Exhibit 10.1

MORGAN STANLEY

2006 NOTIONAL LEVERAGED CO-INVESTMENT PLAN

SECTION 1. Purpose. The Morgan Stanley 2006 Notional Leveraged Co-Investment
Plan (as may be amended from time to time, the “Plan”) has the purposes of:
(i) providing the opportunity to a select group of management and highly
compensated employees to enhance (A) the portion of any discretionary above base
compensation that would otherwise be awarded to them in the form of Morgan
Stanley equity compensation or other mandatory long-term incentive compensation
or (B) any retention, new hire or similar awards that would be granted to such
management and employees and (ii) facilitating the allocation of such
compensation to the notional investment opportunities afforded by the Plan.

SECTION 2. Definitions. As used in the Plan, unless determined otherwise by the
Firm and set forth in the applicable Award Certificate, the following terms
shall have the indicated meanings:

“Above Base Compensation” means any compensation other than base salary that the
Firm awards to an Eligible Person, before reduction for any applicable taxes.
Nothing in the Plan shall obligate the Firm to award or pay any Above Base
Compensation to any person.

“Account” means the bookkeeping account that the Firm establishes and maintains
for a Participant pursuant to Section 7. An Account is established only for
purposes of tracking a Notional Plan Investment and not to segregate or identify
assets that may be used to make distributions or other payments under the Plan.

“Accredited Investor” means an Eligible Person who is able to represent at the
time of such Eligible Person’s submission of an Allocation Form that:

(i) Such Eligible Person’s net worth, either individually or jointly with such
Eligible Person’s spouse, exceeds $1,000,000; or

(ii) Such Eligible Person had individual income (before elective deferrals) in
excess of $200,000 in each of the two most recent years and has a reasonable
expectation of reaching the same level in the current year; or

(iii) Such Eligible Person had joint income with such Eligible Person’s spouse
in excess of $300,000 in each of the two most recent years and has a reasonable
expectation of reaching the same level in the current year.

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Income does not include the value of any mandatory equity-based or other
long-term incentive compensation awards.

“Administrator” means one or more officers of the Firm to whom the Committee, in
its sole discretion, delegates all or some of its authority and responsibilities
to administer the Plan. Such officers are authorized to sub-delegate some or all
of such authority and responsibilities to the Executive Compensation Department,
another committee of the Firm and/or one or more officers of the Firm, and any
person or persons to whom are sub-delegated all or some of such authority and
responsibilities is also, to the extent of such sub-delegation, the
“Administrator”. Only the Committee is authorized to make any decision or
amendment regarding the participation in the Plan or any interest in the Plan
held by any member of the Management Committee of Morgan Stanley or any employee
who is an “executive officer” of Morgan Stanley under United States federal
securities laws.

“Allocation” shall have the meaning set forth in Section 5(a).

“Allocation Form” shall have the meaning set forth in Section 5(a).

“Allocation Preference” shall have the meaning set forth in Section 5(a).

“Associated Employee Fund” means, with respect to any reference investment
underlying a Notional Plan Investment, a co-investment or feeder fund that is
available primarily to employees of the Firm and is associated with such
reference investment.

“Award Certificate”, with respect to any Participant, means a written document
(including in electronic form) that sets forth the terms and conditions of such
Participant’s participation in the Plan. A Participant’s participation in the
Plan shall be governed by the Plan, such Participant’s Award Certificate and, if
and to the extent applicable pursuant to Section 16(e), the International
Supplement.

“Board” means the Board of Directors of Morgan Stanley.

“Cancellation Event”, with respect to any Participant, shall have the meaning
set forth in such Participant’s Award Certificate. Cancellation Events in
respect of any given Fiscal Year shall be substantially similar to such events
as set forth in the annual year-end equity compensation awards granted to such
Participant.

“Closed-End Investment” means a Notional Plan Investment in a reference
investment that generally does not permit redemptions by investors but makes
distributions to investors from time to time following the sale, transfer or
other disposition of its investments.

 

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“Code” means the United States Internal Revenue Code of 1986, as amended.

“Committee” means the Compensation, Management Development and Succession
Committee of the Board, any successor committee thereto or any other committee
of the Board appointed by the Board with the powers of the Committee under the
Plan, or any subcommittee appointed by such Committee.

“Descriptive Materials” means all brochures, letters, memoranda or other
documents from the Firm to a Participant regarding the Plan, including all
electronic-based materials.

“Distribution Date” means, (i) with respect to a Closed-End Investment, the
Scheduled Distribution Date and all Subsequent Distribution Dates (including the
Final Distribution Date) and (ii) with respect to an Open-End Investment, the
Scheduled Distribution Date.

“Eligible Person” means a professional employee of the Firm who satisfies the
eligibility requirements set forth in Section 4.

“Executive Compensation Department” means Morgan Stanley’s Executive
Compensation Department or any other department of Morgan Stanley that succeeds
to the functions of the Executive Compensation Department.

“Final Distribution Date” means, with respect to any Participant, the date,
specified in such Participant’s Award Certificate, on which the Firm shall make
its final distribution to such Participant in accordance with
Section 10(a)(iii). The Final Distribution Date in respect of any given Fiscal
Year shall be January 15 of the thirteenth Fiscal Year following the end of such
Fiscal Year (e.g., in respect of the 2006 Fiscal Year, the Final Distribution
Date shall be January 15, 2019).

“Firm” means Morgan Stanley together with its subsidiaries and other affiliates.

“Fiscal Year” and “Fiscal Quarter” mean Morgan Stanley’s Fiscal Year and Morgan
Stanley’s Fiscal Quarter, respectively.

“International Supplement” shall have the meaning set forth in Section 16(e).

“Investment Committee” means a committee of two or more officers of the Firm to
whom the Administrator delegates the authority and responsibilities to select
Notional Plan Investments.

“Legal Requirement” means any law, regulation, ruling, judicial decision,
accounting standard, regulatory guidance or other legal requirement.

 

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“LIBOR” means the London Interbank Offering Rate.

“Morgan Stanley” means Morgan Stanley, a Delaware corporation, or any successor
thereto.

“Morgan Stanley Applicable Rate” means, for any period, the rate at which
notional interest with respect to any Notional Advance shall accrue from the
date when it is used to notionally fund a Notional Plan Investment until and to
the extent such Notional Advance (or portion thereof) is reduced by any
Proceeds. Unless otherwise determined by the Firm, the Morgan Stanley Applicable
Rate shall be equal to the sum of (i) 90-day LIBOR, as determined before the
beginning of the applicable period, plus (ii) 50 basis points. Pursuant and
subject to Section 3(a)(iv), the Firm reserves the right to revise the Morgan
Stanley Applicable Rate at any time and from time to time.

“Notional Advance” means, with respect to any Participant, the notional amount
that Morgan Stanley adds to that portion of such Participant’s Participant
Allocation that is notionally invested in a Notional Plan Investment in
accordance with Section 6.

“Notional Plan Investment” means an investment designated by the Firm as a
reference investment for the benefit of the Plan. Reference investments
underlying Notional Plan Investments include proprietary investment funds of the
Firm or “funds of funds” of the Firm that include investment funds sponsored or
offered by third parties. For the avoidance of doubt, a Participant’s interest
in any Notional Plan Investment shall be notional.

“Open-End Investment” means a Notional Plan Investment in a reference investment
that generally does not make distributions to its investors but permits
investors to redeem their interest in the fund from time to time.

“Open-End Investment Proceeds” shall have the meaning set forth in
Section 10(b).

“Participant” means an Eligible Person who participates in the Plan.

“Participant Allocation” means, with respect to any Participant, (i) that
portion of such Participant’s Above Base Compensation that would otherwise be
awarded in the form of Morgan Stanley equity compensation or other mandatory
long-term incentive compensation that is allocated to the Plan or (ii) such
Participant’s Special Award.

“Participant Applicable Rate” means, for any period, the rate at which notional
interest shall accrue with respect to:

(i) Each Participant’s Participant Allocation (or the portion thereof), from the
date on which such Participant’s Above Base Compensation would

 

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otherwise have been paid (or, in the case of a Special Award, the grant date of
such Special Award) until the Firm notionally allocates such Participant
Allocation (or such portion) to one or more Notional Plan Investments;

(ii) Each Participant’s Participant Allocation, if the Firm determines that a
Participant’s Participant Allocation shall not be notionally invested in
Notional Plan Investments, from the date on which such Participant’s Above Base
Compensation would otherwise have been paid (or, in the case of a Special Award,
the grant date of such Special Award) until the Scheduled Distribution Date;

(iii) The Proceeds relating to a Realization (or partial Realization) with
respect to a Closed-End Investment, from the date of such Realization until the
applicable Distribution Date, as further set forth in Section 10(a);

(iv) The Proceeds relating to a Realization (or partial Realization) with
respect to an Open-End Investment, from the date of such Realization until the
Scheduled Distribution Date, as further set forth in Section 10(b);

(v) The Proceeds relating to a Realization (or partial Realization) with respect
to a Notional Plan Investment, from the date of the applicable Distribution Date
to the actual date of distribution permitted by Section 11(a); and

(vi) Each Participant’s Plan Termination Value, from the date of any termination
of the Plan until the distribution of such Plan Termination Value on the
applicable Distribution Date.

Unless otherwise determined by the Firm, the Participant Applicable Rate shall
be equal to 90-day LIBOR, as determined before the beginning of the applicable
period. Pursuant and subject to Section 3(a)(iv), the Firm reserves the right to
revise the Participant Applicable Rate at any time and from time to time.

“Plan” shall have the meaning set forth in Section 1.

“Plan Interest” means, with respect to any Participant, such Participant’s Total
Notional Investment (including any notional interest accrued at the Participant
Applicable Rate) minus such Participant’s theretofore unreduced Notional
Advances (plus accrued and previously unreduced notional interest thereon).

“Plan Termination Value” means, with respect to any Participant in connection
with the termination of this Plan or a Final Distribution Date, the fair value
(determined by reference to the value that the Firm’s books and records show as
of the then most recently concluded Fiscal Quarter end preceding the date of
such termination) of such Participant’s vested Plan Interest, if any (together
with any notional interest accrued thereon), on the effective date of such
termination or as of such Final Distribution Date, as applicable.

 

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“Proceeds” means, with respect to any Notional Plan Investment, (i) notional
gross cash proceeds, if any, that are Realized in respect of such Notional Plan
Investment at any time, plus (ii) if there is an Associated Employee Fund, an
additional amount equal to the difference between (A) the “carried interest”
that would be paid by third-party investors with respect to the reference
investment underlying such Notional Plan Investment, and (B) the “carried
interest” that would be paid by employee investors in an Associated Employee
Fund.

“Realization” or “Realize” means (i) with respect to a Closed-End Investment,
the receipt of a distribution by an investor, had such investor received such a
distribution from such Closed-End Investment; and (ii) with respect to an
Open-End Investment, the receipt of a distribution or redemption proceeds by an
investor, had such investor received such a distribution or effected such a
redemption from such Open-End Investment as of such Open-End Investment’s most
recent valuation date. For the avoidance of doubt, the re-investment of proceeds
by a Notional Plan Investment does not, itself, give rise to a Realization.

“Scheduled Distribution Date” means, with respect to any Participant, the date,
specified in such Participant’s Award Certificate, on which Proceeds in respect
of Notional Plan Investments shall commence being distributed to such
Participant. Except as set forth in Section 14, the Scheduled Distribution Date
in respect of any given Fiscal Year shall be the date on which any annual
year-end stock unit awards granted to such Participant in respect of such Fiscal
Year first convert into shares of Morgan Stanley common stock.

“Section 409A” means Section 409A of the Code, and the rules, regulations and
guidance thereunder (or any successor provisions thereto).

“Securities Act” means the United States Securities Act of 1933, as amended.

“Special Award” means a retention, new hire or similar award that is granted in
the form of a participation in the Plan.

“Subsequent Distribution Date”, with respect to any Participant, means each
anniversary of such Participant’s Scheduled Distribution Date, until the earlier
of (i) the Subsequent Distribution Date on which all remaining Proceeds relating
to all Closed-End Investments are distributed to Participants, and (ii) the
Final Distribution Date.

“Total Compensation” means (i) base salary, commissions and annual bonus,
inclusive of the value of long-term incentive compensation, or what the Firm
designates as “total reward”; and (ii) for employees who are Investment
Representatives or Financial Advisors of the Global Wealth Management Group,
gross compensation, pre-deductions, inclusive of the value of long-term
incentive compensation, or what the Firm designates as “total reward”.

 

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“Total Notional Investment” means, with respect to any Participant at any time,
such Participant’s interest in the Plan that is attributable to such
Participant’s Participant Allocations at such time and any related Notional
Advances.

SECTION 3. Administration.

(a) The Committee shall administer the Plan. In addition to other express powers
and authorizations that the Plan confers on the Committee, the Committee shall
have full power and authority, subject to the express provisions of the Plan,
Legal Requirements and contractual provisions binding upon the Firm and any
internal policies and procedures of the Firm:

(i) to determine the terms and conditions of each Award Certificate;

(ii) to construe and interpret the Plan, any Award Certificate or any summary of
the foregoing;

(iii) to prescribe, amend, rescind or waive rules and procedures relating to the
Plan with respect to any and all Participants;

(iv) to revise the Morgan Stanley Applicable Rate and the Participant Applicable
Rate;

(v) to waive any provision of the Plan or one or more Award Certificates with
respect to any and all Participants;

(vi) to vary the terms and conditions of participation in the Plan to take
account of tax laws, securities laws and other regulatory requirements of
foreign jurisdictions; and

(vii) to make all other determinations necessary or advisable for the
administration of the Plan.

Except as expressly provided for in the Plan, the Committee’s determinations
under the Plan need not be uniform and may be made selectively among Eligible
Persons and Participants, whether or not such persons are similarly situated.
All determinations by the Committee or the Administrator pursuant to
Section 3(b), in administering, construing or interpreting the Plan shall be
final, binding and conclusive for all purposes and upon all persons.

(b) The Committee may, but need not, from time to time delegate such of its
responsibilities under the Plan as it deems appropriate to the Administrator;
provided, however, that only the Committee shall be authorized to make any
determination under the Plan with respect to any Participant who is a member of
the Management Committee of Morgan Stanley or who is an “executive officer”

 

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of Morgan Stanley under United States federal securities laws; and provided
further that the Administrator is not authorized to designate Notional Plan
Investments without the concurrence and authorization of the Investment
Committee. In connection with the performance of their responsibilities under
the Plan, the Committee, the Administrator and the Investment Committee may
consult with any third party they deem necessary or advisable, including any
outside consultant or advisor.

(c) Neither the Firm nor any member of the Board, the Committee, the Investment
Committee, the Administrator and their respective affiliates and employees shall
be liable in any manner whatsoever in connection with the administration,
construction or interpretation of the Plan, any Award Certificate or the
Descriptive Materials, except for any liability arising out of such person’s
willful misconduct. Under no circumstances shall any such person be liable for
any act or omission of any other person. In the performance of its, his or her
functions with respect to the Plan, each such person shall be entitled to rely
upon information and advice furnished by the Firm’s officers, the Firm’s
accountants, the Firm’s counsel, the Firm’s tax advisors and any other person
the Committee deems necessary or advisable, and no such person shall be liable
for any action taken or not taken in reliance upon any such advice.

(d) Any discretionary authority or obligation pursuant to the Plan shall not be
applicable to the extent such discretionary authority or obligation is
prohibited by Section 409A, or would result in a Participant being required to
recognize income for United States federal income tax purposes prior to the
relevant Distribution Date or would result in a Participant incurring interest
or additional tax under Section 409A.

SECTION 4. Eligibility.

(a) In order for a professional employee of the Firm to be an Eligible Person
with respect to any given Fiscal Year, such employee shall:

(i) Have earned Total Compensation of at least US$500,000 (annualized), or local
currency equivalent, in respect of the most recently ended Fiscal Year, or, if
hired during the current Fiscal Year, have a reasonable expectation of Total
Compensation of at least such amount in respect of the current Fiscal Year; and

(ii) Certify that such employee qualifies as an Accredited Investor.

(b) An Eligible Person with respect to a given Fiscal Year who does not earn
Total Compensation of at least US$500,000 (annualized), or local currency
equivalent, in respect of such Fiscal Year shall not be permitted to participate
in the Plan.

 

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(c) A Branch Manager or a Financial Advisor in the Global Wealth Management
Group shall be an Eligible Person if such Branch Manager or Financial Advisor
satisfies the requirements described in Section 4(a) and receives a “challenge
bonus” or “productivity bonus” award (as such internal titles, units and bonuses
may be referred to from time to time).

(d) Any employee who is a member of the Management Committee of Morgan Stanley
or who is an “executive officer” of Morgan Stanley under United States federal
securities laws is not eligible to participate in the Plan. However, if a
Participant subsequently becomes such a member or executive officer, such
Participant shall continue to participate in the Plan in respect of such
Participant’s then existing Total Notional Investment on the same basis as other
Participants.

SECTION 5. Participant Allocation.

(a) In accordance with any rules and procedures that the Firm establishes, an
Eligible Person with respect to any given Fiscal Year may express a preference
to allocate up to 40% of the compensation other than base salary that would
otherwise be granted in the form of Morgan Stanley equity compensation or other
mandatory long-term incentive compensation in respect of such Fiscal Year to the
Plan (an “Allocation Preference”); provided that the Firm, in its sole
discretion, reserves the right not to give effect to all or any portion of such
Allocation Preference and retains ultimate and sole discretion on the final
allocation (“Allocation”) of the non-cash component of such Eligible Person’s
Above Base Compensation. Such Allocation Preference, which such Eligible Person
shall make by submitting a form, including in electronic form (an “Allocation
Form”), on or prior to a date specified on such Allocation Form, shall be
irrevocable on or after such date. Any Allocation shall be subject to the
eligibility criteria of Section 4 and shall not constitute a guarantee of Plan
participation.

(b) If the Firm’s ability to give effect to Allocations is limited for any
reason, it shall limit Allocations on a basis that is as pro rata as
administratively practicable.

(c) The Firm shall issue to each Participant an Award Certificate setting forth
the terms and conditions of such Participant’s participation in the Plan.

(d) Each Participant’s Participant Allocation shall accrue notional interest at
the Participant Applicable Rate from the date that such Participant’s Above Base
Compensation would otherwise have been paid (or, in the case of a Special Award,
the grant date of such Special Award): (i) until the Firm notionally allocates
such Participant Allocation (or the portion thereof) to one or more Notional
Plan Investments pursuant to Section 8, or (ii) if the Firm does not notionally
invest such Participant Allocation (or portion thereof) in a Notional Plan
Investment, until the Scheduled Distribution Date, on which date the Firm shall
pay such Participant Allocation (or such portion) to such Participant.

 

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(e) Allocations are intended to be exempt from registration under the Securities
Act. By participating in the Plan, each Participant shall be deemed to
acknowledge, represent and warrant to and agree with Morgan Stanley, and the
Firm may require the Participant to affirmatively acknowledge, represent and
warrant to and agree with Morgan Stanley, as follows:

(i) The Participant received and carefully reviewed the Descriptive Materials,
and the Participant understands the information contained therein, the risks
associated with a Notional Plan Investment under the Plan and the conflicts that
the Plan may present for the Firm and agrees to be bound by the terms of the
Descriptive Materials;

(ii) The Participant had a reasonable opportunity to ask questions of and
receive answers from a person or persons acting on behalf of Morgan Stanley
concerning the Plan and all such questions were answered to the Participant’s
full satisfaction;

(iii) No oral or written representations were made to the Participant concerning
the Plan other than as stated in any Award Certificate and/or the Descriptive
Materials, and no oral or written information furnished to the Participant in
connection with the Plan was inconsistent with the information stated in the
Descriptive Materials;

(iv) The Participant has adequate means of providing for the Participant’s
current financial needs and contingencies, is able to bear the substantial
economic risks of the Plan for an indefinite period of time, has no need for
liquidity regarding the Participant’s assets placed in the Plan and, at the
present time, could afford a complete loss of such assets;

(v) The Participant has such knowledge and experience in financial, tax and
business matters so as to enable the Participant to utilize the information made
available to the Participant in connection with the Plan to evaluate the merits
and risks of the Plan and to make an informed decision with respect thereto;

(vi) The Participant is not relying on Morgan Stanley or any person or persons
acting on behalf of Morgan Stanley with respect to the tax and other economic
considerations of the Plan;

(vii) The Participant satisfies the eligibility requirements set forth in
Section 4;

(viii) The Participant shall provide such information and execute and deliver
such documents as may reasonably be requested by the Firm in connection with the
Plan, including such information and documents as may reasonably be necessary to
comply with any and all laws to which the Firm is subject, and such additional
information as the Firm may deem

 

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appropriate with regard to the Participant’s eligibility (including
documentation relating to the Participant’s qualification as an Accredited
Investor); and

(ix) The Participant shall keep confidential all matters relating to the Plan
(including the terms of the Plan and any Award Certificate and the Descriptive
Materials), except to the extent such matters are publicly available (through no
fault of the Participant) or as otherwise required by Legal Requirements. The
Firm’s Code of Conduct regarding confidential and proprietary information shall
cover such matters.

SECTION 6. Notional Advance.

(a) At the time that any Participant Allocation (or portion thereof) is
notionally invested in a Notional Plan Investment, a Notional Advance in an
amount equal to such Participant Allocation (or such portion) multiplied by two
shall be added to the Participant Allocation (or such portion) for purposes of
the Participant’s notional investment in such Notional Plan Investment.

(b) Each Notional Advance shall accrue notional interest at the Morgan Stanley
Applicable Rate during the period that such Notional Advance is deemed to be
outstanding (i.e., from the date of the addition of such Notional Advance to the
related Participant Allocation (or such portion) until and to the extent such
Notional Advance (or portion thereof) is reduced by any Proceeds). For the
avoidance of doubt, no Notional Advance shall be allocated until a Participant’s
Participant Allocation is notionally invested in a Notional Plan Investment
(therefore, no notional interest shall begin to accrue until such time).

(c) Any Notional Advance shall be satisfied only through reductions to: (i) any
notional interest theretofore accrued at the Participant Applicable Rate, or
(ii) Proceeds in accordance with Section 10. No Participant shall be required to
make any direct or out-of-pocket payment to the Firm in connection with any
Notional Advance.

SECTION 7. Establishment of Accounts. The Firm shall establish an Account for
each Participant, to which it shall credit such Participant’s Participant
Allocations and any related Notional Advances. Each Participant’s Account shall
reflect such Participant’s notional share of each Notional Plan Investment.

SECTION 8. Notional Plan Investments.

(a) The Firm shall designate Notional Plan Investments for the benefit of the
Plan, and shall establish a purchase price, for purposes of the Plan, equal to
the fair value (as the Firm shall determine) of such Notional Plan Investments
at the time of their designation. Participants shall participate in each
Notional Plan Investment pro rata based on their respective Total Notional
Investments. Each Participant’s notional share of any Notional Plan Investment
shall be deemed to have been notionally funded by such Participant’s Participant
Allocation and the related Notional Advance.

 

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(b) Notional Plan Investments in respect of any given Fiscal Year shall be
indicated on the Executive Compensation Department website or through other
means that the Firm shall determine and communicate to Participants from time to
time. The Firm may provide a Participant with a description of the related
reference investments and their historical returns; however, the Firm is not
responsible for actions, statements or performance of the Notional Plan
Investments.

(c) The Firm may choose Notional Plan Investments based on a variety of factors,
which may include the Firm’s own business interests and its relations with such
reference investments or parties affiliated with such referenced funds. By
participating in the Plan, each Participant shall be deemed to acknowledge the
existence of actual and potential conflicts of interest with the Firm and waive
any claim with respect to the existence of any conflict of interest and the Firm
may require each Participant to affirmatively make such acknowledgment and
waiver.

(d) The performance of each Notional Plan Investment shall reflect all of the
fees and costs of the related reference investment, including placement agent
and brokerage fees, which such reference investment may pay to the Firm if the
Firm provides such services to it. The Firm may also act as the investment
advisor or provide other services to such reference investment and receive fees
for providing these services. Fees paid by any reference investment will reduce
the performance of such reference investment (and, accordingly, the performance
of the Notional Plan Investment) and, therefore, will reduce the amount of the
Firm’s distribution obligations to Participants under the Plan.

(e) Nothing in the Descriptive Materials shall be construed to confer on a
Participant the right to continue to have any particular Notional Plan
Investment available for purposes of measuring the value of the Participant’s
Total Notional Investment.

(f) The value of a Participant’s Total Notional Investment is subject to risk at
all times based upon the performance of the Notional Plan Investments. If the
value of the Notional Plan Investments decreases in the future, then the value
of a Participant’s Total Notional Investment may be lower than the Participant’s
Participant Allocation. Additionally, if the value of the Notional Plan
Investments decreases in the future and proves to be insufficient to reduce the
Notional Advances (plus any notional interest thereon), a Participant will not
be entitled to receive any of such Participant’s Participant Allocation.
Although a Participant will not be an investor in any reference investments
underlying the Notional Plan Investments, a Participant’s Total Notional
Investment will be determined by referencing the gains and losses attributable
to the performance of such Notional Plan Investments. In effect, the Firm is
merely targeting the return and liquidity on such Notional Plan Investments and
to the extent that the Firm

 

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incurs any costs in connection therewith or in connection with the
administration of the Plan, it has the right to adjust the return on a
Participant’s Notional Plan Investments to reflect these costs. Any distribution
or other payment under the Plan is also subject to the risks associated with the
Participant’s status as an unsecured general creditor of Morgan Stanley as
described in Section 16(c).

SECTION 9. Vesting.

(a) Terms and conditions relating to the vesting of a Participant’s Plan
Interest (including any consequences of a termination of such Participant’s
employment) shall be set forth in such Participant’s Award Certificate. Such
terms and conditions with respect to any Participant in respect of any given
Fiscal Year shall be substantially similar to analogous terms and conditions set
forth in the annual year-end equity compensation awards granted to such
Participant in respect of such Fiscal Year.

(b) The Firm may accelerate the vesting of a Participant’s Plan Interest and
may, in its sole discretion, determine other circumstances under which a
Participant’s Plan Interest shall vest. Nothing in the Plan or in any Award
Certificate shall entitle a Participant to request or receive any distribution
or other payment upon the vesting of all or any portion of such Participant’s
Plan Interest.

(c) Even if a Participant holds a Plan Interest, whether or not fully vested, it
may be cancelled without any consideration upon the occurrence of a Cancellation
Event prior to the Scheduled Distribution Date. Upon such occurrence, the
Participant shall have no further interest in or entitlement under the Plan,
including no right or entitlement to any Participant Allocation.

SECTION 10. Distributions.

(a) Closed-End Investments.

(i) With respect to any Proceeds in respect of a Closed-End Investment on or
prior to the Scheduled Distribution Date, the Participant’s share thereof shall
immediately be reduced by such Participant’s theretofore unreduced Notional
Advances (plus accrued and previously unreduced notional interest thereon). Any
remaining Proceeds shall accrue notional interest at the Participant Applicable
Rate from the date of the Realization of such Proceeds until the Scheduled
Distribution Date. Any unreduced Notional Advances (plus accrued and previously
unreduced notional interest thereon) shall reduce subsequent Proceeds
(including, if applicable, Proceeds in respect of a Closed-End Investment
Realized after the Scheduled Distribution Date and/or Proceeds in respect of an
Open-End Investment). Such remaining Proceeds shall be aggregated and
distributed to such Participant on the Scheduled Distribution Date.

 

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(ii) With respect to any Proceeds in respect of a Closed-End Investment Realized
after the Scheduled Distribution Date, but on or prior to the Subsequent
Distribution Date, the Participant’s share of such Proceeds, to the extent of
such Realizations, shall be reduced and aggregated and distributed on such
Subsequent Distribution Date in accordance with the method described in
Section 10(a)(i). A Participant’s share of Proceeds in respect of a Closed-End
Investment Realized after such Subsequent Distribution Date and on or prior to
the next Subsequent Distribution Date shall be reduced and aggregated and
distributed on such next Subsequent Distribution Date.

(iii) If the last Subsequent Distribution Date is the Final Distribution Date,
then the Firm shall distribute to each Participant an amount equal to the sum of
(i) such Participant’s share of any undistributed Proceeds and (ii) such
Participant’s Plan Termination Value with respect to any then un-Realized
Notional Plan Investments in accordance with the method described in
Section 10(a)(i) on such Final Distribution Date.

(b) Open-End Investments. With respect to any Proceeds in respect of an Open-End
Investment, the Participant’s share thereof shall accrue notional interest at
the Participant Applicable Rate from the date of the Realization relating to
such Proceeds until the Scheduled Distribution Date. Such Proceeds (and any
accrued notional interest thereon) (“Open-End Investment Proceeds”) will
immediately be reduced by such Participant’s theretofore unreduced Notional
Advances (plus accrued and previously unreduced notional interest thereon), and,
after such reduction, such Participant’s share of any remaining Open-End
Investment Proceeds, if any, shall be distributed to such Participant on the
Scheduled Distribution Date.

(c) Distributions in Connection with a Termination of Employment. Terms and
conditions relating to any distribution of a Participant’s vested Plan Interest
in connection with a termination of such Participant’s employment shall be set
forth in such Participant’s Award Certificate. Such terms and conditions with
respect to any Participant in respect of any given Fiscal Year shall be
consistent with analogous terms and conditions set forth in the annual year-end
equity compensation awards granted to such Participant in respect of such Fiscal
Year.

(d) Distributions in Connection with a Plan Termination. Upon a termination of
the Plan, subject to any Cancellation Event, the Firm shall distribute to each
Participant an amount equal to such Participant’s Plan Termination Value (with
notional interest accruing thereon at the Participant Applicable Rate from the
date of such termination until the date of distribution) in accordance with the
method described in Section 10(a)(i) on the applicable Distribution Date.

 

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SECTION 11. Distributions and Other Payments Generally.

(a) References in the Plan to distributions or other payments on a given date
(including any Distribution Date) shall mean on such date or as soon thereafter
as administratively practicable; provided that such distributions or other
payments shall be made prior to December 31 of the calendar year in which the
applicable Distribution Date or other payment date occurs or, if later, no more
than 21/2 months after such Distribution Date or other payment date. The
Proceeds relating to a Realization (or partial Realization) with respect to a
Notional Plan Investment (after the reduction of such Proceeds pursuant to
Sections 10(a)(i) and 10(a)(ii) or Section 10(b), as applicable) shall accrue
interest at the Participant Applicable Rate from the date of the applicable
Distribution Date to the actual date of distribution permitted by this
Section 11(a).

(b) The Firm may accelerate distributions or other payments under the Plan,
without the consent of any Participant, only to the extent such modification is
not inconsistent with Section 3(d).

(c) Notwithstanding any provision of the Plan or in the Award Certificate to the
contrary, if the Firm considers a Participant to be one of its “specified
employees” under Section 409A at the time of termination of such Participant’s
employment, any distribution or other payment of any deferred amounts shall
commence on the date that is six months after such termination of employment.

(d) Notwithstanding the other provisions of the Plan or in any Award
Certificate, distributions or other payments under the Plan will be deferred
with respect to a Participant if, at the time scheduled for such distribution or
payment (whether a Distribution Date or some other time), Morgan Stanley
considers such Participant to be one of its executive officers and such
Participant’s compensation may not be fully deductible by virtue of
Section 162(m) of the Code. This deferral will continue until the termination of
such Participant’s employment with the Firm, and the Firm shall make any
distribution or other payment in respect of such Participant’s vested Plan
Interest as soon thereafter as administratively practicable; provided that if
Morgan Stanley considers such Participant to be one of its “specified employees”
under Section 409A at the time of termination of such Participant’s employment
with the Firm, such deferral will continue until the date that is six months
after such termination of employment, and the Firm shall make any distribution
or other payment in respect of such Participant’s vested Plan Interest as soon
as administratively practicable thereafter; and provided, further, that in the
event of such Participant’s death or a corporate event relating to the ownership
of Morgan Stanley, such distribution or payment shall be made in accordance with
such Participant’s Award Certificate.

(e) Unless otherwise set forth in an International Supplement, all distributions
or other payments under the Plan shall be made in United States dollars or the
Participant’s local currency.

 

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(f) The Firm may, in its sole discretion and to the maximum extent permissible
under applicable Legal Requirements, withhold from or offset against any
distribution or other payment to which a Participant may be entitled under the
Plan an amount sufficient to satisfy any obligation owed by such Participant to
the Firm.

SECTION 12. Transferability.

(a) No Participant may transfer (other than by will or by the laws of descent
and distribution), pledge, hypothecate or otherwise dispose of or encumber such
Participant’s Total Notional Investment.

(b) During a Participant’s lifetime, the Firm shall make any distribution or
other payment in respect of such Participant’s Plan Interest only to such
Participant. A Participant may designate in writing on a beneficiary designation
form, in accordance with procedures established by the Executive Compensation
Department, a beneficiary or beneficiaries (including the Participant’s estate)
to receive all or part of the amounts that the Firm may be obligated to pay or
distribute in respect of such Participant’s Plan Interest in the event of such
Participant’s death. A Participant may replace or revoke a designation of a
beneficiary at any time by filing a new beneficiary designation form.

SECTION 13. Withholding or Other Deductions. The Firm may withhold or otherwise
deduct from any amounts distributable or otherwise payable under the Plan any
such taxes or other amounts as may be required to be withheld or otherwise
deducted pursuant to applicable Legal Requirements.

SECTION 14. Special Awards. In the sole discretion of the Firm, an Eligible
Employee may be eligible to receive a Special Award. Upon the grant of such
Special Award, such Eligible Employee shall be treated as a Participant for all
purposes of the Plan. Notwithstanding anything to the contrary in the Plan,
terms and conditions relating to such Participant’s participation in the Plan
may differ from the analogous terms and conditions set forth in the Plan, in
which case such terms and conditions shall be set forth in such Participant’s
Award Certificate.

SECTION 15. Termination and Amendment.

(a) The Firm may terminate the Plan at any time in its sole discretion, subject
to Section 10(d).

(b) The Firm may also alter, amend or modify the Plan, any Award Certificate or
the International Supplement at any time in its sole discretion. These
amendments may include changes that the Firm considers necessary or advisable as
a result of changes in any, or the adoption or interpretation of any new, Legal
Requirement. The Firm may not amend or modify the Plan, any Award Certificate or
the International Supplement in a manner that would

 

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materially impair a Participant’s participation in the Plan without the
Participant’s consent; provided, however, that the Firm may, without a
Participant’s consent alter, amend or modify the Plan, any Award Certificate or
the International Supplement in any manner that the Firm considers necessary or
advisable to comply with any Legal Requirement (including Section 409A) and to
ensure that no Participant would be required to recognize income for United
States federal income tax purposes prior to the relevant Distribution Date or
would result in a Participant incurring interest or additional tax under
Section 409A. No such action shall give rise to a claim of constructive
termination on the part of such Participant. Any amendment or waiver of a
provision of the Plan, any Award Certificate or the International Supplement
(other than any amendment or waiver applicable to all Participants, or similarly
situated Participants, generally), which amendment or waiver operates in a
Participant’s favor or confers a benefit on the Participant, must be in writing
and signed by the Global Director of Human Resources or the Chief Administrative
Officer (or if such positions no longer exist, by the holder of an equivalent
position) to be effective. The Firm shall notify Participants of any amendment
to the Plan, any Award Certificate or the International Supplement that is
material, and shall notify affected Participants of any amendment that affects
such Participants’ rights.

SECTION 16. Miscellaneous.

(a) The headings of sections herein are included solely for the convenience of
reference and shall not affect the meaning of any of the provisions of the Plan.

(b) THE PLAN AND ALL RIGHTS UNDER THE PLAN (INCLUDING UNDER ANY AWARD
CERTIFICATE OR THE INTERNATIONAL SUPPLEMENT) SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY
CONFLICTS IN CHOICE OF LAW, RULE OR PRINCIPLE THAT MIGHT OTHERWISE REFER THE
INTERPRETATION OF THE PLAN ON ANY SUCH RIGHT TO THE SUBSTANTIVE LAW OF ANOTHER
JURISDICTION.

(c) Except as set forth in an International Supplement, neither the Plan, any
Award Certificate, the International Supplement nor the Descriptive Materials
shall create or be construed to create a trust with respect to the Plan nor
create or be construed to create a separate fund of any kind or a fiduciary
relationship between the Firm, a Participant or any other person nor create or
be construed to create a segregation by the Firm of assets to fund the Plan. To
the extent any Participant has a right to receive distributions or other
payments from the Firm pursuant to the Plan, such right shall be no greater than
the right of any unsecured general creditor of the Firm.

(d) The Firm has no obligation to invest amounts corresponding to a
Participant’s Participant Allocation or Notional Advance and/or any Proceeds

 

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with respect to Notional Plan Investments. If the Firm invests amounts
corresponding to a Participant’s Participant Allocation or Notional Advance in
any Notional Plan Investment, such investment shall not confer on such
Participant any right or interest in any such Notional Plan Investment. The
Participant will have no ownership or other interest in any financial or other
instrument or arrangement that the Firm may acquire or enter into to hedge its
obligations under the Plan.

(e) A Participant’s participation in the Plan shall be conditioned on the Firm
making any filings and the Firm’s receipt of any consents or authorizations
required to comply with, or required to be obtained under, applicable Legal
Requirements. To the extent necessary to comply with the local Legal
Requirements of any jurisdiction in which the Firm implements the Plan, the Firm
may supplement the Plan and/or the Award Certificate with a supplement (the
“International Supplement”), which shall set forth certain terms and conditions
applicable to such implementation in such jurisdiction. If there is a conflict
between the provisions of the Plan and the provisions contained in the
International Supplement on an issue pertinent to such jurisdiction, then the
provisions of such International Supplement shall govern.

(f) Neither the Plan, any Award Certificate, the International Supplement, the
Descriptive Materials nor any interpretation, determination or other action
taken or omitted to be taken pursuant to the Plan shall be construed as
guaranteeing a Participant’s employment, a discretionary bonus or any particular
level of bonus, compensation or benefits, as giving a Participant any right to
continued employment, during any period, nor shall they be construed as giving a
Participant any right to be reemployed by the Firm following any termination of
employment. The Firm reserves the right not to make available any plan similar
to the Plan (in whole or in part), nor to permit any future participation after
Allocations are made with respect to Above Base Compensation in respect of any
given Fiscal Year or after a Special Award is granted.

(g) If any provision of the Plan or any Award Certificate is or becomes or is
deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any
Participant, or would disqualify the Plan or such Award Certificate under any
Legal Requirement, such provision shall be construed or deemed amended to
conform to any such Legal Requirement, or if it cannot be construed or deemed
amended without materially altering the intent of the Plan or such Award
Certificate, then such provision shall be stricken as to such jurisdiction or as
to such Participant, and the remainder of the Plan or such Award Certificate
shall remain in full force and effect.

[END OF THE PLAN]

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