Exhibit 10.2

 

MORGAN STANLEY

 

SELECT EMPLOYEES’ CAPITAL ACCUMULATION PROGRAM

PLAN DOCUMENT

 

This plan document sets forth the terms and conditions of the Morgan Stanley
Select Employees’ Capital Accumulation Program (“SECAP”). SECAP consists of two
programs, SECAP I and SECAP II. Unless otherwise noted, use of the term SECAP
herein or in any Descriptive Materials refers to both SECAP I and SECAP II.
Capitalized terms used herein without definition have the meanings set forth in
Section 24 or the applicable Term Sheet. The terms and conditions set forth in
this plan document shall govern each Applicable Account Value, unless otherwise
determined by the Administrator and set forth in the applicable Term Sheet.

 

1. Purposes; SECAP Generally.

 

SECAP is a nonqualified deferred compensation program under which Eligible
Employees may elect to defer all or a portion of their Eligible Compensation
until a later date. Subject to the terms and conditions of SECAP set forth
herein, Eligible Employees may elect how their Deferred Amounts shall be deemed
allocated among the Notional Investments available to Eligible Employees for
purposes of measuring the increase or decrease in the value of their Account.
Participation in SECAP is voluntary.

 

2. Administration.

 

(a) Authority. SECAP is sponsored by Morgan Stanley. The Chief Administrative
Officer is responsible for administering SECAP, including, without limitation,
adopting rules and procedures for determining Notional Investments offered,
determining the terms and conditions of SECAP for each Fiscal Year and
interpreting SECAP provisions and any Descriptive Materials. The Chief
Administrative Officer may, in his sole discretion, delegate some or all of his
authority and responsibilities pursuant to SECAP to the NQDC Committee, the
Executive Compensation Department, another committee of the Firm and/or one or
more officers of the Firm. The Chief Administrative Officer and, to the extent
that the Chief Administrative Officer has delegated authority to administer all
or any portion of SECAP to any committee or officer, such committee or officer,
are referred to herein as the “Administrator”. Each interpretation,
determination or other action made or taken pursuant to SECAP by the
Administrator from time to time shall be made or taken in its sole discretion
and shall be final, binding and conclusive on all persons.

 

(b) No Liability. The Administrator shall not be liable for anything whatsoever
in connection with the administration of SECAP, including, without limitation,
any interpretation, determination or other action taken or not taken in

 

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administering SECAP, except the Administrator’s own willful misconduct. In the
performance of its functions with respect to SECAP, the Administrator shall be
entitled to rely upon information and advice furnished by the Firm’s officers,
the Firm’s accountants, the Firm’s counsel and any other party the Administrator
deems necessary, and the Administrator shall not be liable for any
interpretation, determination or other action taken or not taken in reliance
upon any such advice.

 

3. Eligibility.

 

SECAP is maintained by Morgan Stanley for the purpose of providing deferred
compensation for a select group of management or highly compensated employees,
and a Participant’s participation in SECAP in respect of any Fiscal Year shall
depend, among other things, on the Administrator’s determination, in its sole
discretion, that the Participant is a member of such select group. The
eligibility to participate in SECAP shall depend upon a Participant’s
satisfaction of the specified eligibility criteria for the applicable Fiscal
Year to be established by the Administrator in its sole discretion and set forth
in the applicable Term Sheet.

 

4. Deferral Elections.

 

For each Deferral Year, Eligible Employees may make a Deferral Election with
respect to their Eligible Compensation in a manner prescribed by the
Administrator. The Administrator may set minimum and maximum Deferred Amounts
and the minimum dollar or percentage increments of Eligible Compensation that
may be deferred for each Deferral Year. Deferral Elections shall be made by a
date specified by the Administrator. An Eligible Employee may revoke a Deferral
Election in a manner prescribed by the Administrator prior to the applicable
election deadline. Following the expiration of the applicable election deadline,
a Participant’s Deferral Election is irrevocable. If a Participant’s actual
Eligible Compensation is less than the amount the Participant elected to defer
pursuant to the Participant’s Deferral Election, then the Participant’s elected
deferral amount shall be reduced so that the Participant’s Deferred Amount
equals the amount of the Participant’s Eligible Compensation for that Fiscal
Year.

 

The Administrator may reduce the amount a Participant elects to defer in any
Deferral Year.

 

5. Accounts.

 

(a) Credits and Charges to a Participant’s Account. A Participant’s Deferred
Amount shall be credited to the Participant’s Account as of a date determined by
the Administrator, which crediting date shall occur on, or as soon as reasonably
practicable following, the date on which such amount would otherwise have been
paid to the Participant. A Participant’s Account shall also be credited (or
debited) with returns on the Participant’s Notional Investments following the
date on which the Participant’s Deferred Amounts are credited. A Participant’s
Account shall be charged with any amounts distributed to the Participant or any
of the Participant’s Beneficiaries. All

 

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payments shall be debited from the portion of the Participant’s Account deemed
allocated to the money market fund Notional Investment(s).

 

(b) Election of Notional Investments. A Participant’s Account Value shall be
deemed allocated in minimum allocations established by the Administrator from
time to time among one or more Notional Investments as indicated on the form
submitted by the Participant. This deemed allocation is made exclusively for the
purpose of determining the Participant’s Account Value from time to time in
accordance with SECAP. A Participant may change the deemed allocation of the
Account Value among the Notional Investments then available under SECAP in
accordance with procedures and at such times as established by the Administrator
from time to time; provided, however, that the Administrator may determine (i)
the frequency of reallocations, (ii) the minimum percentage of the Account Value
that is required to be allocated to any single Notional Investment and (iii) the
minimum percentage of the Account Value that is required to be allocated to one
or more money market fund(s) available as Notional Investments; and provided
further, that no reallocation that a Participant requests shall be honored to
the extent that it would conflict with the minimum allocation requirements that
the Administrator may establish from time to time.

 

(c) Determination of Account Value. The Administrator shall from time to time
calculate each Participant’s Account Value based on the Participant’s Deferred
Amounts and elections with respect to the deemed allocation of the Participant’s
Account among the Notional Investments available to the Participant. Such
calculation will be based on the best information available to the Administrator
as of the date of determination, which information may include estimates. The
rate of return of any Notional Investment over the relevant measurement period
will track the performance of the fund(s) or other investment vehicle(s) to
which that Notional Investment relates (each, a “Referenced Fund”). Following
the commencement of distribution of a Participant’s Account Value to the
Participant, the Administrator shall continue to calculate the Participant’s
Account Value from time to time in the manner described above, taking into
account distributions from the Participant’s Account. The Firm’s valuation of a
Participant’s Account Value shall be conclusive and binding.

 

(d) Selection of Notional Investments; Conflicts of Interest.

 

(i) The Notional Investments available to a Participant depend on whether the
Participant is a SECAP I Participant or a SECAP II Participant. The Notional
Investments available from time to time will be indicated on the Executive
Compensation website or through other means that the Administrator shall
determine and communicate to Participants from time to time. The Firm may
provide a Participant with a description of the Referenced Funds and their
historical returns; however, the Firm is not responsible for actions, statements
or performance of the Referenced Funds.

 

(ii) The Administrator shall choose the Notional Investments available under
SECAP based on a variety of factors, including, without limitation, the Firm’s
own business interests and its relations with the Referenced Funds or

 

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parties affiliated with the Referenced Funds. The Administrator has no
obligation to select Notional Investments based solely on its expectation as to
their potential rate of return. In electing to participate in SECAP, 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 Administrator may require each
Participant to affirmatively make such acknowledgment and waiver.

 

(iii) The performance of each Notional Investment shall reflect all of the fees
and costs of the Referenced Fund, including, without limitation, placement agent
and brokerage fees, which the Referenced Fund 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 the Referenced Fund and receive fees for providing
these services. Fees paid by a Referenced Fund will reduce the performance of
the Referenced Fund and accordingly the performance of the Notional Investment.
Although Participants will not be investing in the Referenced Fund, because the
fees paid by the Referenced Fund to the Firm reduce the performance of the
Referenced Fund, the fees paid to the Firm will reduce the amount of the Firm’s
deferred compensation payment obligations to Participants.

 

(e) Right to Change Notional Investments. The Administrator may, from time to
time, change the Notional Investments available to Participants or allocate a
Participant’s Account to different Notional Investments than those selected by
the Participant. Nothing in the Descriptive Materials shall be construed to
confer on a Participant the right to continue to have any particular Notional
Investment option available for purposes of measuring the value of the
Participant’s Account.

 

(f) Amounts at Risk. The value of a Participant’s Account is subject to risk at
all times based upon the performance of the Notional Investments to which the
Participant’s Account is allocated. If the value of a Participant’s Notional
Investments decreases in the future, the value of the Participant’s Account may
be lower than the Participant’s original Deferred Amounts. Although a
Participant will not be an investor in the Referenced Funds underlying the
elected Notional Investments, a Participant’s Account will be subject to gains
and losses attributable to the performance of the elected Notional Investments.
Payment of the Participant’s Account is also subject to the risks associated
with the Participant’s status as an unsecured general creditor of Morgan Stanley
as described in Section 10.

 

(g) Administration Fees. Deferred Amounts are subject to a one-time set-up fee
and Account Values are subject to a quarterly administration fee (collectively,
the “Administration Fees”) determined by the Administrator from time to time and
set forth in the applicable Term Sheet. The Administration Fees are separate
from any fees applicable to the Notional Investments and the related Referenced
Funds, which are reflected in the net returns credited to a Participant’s
Account.

 

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(h) Other Deferrals. If a Participant becomes eligible to participate in SECAP
or a program similar to SECAP for any subsequent Fiscal Year, or if a
Participant has already deferred amounts pursuant to another deferred
compensation plan, the Firm may, for administrative convenience, maintain a
single Account to record deferrals by the Participant (and amounts credited or
debited to such deferrals) under SECAP and any similar programs for other Fiscal
Years. The portion of a Participant’s Account corresponding to each Fiscal
Year’s Deferred Amount shall be governed by the terms and conditions applicable
to each such Fiscal Year’s Deferred Amount.

 

6. Manner of Payment.

 

(a) US Dollars. All payments under SECAP shall be in US dollars. Participants
shall have no right to any other form of payment.

 

(b) Distribution Election. At the time a Participant makes a Deferral Election,
the Participant must make an irrevocable Distribution Election specifying an
Elected Distribution Date. Except as otherwise provided in this Section 6,
distribution of the Applicable Account Value shall commence promptly following
the Elected Distribution Date. For each Fiscal Year in which a Participant
participates in SECAP, the Participant will be required to make an irrevocable
Distribution Election governing the Applicable Account Value. Nevertheless, the
Firm reserves the right to defer distributions scheduled during a Participant’s
Employment if, on any date on which the Firm would otherwise make a distribution
to the Participant, the Firm considers the Participant to be one of its
executive officers and the Participant’s compensation may not be fully
deductible by virtue of Section 162(m) of the Internal Revenue Code. Such a
deferral shall continue until the Firm no longer considers the Participant to be
an executive officer or such earlier date as the Firm may determine if, in its
sole discretion, an earlier payment is likely to be deductible to the Firm.

 

(c) Payment Options. Subject to the other terms and conditions of SECAP, a
Participant will elect at the time the Participant makes a Deferral Election to
have the Applicable Account Value distributed in either one lump sum or in two
to ten annual installments commencing on the Elected Distribution Date. For each
Fiscal Year in which a Participant participates in SECAP, the Participant will
be required to elect a form of distribution governing the Applicable Account
Value.

 

(d) Payment of Installments. If a Participant elects distribution of the
Applicable Account Value in annual installments, the undistributed portion of
the Applicable Account Value shall remain in the Participant’s Account and be
credited (or debited) with future returns from the Participant’s selected
Notional Investment options. As a result, the amount of each installment payment
may vary, depending on the future rate of return applied to the Participant’s
Account. The amount of each annual installment shall equal “(1/A) x B”, where
“A” equals the number of annual installments remaining to be made (including the
installment with respect to which the calculation is made) and “B” equals the
Applicable Account Value as of the date the amount of such installment is
determined.

 

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(e) Payment Notice. The Administrator shall determine the value of each
distribution. Prior to any distribution, the Administrator shall advise the
Participant of (i) the estimated value of the Participant’s distribution amount
and (ii) the value of the Participant’s money market fund Notional Investments
in the Participant’s Account. To the extent that there is a shortfall between
the value of a Participant’s money market fund Notional Investments and the
value of the distribution amount, the Administrator shall advise the Participant
to reallocate a portion of the Account Value out of other current Notional
Investments during the next reallocation period into the Participant’s selected
money market fund Notional Investment(s) in order to ensure that the
Participant’s scheduled distribution payment(s) can be made in full and on time.
Payment may be delayed if a Participant does not make appropriate reallocations.
The Administrator may reallocate Notional Investments to ensure the Participant
satisfies this Section 6(e).

 

(f) No Withdrawals or Loans. Except for distributions made in accordance with
the terms of SECAP, a Participant shall have no rights to make withdrawals or
loans from the Participant’s Account for any reason.

 

(g) Acceleration. Notwithstanding anything to the contrary set forth in any
Descriptive Materials, the Administrator may accelerate distribution of a
Participant’s Account Value at any time.

 

7. Vesting; Termination of Employment; Cancellation Events.

 

The application and effect of vesting, termination of Employment, Cancellation
Events and other restrictions on the Applicable Account Value shall be
determined by the Administrator and set forth in the applicable Term Sheet.

 

8. Death.

 

If a Participant dies before the Elected Distribution Date for the Applicable
Account Value, the Participant’s Applicable Account Value shall be paid in a
lump sum to the Participant’s Beneficiaries as soon as practicable following
notice to Morgan Stanley of the Participant’s death. If a Participant dies
following the first installment payment of the Participant’s Applicable Account
Value made pursuant to Section 6(d), the Participant’s remaining installment
payments relating to that Applicable Account Value and determined in accordance
with Section 6(d), shall be paid to the Participant’s Beneficiaries at the
scheduled times. The Administrator may accelerate payments of any portion or all
of the Participant’s Account Value at any time following the Participant’s
death.

 

9. Termination and Amendment.

 

The Administrator may, at any time, terminate SECAP in whole or in part as to
some or all Participants. No further deferrals shall be permitted by affected
Participants after the effective date of any termination. Following the
termination of SECAP, the Administrator may permit existing Account Values to
remain in SECAP, subject to their applicable terms and conditions, or make early
distributions of portions or all of an Account Value as to some or all
Participants. Upon such early distribution,

 

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payment of a Participant’s Account Value, determined as of the effective date of
the termination of SECAP, shall be made to the Participant (or, following the
Participant’s death, the Participant’s Beneficiaries) as soon as practicable
following the January 1st of the year following the year in which notice of such
termination is sent to all affected Participants. The Administrator may also
alter, amend or modify SECAP or any Term Sheet at any time in its sole
discretion. These amendments may include (but are not limited to) changes that
the Administrator considers necessary or advisable as a result of changes in, or
the adoption or interpretation of, any law, regulation, ruling, judicial
decision or accounting standards (collectively, “Legal Requirements”).
Notwithstanding anything to the contrary in any Descriptive Materials, the
Administrator may not amend or modify SECAP in a manner that would materially
impair a Participant’s rights in the Account without the Participant’s consent;
provided, however, that the Administrator may, without a Participant’s consent,
(i) accelerate distribution of Account Values at any time and (ii) amend or
modify SECAP in any manner that the Administrator considers necessary or
advisable to comply with any Legal Requirement or to ensure that a Participant’s
Account Value is not subject to federal, state or local income tax prior to
payment. The Administrator shall notify Participants of any termination of SECAP
or any amendment of SECAP that is material, and shall notify affected
Participants of any amendment that affects such Participants’ rights.

 

10. SECAP Unfunded.

 

SECAP is an unfunded nonqualified deferred compensation plan. A Participant’s
Account represents at all times an unfunded and unsecured contractual obligation
of Morgan Stanley. Each Participant and Beneficiary is an unsecured general
creditor of Morgan Stanley with respect to all obligations owed under SECAP.
Amounts payable under SECAP shall be satisfied solely out of the general assets
of Morgan Stanley, subject to the claims of its creditors. A Participant and a
Participant’s Beneficiaries will not have any interest in any fund or in any
specific asset of Morgan Stanley of any kind by reason of any amount credited to
the Participant under SECAP, nor shall a Participant or any Beneficiary or any
other person have any right to receive any distribution under SECAP except as,
and to the extent, expressly provided in this plan document or the Term Sheet.
Morgan Stanley will not segregate any funds or assets to provide for the
distribution of a Participant’s Account Value or issue any notes or securities
for the payment thereof.

 

11. No Investment Obligation.

 

The Firm has no obligation to invest amounts corresponding to a Participant’s
Deferred Amounts or Account Value and/or any appreciation thereon (including,
without limitation, in the Referenced Funds tracked by the Notional Investments
a Participant selects). If the Firm invests amounts corresponding to Deferred
Amounts in any Referenced Fund, such investment shall not confer on a
Participant any right or interest in any such Referenced Fund. The Participant
will have no ownership or other interest in any financial or other instrument or
arrangement that Morgan Stanley may acquire or enter into to hedge its
obligations under SECAP.

 

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12. Compliance with Laws.

 

(a) Offerings under SECAP are intended to be exempt from registration under the
Securities Act. As a condition to participation in SECAP, at the time each
Participant makes a Deferral Election, the Participant will be deemed to
acknowledge, represent and warrant to and agree with Morgan Stanley, and the
Administrator 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 an investment in SECAP and the conflicts that SECAP 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 SECAP and all such questions were answered to the Participant’s full
satisfaction;

 

(iii) No oral or written representations were made to the Participant concerning
SECAP other than as stated in the Descriptive Materials, and no oral or written
information furnished to the Participant in connection with SECAP 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 SECAP for an indefinite period of time, has no need for
liquidity in the Participant’s assets placed in SECAP 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 SECAP to evaluate the merits and
risks of SECAP and to make an informed decision with respect thereto;

 

(vi) The Participant is not relying on Morgan Stanley with respect to the tax
and other economic considerations of SECAP;

 

(vii) The Participant meets the eligibility requirements to be a SECAP I
Participant or a SECAP II Participant, as applicable;

 

(viii) The Participant shall provide such information and execute and deliver
such documents as may reasonably be requested by the Firm in connection with
SECAP, including, without limitation, 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 appropriate with

 

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regard to the Participant’s eligibility (including, without limitation,
documentation relating to the Participant’s Accredited Investor or Qualified
Purchaser status);

 

(ix) The Participant’s representations, warranties and agreements made at the
time the Participant makes a Deferral Election, and in any other writing
delivered, or electronic election made, in connection with SECAP shall be true
and correct in all respects on and as of the date of any deferral under SECAP as
if made on and as of such date;

 

(x) The Participant’s participation in SECAP 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; and

 

(xi) The Participant shall keep confidential all matters relating to SECAP
(including, without limitation, the terms of SECAP and the Descriptive
Materials), except to the extent such matters are publicly available (through no
fault of the Participant) or as otherwise required by law. The Firm’s Code of
Conduct regarding confidential and proprietary information shall cover such
matters.

 

(b) The Administrator may from time to time amend or modify the representations
that a Participant is required to make pursuant to this Section 12.

 

(c) Participants are required to promptly inform Morgan Stanley if any of the
representations included in this Section 12, as may be amended or modified from
time to time by the Administrator, becomes false for any reason.

 

13. Satisfaction of Withholding and Other Obligations.

 

The Firm may, in its sole discretion, take various actions affecting a
Participant’s Account in order to collect amounts sufficient to satisfy (i) any
tax or withholding obligations, or other obligations with respect to assessments
or other governmental charges, imposed on property or income received by the
Participant pursuant to SECAP and (ii) any obligation that the Participant owes
to the Firm. In particular, upon either the scheduled payment of all or any
portion of a Participant’s Account Value or the accelerated payment of such
Account Value pursuant to Section 6(g), the Firm may, in its sole discretion,
deduct or withhold an amount sufficient to satisfy any such obligations. The
Firm’s determination of the amount that a Participant owes the Firm shall be
conclusive and binding.

 

14. Nontransferability.

 

A Participant may not assign, sell, garnish, transfer, pledge or encumber the
Participant’s interests in SECAP, other than as provided in Section 15 (which
allows a Participant to designate a Beneficiary or Beneficiaries in the event of
the Participant’s 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 a Participant’s lifetime,
payments shall be made only to the Participant. The term

 

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and conditions of SECAP are binding on, and shall benefit, Morgan Stanley and
its successors and assigns, and the Participants, their Beneficiaries, heirs,
legatees and personal representatives.

 

15. Designation of a Beneficiary.

 

A Participant may make a written designation of a Beneficiary or Beneficiaries
to receive all or part of the Participant’s SECAP payments to be paid under
SECAP in the event of the Participant’s death. To make a Beneficiary
designation, a Participant must complete and submit a designation of beneficiary
form with the Executive Compensation Department pursuant to procedures the
Administrator may establish from time to time. A Participant may revoke or
change the Participant’s designation at any time.

 

If a Participant does not designate a Beneficiary to which payments are to be
made upon the Participant’s death, or if no Beneficiary survives a Participant,
payments under Section 8 subsequent to the Participant’s death shall be made to
the Participant’s estate. If a Beneficiary survives a Participant but dies prior
to the completion of the payments contemplated to be made to that Beneficiary
under Section 8, the unpaid portion of such payments at the death of the
Beneficiary shall be paid to the Beneficiary’s estate.

 

If there is any question as to the legal right of any designated Beneficiary to
receive payment, the Administrator may determine to pay the Participant’s estate
or legal representative. The Administrator’s determination shall be binding and
conclusive on all persons, and the Firm shall have no further liability to
anyone with respect to such payment.

 

16. Claims Procedure.

 

The Administrator may establish procedures from time to time pursuant to which
the Administrator will process claims by Participants with respect to SECAP.

 

17. Commodity Exchange Act Compliance.

 

Morgan Stanley has filed with the National Futures Association a notice claiming
an exclusion from the definition of the term “commodity pool operator” (“CPO”)
under the Commodity Exchange Act, as amended, and the rules of the Commodity
Futures Trading Commission promulgated thereunder, with respect to its operation
of SECAP and, accordingly, is not subject to registration or regulation as a CPO
of SECAP. Morgan Stanley reserves the right to modify SECAP to ensure that it is
not subject to registration or regulation as a CPO.

 

18. No Right to Continued Employment or Participation.

 

Neither SECAP nor any interpretation, determination or other action taken or
omitted to be taken pursuant to SECAP shall be construed as guaranteeing a
Participant’s Employment, a discretionary bonus or any particular level of
bonus,

 

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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. In addition, neither SECAP nor any interpretation, determination or
other action taken or omitted to be taken pursuant to SECAP shall be deemed to
create or confer on a Participant any right to participate in SECAP, or in any
similar program that may be established by the Firm, in respect of any Fiscal
Year.

 

19. Compliance with Local Law.

 

The Administrator may modify the terms and conditions of SECAP to comply with
the applicable requirements of local laws.

 

20. Conflicts.

 

In the event of any conflict or inconsistency between the SECAP plan document
and any Term Sheet or any of the Descriptive Materials, the plan document shall
govern and the Term Sheet and any Descriptive Materials shall be interpreted to
minimize or eliminate any such conflict or inconsistency; provided, however,
that to the extent the Administrator amends or modifies any term or definition
set forth herein, such modified term or definition will be communicated to the
Participant in the applicable Term Sheet and shall govern.

 

21. Governing Law.

 

SECAP and the legal relations between a Participant and the Firm shall 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.

 

22. Effective Date.

 

The Compensation Committee of the Board of Directors of Morgan Stanley approved
SECAP on June 27, 2003 and the first deferrals under SECAP occurred in January,
2004.

 

23. Construction.

 

The headings in this plan document have been inserted for convenience of
reference only and are to be ignored in any construction of SECAP. Use of one
gender includes the other, and the singular and plural include each other.

 

24. Defined Terms.

 

Unless determined otherwise by the Administrator and set forth in the applicable
Term Sheet the following terms shall have the indicated meanings:

 

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(a) “Account” means the bookkeeping account maintained on the books and records
of Morgan Stanley in a Participant’s name to record Deferred Amounts and credits
or debits thereto in accordance with SECAP. An Account is established only for
purposes of measuring a deferred benefit and not to segregate assets or to
identify assets that may be used to make payments under SECAP.

 

(b) “Account Value” means the amount reflected on the books and records of
Morgan Stanley as the value of a Participant’s Account at any date of
determination, as determined in accordance with SECAP.

 

(c) For purposes of SECAP, an “Accredited Investor” is an individual who is able
to represent at the time of deferral that:

 

(i) His or her net worth, either individually or jointly with his or her spouse,
exceeds $1,000,000 (all of the individual’s assets may be included, including,
without limitation, the net value of his or her residence);

 

(ii) He or she had an individual adjusted gross income as reported for United
States federal income tax purposes 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) He or she had joint adjusted gross income as reported for federal income
tax purposes with his or her 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.

 

(d) “Applicable Account Value” means the portion of the Participant’s Account
Value that corresponds to the applicable Fiscal Year’s Deferred Amount.

 

(e) “Beneficiary” means the person designated by a Participant pursuant to
Section 15 to receive any payments under Section 8 in the event of the
Participant’s death.

 

(f) A “Cancellation Event” shall have the meaning set forth in the applicable
Term Sheet.

 

(g) “Chief Administrative Officer” means the officer of Morgan Stanley to whom
the Compensation Committee of Morgan Stanley’s Board of Directors has delegated
authority to administer SECAP.

 

(h) “Deferral Election” means, for each Fiscal Year’s participation, an
irrevocable election made by a Participant to defer payment of an amount of the
Participant’s Eligible Compensation subject to the terms and conditions of
SECAP.

 

(i) “Deferral Year” means the Fiscal Year with respect to which the
Participant’s Deferred Amount under SECAP relates. For instance, (i) with
respect to

 

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year-end bonuses, the Deferral Year is the year in which the bonuses are earned
even if the bonuses are paid in a subsequent Fiscal Year and (ii) with respect
to commission payouts or notional revenue credit advances, the Deferral Year is
the year in which the commission payouts or notional revenue credit advances are
earned.

 

(j) “Deferred Amount” means the amount of Eligible Compensation deferred by a
Participant pursuant to a Deferral Election. The amount a Participant defers
will be taken from the Participant’s Eligible Compensation, after the following
deferrals (as applicable):

 

(i) any non-elective equity-based awards (e.g., regular EICP); and

 

(ii) bonus waivers;

 

but before the following deductions (as applicable):

 

(i) elective equity-based awards (e.g., Voluntary EICP or Voluntary Equity
Participation Plan);

 

(ii) Morgan Stanley 401(k) Plan; and

 

(iii) income taxes and US Social Security and Medicare tax.

 

(k) “Descriptive Materials” means the applicable Term Sheet, the SECAP plan
document and all other brochures, letters, memoranda or other documents from
Morgan Stanley to the Participant regarding SECAP, including all
electronic-based materials.

 

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

 

(m) “Distribution Election” means an irrevocable election by a Participant as to
(i) the Elected Distribution Date of the Applicable Account Value and (ii) the
installment payment method to be used for distribution of the Participant’s
Applicable Account Value.

 

(n) “Elected Distribution Date” means, with respect to each Deferral Year, the
date specified in a Participant’s Distribution Election for commencement of the
distribution of the Applicable Account Value, which commencement date may not be
earlier than the Vesting Date and may not be later than the later of (i) January
1st of the year in which the Participant turns 65 and (ii) January 1st of the
year following the Participant’s termination of Employment. A Participant shall
select a separate Elected Distribution Date for each Applicable Account Value.

 

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(o) “Eligible Compensation” means the cash compensation a Participant may defer
pursuant to SECAP, as determined by the Administrator from time to time and set
forth in the applicable Term Sheet.

 

(p) “Eligible Employees” shall have the meaning set forth in the applicable Term
Sheet.

 

(q) “Employment” refers to employment with the Firm and/or Related Employment.

 

(r) “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.

 

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

 

(t) “Fiscal Year” means a fiscal year of Morgan Stanley.

 

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

 

(v) “Notional Investments” means the Referenced Funds or other investment
vehicles used to measure the return (positive or negative) to be attributed to
Deferred Amounts.

 

(w) “NQDC Committee” means the nonqualified deferred compensation administrative
committee consisting of officers of the Firm, appointed from time to time by
Morgan Stanley’s Chief Administrative Officer to administer SECAP.

 

(x) “Participant” means an Eligible Employee who participates in SECAP.

 

(y) For purposes of SECAP, a “Qualified Purchaser” is an individual who is able
to represent at the time of deferral that he or she has net “investments” of $5
million. “Investments” are generally securities held solely for investment
purposes, which do not include the investor’s primary residence. When
determining a Participant’s ownership in “investments” the following rules are
applicable:

 

(i) Investments should be valued at either their fair market value as of the
most recent practicable date or at their cost.

 

(ii) Investments include investments held jointly with a Participant’s spouse.

 

(iii) Investments include investments held in any IRA, 401(k) or similar
retirement account directed by a Participant and held for the Participant’s
benefit.

 

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(iv) The principal amount of any outstanding debt, including margin loans,
incurred by a Participant to acquire or for the purpose of acquiring the
investment must be excluded from the value of each investment.

 

(v) Investments include the following:

 

(1) securities, other than securities of an issuer that controls, is controlled
by, or is under common control with a Participant unless the issuer is:

 

(A) a private investment company, such as a hedge fund, offshore fund, commodity
pool or similar private investment company;

 

(B) a public company; or

 

(C) a company with shareholders’ equity of $50 million or more;

 

(2) cash and cash equivalents (including foreign currencies) held for investment
purposes;

 

(3) real estate held for investment purposes; and

 

(4) commodity interests, including commodity futures contracts and options
thereon, swaps and other financial contracts.

 

(vi) Investments do not include:

 

(1) jewelry, artwork, antiques and collectibles;

 

(2) real estate held for personal purposes or as a place of business; and

 

(3) investments held in retirement accounts where the purchaser does not make
the investment decisions (e.g., an employer retirement plan where the investment
decisions are not directed by the subscriber).

 

(z) “Related Employment” means a Participant’s employment with an employer other
than the Firm, provided that: (i) the Participant undertakes such employment at
the request or with the consent of the Firm; (ii) immediately prior to
undertaking such employment the Participant was an employee of the Firm or was
engaged in Related Employment (as defined herein); and (iii) such employment is
recognized by the Firm in its discretion as Related Employment.

 

(aa) “SECAP I Participant” shall have the meaning set forth in the applicable
Term Sheet.

 

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(bb) “SECAP II Participant” shall have the meaning set forth in the applicable
Term Sheet.

 

(cc) “Securities Act” means the Securities Act of 1933, as amended.

 

(dd) “Term Sheet” means a written or electronic document which, for each
specified Fiscal Year’s deferral, sets forth those terms and conditions of SECAP
that, pursuant to the terms of this plan document, are to be communicated in a
Term Sheet, including terms and definitions that are not otherwise set forth
herein or that the Administrator has determined to modify from those set forth
herein.

 

(ee) “Vesting Date” shall have the meaning set forth in the applicable Term
Sheet with respect to the specified Fiscal Year’s deferral.

 

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