Date     

 

   Signature

 

Please sign and return this form to the Executive Compensation Department,
[insert address].

 

24