Document:

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                                                                   Exhibit 10.21

                        MORGAN STANLEY DEAN WITTER & CO.
                   DIRECTORS' EQUITY CAPITAL ACCUMULATION PLAN
                    (as amended and restated January 1, 2002)

Section 1.  Purpose

     Morgan Stanley Dean Witter & Co., a Delaware corporation (the "Company"),
hereby adopts the Morgan Stanley Dean Witter & Co. Directors' Equity Capital
Accumulation Plan (the "Plan"). The purpose of the Plan is to promote the
long-term growth and financial success of the Company by attracting, motivating
and retaining non-employee directors of outstanding ability and assisting the
Company in promoting a greater identity of interest between the Company's
non-employee directors and its stockholders.

Section 2.  Eligibility

     Only directors of the Company who are not employees of the Company or any
affiliate of the Company (the "Eligible Directors") shall participate in the
Plan.

Section 3.  Plan Operation

     (a) Administration. Other than as provided in Section 5(i) of the Plan, the
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Plan requires no discretionary action by any administrative body with regard to
any transaction under the Plan. To the extent, if any, that questions of
administration arise, these shall be resolved by the Board of Directors of the
Company. The Board may, in its discretion, delegate to the Chief Financial
Officer or the Chief Legal Officer of the Company any or all authority and
responsibility to act pursuant to this Plan. All references to the "Plan
Administrators" in this Plan shall refer to the Board, or the Chief Financial
Officer or Chief Legal Officer if the Board has delegated its authority pursuant
to this Section 3(a). The determination of the Plan Administrators on all
matters within their authority relating to the Plan shall be conclusive.

     (b) No Liability. The Plan Administrators shall not be liable for any
         ------------
action or determination made in good faith with respect to the Plan or any award
hereunder, and the Company shall indemnify and hold harmless the Plan
Administrators from all losses and expenses (including reasonable attorneys'
fees) arising from the assertion or judicial determination of any such
liability.

Section 4.  Shares of Stock Subject to the Plan

     (a) Stock. Awards under the Plan shall relate to shares of common stock,
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par value $.01 per share, of the Company and any other shares into which such
stock shall thereafter be changed by reason of any merger, reorganization,
recapitalization, consolidation, split-up, combination of shares or similar
event as set forth in and in accordance with this Section 4 (the "Stock").

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     (b) Shares Available for Awards. Subject to Section 4(c) (relating to
         ---------------------------
adjustments upon changes in capitalization), as of any date, the total number of
shares of Stock with respect to which awards may be granted under the Plan shall
be equal to the excess (if any) of (i) 1,700,000 shares over (ii) the sum of (a)
the number of shares subject to outstanding awards granted under the Plan and
(b) the number of shares previously issued pursuant to the Plan. In accordance
with (and without limitation upon) the preceding sentence, shares of Stock
covered by awards granted under the Plan that are canceled or expire unexercised
shall again become available for awards under the Plan. Shares of Stock that
shall be issuable pursuant to the awards granted under the Plan shall be
authorized and unissued shares, treasury shares or shares of Stock purchased by,
or on behalf of, the Company in open-market transactions.

     (c) Adjustments. In the event of any merger, reorganization,
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recapitalization, consolidation, sale or other distribution of substantially all
of the assets of the Company, any stock dividend, split, spin-off, split-up,
split-off, distribution of cash, securities or other property by the Company, or
other change in the Company's corporate structure affecting the Stock, then the
following shall be automatically adjusted in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be awarded under
the Plan:

               (i)     the aggregate number of shares of Stock reserved for
               issuance under the Plan,

               (ii)    the number of shares of Stock subject to outstanding
               awards,

               (iii)   the number of "Stock Units" credited pursuant to Section
               7(b) of the Plan,

               (iv)    the per share purchase price of Stock subject to Elective
               Options and Director Options,

               (v)     the number of shares to be granted as Director Stock
               pursuant to Section 6(a), and

               (vi)    the number of shares with respect to which Director
               Options are granted pursuant to Section 5(a).

Section 5.  Director Options; Election to Receive Options.

     (a) Awards. Subject to the provisions of this Section 5, each Eligible
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Director shall receive the following options to purchase Stock for service as a
director of the Company (the "Director Options"):

               (i)     Initial Awards. If a person is elected, appointed or
                       --------------
               otherwise becomes an Eligible Director, then such Eligible
               Director shall receive a Director Option to purchase 8,000 shares
               of Stock on the first day of the calendar month following the
               month in which such Eligible Director first becomes an Eligible
               Director; provided, however, that if a person is elected,
               appointed or otherwise becomes an Eligible Director during a
               period 60 days prior to the Company's annual meeting of its
               stockholders (the "Annual Meeting") in any year, then such
               Eligible Director shall receive no Director Option pursuant to
               this Section 5(a)(i).

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               (ii)    Subsequent Awards. As of the date of each Annual Meeting,
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               each Eligible Director shall automatically receive a Director
               Option to purchase 8,000 shares of Stock provided that such
               Eligible Director shall continue to serve as a director of the
               Company after such Annual Meeting.

     (b) Election to Receive Options. An Eligible Director may elect (an "Option
         ---------------------------
Election") to receive options to purchase Stock ("Elective Options") in lieu of
all (but not a portion) of the amount of the Eligible Director's annual cash
retainer for services as a member of the Board (the "Retainer") by submitting an
Option Election Form (an "Option Election Form") to the Company's Secretary
indicating that the Eligible Director elects to receive Elective Options in lieu
of Retainer. An Option Election shall become effective only with respect to the
Retainer earned after the date on which the Option Election Form is received by
the Secretary. Each Option Election, once made, shall be irrevocable.
Notwithstanding the foregoing, an Option Election may be superseded with respect
to future payments of Retainer by submitting a new Option Election Form to the
Secretary.

     (c) Award of Elective Option. If the Company's Secretary receives an
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effective Option Election Form from an Eligible Director, such Eligible Director
shall receive Elective Options to acquire whole shares of Stock (but not
fractional shares) in lieu of the Retainer elected to be received in Elective
Options. Each such Option shall be awarded on the date on which the Eligible
Director becomes entitled to the payment of the Retainer, or if such date is not
a business day, then on the next succeeding business day. The number of shares
of Stock subject to each such Option shall be the number of whole shares of
Stock determined by multiplying (i) the number three (3) by (ii) the quotient
obtained by dividing the amount of the Retainer by the Fair Market Value of a
share of Stock on the award date, provided that (x) in no circumstances shall
the Eligible Director be entitled to receive, or the Company have any obligation
to issue to the Eligible Director, any Elective Option in respect of any
fractional share of Stock and (y) in lieu of any Elective Option in respect of
any fractional share of stock, such Eligible Director shall be entitled to
receive, and the Company shall be obligated to pay to such Eligible Director,
cash equal to the value of any fractional share of Stock.

     (d) Exercise Price. The purchase price of Stock subject to a Director
         --------------
Option or an Elective Option shall be the Fair Market Value (as defined in
Section 9) of the Stock on the date such Option is granted, rounded up to the
nearest whole cent.

     (e) Nontransferability. No Director Option or Elective Option granted
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pursuant to this Plan shall be sold, assigned or otherwise transferred by an
Eligible Director other than by will or the laws of descent or distribution and
may be exercised during the Eligible Director's lifetime only by such Eligible
Director.

     (f) Limitation on Exercise. Director Options and Elective Options may not
         ----------------------
be exercised for a period of six (6) months from the date such Options are
granted.

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     (g) Effect of Termination.
         ---------------------

               (i)     If an Eligible Director's service as a director of the
               Corporation terminates for a reason other than for Cause (as
               defined below), then the Director Options and the Elective
               Options granted to such Eligible Director shall remain
               exercisable following the date of such Eligible Director's
               termination of service in accordance with the following
               provisions:

                       (A) Disability, Normal Retirement or Death. If service
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               terminates by reason of Disability (as hereinafter defined),
               Normal Retirement (as hereinafter defined) or death, until the
               expiration date of the Option. With respect to any Eligible
               Director, (1) "Disability" shall mean a "permanent and total
               disability" as defined in Section 22(e)(3) of the Internal
               Revenue Code of 1986, as amended; and (2) "Normal Retirement"
               shall mean the termination of service for retirement at or after
               attaining age 65.

                       (B) Other. If service terminates for any other reason
                           -----
               (except for Cause), until the earlier of ninety days after the
               termination date and the expiration date of the Option.

               (ii)    If an Eligible Director is terminated for Cause, all
               Director Options and Elective Options granted to such Eligible
               Director shall be canceled and shall no longer be exercisable,
               effective on the date of such Eligible Director's termination for
               Cause. For purposes of this Plan, "Cause" means, with respect to
               any Eligible Director, on account of any act of (A) fraud or
               intentional misrepresentation, or (B) embezzlement,
               misappropriation or conversion of assets or opportunities of the
               Company or any affiliate.

     (h) Expiration Date of Options. All Director Options and Elective Options
         --------------------------
shall expire on the tenth anniversary of the date on which they are granted.

     (i) Extension of Exercisability. Notwithstanding any other provision
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hereof, the Board of Directors of the Company shall have the authority, in its
discretion, to amend any outstanding Director Option or Elective Option granted
pursuant to this Plan to extend the exercisability thereof, provided, however,
that no such amendment shall cause such Option to remain exercisable beyond its
original expiration date.

Section 6.  Director Stock

     (a) Awards. Each Eligible Director shall receive the following shares of
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Stock for service as a director of the Company (the "Director Stock"):

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               (i)     Initial Awards. If a person is elected, appointed or
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               otherwise becomes an Eligible Director, then such Eligible
               Director shall receive 1,200 shares of Director Stock on the
               first day of the calendar month following the month in which such
               Eligible Director becomes an Eligible Director; provided,
               however, that if a person is elected, appointed or otherwise
               becomes an Eligible Director during a period of 60 days prior to
               the Annual Meeting in any year, then such Eligible Director shall
               receive no Director Stock pursuant to this Section 6(a)(i).

               (ii)    Subsequent Awards. As of the date of each Annual Meeting,
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               each Eligible Director shall automatically receive 1,200 shares
               of Director Stock, provided that such Eligible Director shall
               continue to serve as a director of the Company after such Annual
               Meeting.

     (b) Limitation on Transfer. Director Stock may not be sold, transferred,
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pledged, assigned or otherwise conveyed by an Eligible Director for a period of
six (6) months from the date such Stock is awarded.

     (c) Deferral of Awards. An Eligible Director may elect to defer the receipt
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of all or a portion of the Director Stock by making an election pursuant to
Section 7(a), in which case there shall be credited to the Eligible Director's
Stock Unit Account (as defined in Section 7(b)) a number of units equal to the
number of shares of Director Stock being deferred.

Section 7.  Elective Deferrals

     (a) Election. Each Eligible Director may elect to defer receipt (a
         --------
"Deferral Election") of all or part of: (i) the Retainer; (ii) the fees payable
for meetings of the Board or any committee thereof and the cash retainer for
services as a member of any Board Committee ("Meeting Fees"); or (iii) shares of
Director Stock. An Eligible Director may make a Deferral Election by submitting
a Deferral Election Form (a "Deferral Election Form") to the Secretary of the
Company, indicating: (i) the percentage of the Retainer, Meeting Fees and
Director Stock to be deferred (the "Deferred Amount"); (ii) the date on which
distribution of Deferred Amounts should begin (the "Distribution Date"); (iii)
whether distributions are to be made in a lump sum, installments or a
combination thereof; (iv) the percentage of deferred Retainer and Meeting Fees
to be credited to the Stock Unit Account (as hereinafter defined) and the Cash
Account (as hereinafter defined); and (v) from which Account each distribution
is to be made. A Deferral Election shall be effective only with respect to the
Retainer, Meeting Fees and Director Stock which are earned after the Deferral
Election is made. All Deferral Elections, once made, shall be irrevocable.
Notwithstanding the foregoing, a Deferral Election may be superseded with
respect to future payments of Retainer and Meeting Fees and grants of Director
Stock by submitting a new Deferral Election Form to the Secretary. An Eligible
Director may designate, in any Deferral Election Form, one or more beneficiaries
to receive any distributions under the Plan upon the Eligible Director's death,
and may change such designation at any time by submitting a new Deferral
Election Form to the Secretary.

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        (b) Stock Unit Deferral. An Eligible Director may elect to have all or
            -------------------
part of the Deferred Amount credited to an account (a "Stock Unit Account") in
units which are equivalent in value to shares of Stock ("Stock Units"), except
that an Eligible Director who defers the receipt of Director Stock shall have
credited to the Stock Unit Account a number of Stock Units equal to the number
of shares of Director Stock being deferred. The Deferred Amount allocated to the
Stock Unit Account shall be credited to the Stock Unit Account as of the date on
which the Eligible Director becomes entitled to payment or receipt of the
Deferred Amount. The number of Stock Units credited to the Stock Unit Account on
account of deferred Retainer and Meeting Fees shall be an amount equal to the
result obtained by dividing (i) such Deferred Amount by (ii) the Fair Market
Value of a share of Stock on the date on which the Eligible Director becomes
entitled to payment of such Deferred Amount (or if such date is not a business
day, then on the next succeeding business day). If Stock Units exist in an
Eligible Director's Stock Unit Account on a dividend record date for the
Company's Stock, the Stock Unit Account shall be credited, on the dividend
payment date related to such dividend record date, with an additional number of
Stock Units equal to (i) the cash dividend paid on one share of Stock,
multiplied by (ii) the number of Stock Units in the Stock Unit Account on the
dividend record date, divided by (iii) the Fair Market Value of a share of Stock
on the dividend payment date.

        (c) Cash Deferral. An Eligible Director may elect to have all or part of
            -------------
the Deferred Amount derived from Retainer or Meeting Fees credited to a cash
account (a "Cash Account"). The Deferred Amount allocated to the Cash Account
shall be credited thereto on the date on which the Eligible Director becomes
entitled to payment of such Deferred Amount. As of the last day of each fiscal
quarter and the date of termination of the Eligible Director's service on the
Company's Board of Directors (the "Service Termination Date") the Eligible
Director's Cash Account will be credited with an additional amount equal to (i)
the "Rate of Interest", multiplied by (ii) the Average Daily Cash Balance,
multiplied by (iii) the number of days during which such Cash Account had a
positive balance, divided by (iv) 365. The "Rate of Interest" shall equal the
time weighted average interest rate paid by the Company for such quarter, or
shorter period ending on the Service Termination Date, to institutions from
which it borrows funds. The "Average Daily Cash Balance" shall equal the sum of
the daily balances for such Cash Account for such quarter or shorter period,
divided by the number of days on which a positive balance existed in such Cash
Account.

        (d) Distributions.
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                (i)      Distribution  Date.  Each Eligible Director shall
                         ------------------
               designate on the Deferral Election Form one of the following
               dates as a Distribution Date with respect to amounts credited to
               the Stock Unit Account or Cash Account thereafter: (A) the first
               day of the calendar month following the date of the Eligible
               Director's death; (B) the first day of the calendar month
               following the Service Termination Date; (C) the first day of a
               calendar month specified by the Eligible Director; or (D) the
               earlier to occur of (A), (B) or (C). Unless a Deferral Election
               Form designates a different Distribution Date for the Eligible
               Director's Stock Unit Account than for the Eligible Director's
               Cash Account, the Eligible Director shall be deemed to have
               selected the same Distribution Date for both Accounts.

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                        (ii)    Distribution  Method. An Eligible Director shall
                                --------------------
                        request on the Deferral Election Form that distributions
                        which are subject to such Deferral Election Form be made
                        in (A) a lump sum, (B) no more than 120 monthly, 40
                        quarterly or 10 annual installments or (C) in part as
                        provided in clause (A) and in part as provided in clause
                        (B). The amount to be distributed in any installment
                        pursuant to a specific Deferral Election Form shall be
                        determined by dividing the balance in the Cash Account
                        or the number of Stock Units in the Stock Unit Account,
                        as the case may be, that are subject to such Deferral
                        Election Form by the number of remaining installments.
                        If an Eligible Director receives a distribution on an
                        installment basis, undistributed Deferred Amounts shall
                        remain subject to the provisions of Section 7.

                        (iii)   Form of Distributions. All distributions from
                                ----------------------
                        the Cash Account shall be paid in cash. Distributions
                        made from the Stock Unit Account shall be for a number
                        of whole shares of Stock equal to the number of whole
                        Stock Units to be distributed and cash in lieu of any
                        fractional share (determined by using the Fair Market
                        Value of a share of Stock on the date on which such
                        distributions are distributed, but if such date is not a
                        business day, then on the next preceding business day).

Section 8.  Election to Receive Stock.

                (a) Election. An Eligible Director may elect (a "Stock
                    --------
Election") to receive all or a portion of the Eligible Director's Retainer and
Meeting Fees in shares of Stock by submitting a Stock Election Form (a "Stock
Election Form") to the Company's Secretary indicating the percentage of the
Retainer and the percentage of Meeting Fees to be paid in Stock. A Stock
Election shall become effective with respect to the Retainer and Meeting Fees,
respectively, payable after the date on which the Stock Election Form is
received by the Secretary. Each Stock Election, once made, shall be irrevocable.
Notwithstanding the foregoing, a Stock Election may be superseded with respect
to future payments of Retainer and Meeting Fees by submitting a new Stock
Election Form to the Secretary.

                (b) Payment in Stock. Upon receipt by the Company's Secretary of
                    ----------------
an effective Stock Election Form from an Eligible Director, such Eligible
Director shall thereafter receive whole shares of Stock (but not fractional
shares) in lieu of Retainer and Meeting Fees elected to be received in Stock
(the "Stock Amounts"). The number of shares of Stock to be received by an
Eligible Director with respect to any Stock Amount shall be the number of whole
shares of Stock determined by dividing the Stock Amount by the Fair Market Value
of a share of Stock on the date on which the Eligible Director becomes entitled
to payment of the Stock Amount (or if such date is not a business day, then on
the next succeeding business day), provided that (i) in no circumstances shall
the Eligible Director be entitled to receive, or the Company have any obligation
to issue to the Eligible Director, any fractional share of Stock and (ii) in
lieu of any fractional share of Stock, such Eligible Director shall be entitled
to receive, and the Company shall be obligated to pay to such Eligible Director,
cash equal to the value of any fractional share of Stock (determined by using
the Fair Market Value of a share of Stock on the date on which such Stock is
distributed, but if such date is not a business day, then on the next preceding
business day). Such whole shares of Stock shall be issued to such Eligible
Director promptly after such date.

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Section 9.  Fair Market Value

            "Fair Market Value" shall mean, with respect to each share of Stock
for any day:

            (a) if the Stock is listed for trading on the New York Stock
Exchange, the closing price, regular way, of the Stock as reported on the New
York Stock Exchange Composite Tape, rounded up to the nearest whole cent, or if
no such reported sale of the Stock shall have occurred on such date, on the next
preceding date on which there was such a reported sale, or

            (b) if the Stock is not so listed, but is listed on another
national securities exchange or on the Nasdaq Stock Market ("Nasdaq"), the
closing price, regular way, of the Stock on such exchange or Nasdaq, rounded up
to the nearest whole cent, as the case may be, on which the largest number of
shares of Stock have been traded in the aggregate on the preceding twenty
trading days, or, if no such reported sale of the Stock shall have occurred on
such date on such exchange or Nasdaq, as the case may be, on the next preceding
date on which there was such a reported sale on such exchange or Nasdaq, as the
case may be, or

            (c) if the Stock is not listed for trading on a national securities
exchange or Nasdaq, the average of the closing bid and asked prices as reported
by the National Association of Securities Dealers, rounded up to the nearest
whole cent, or, if no such prices shall have been so reported for such date, on
the next preceding date for which such prices were so reported.

Section 10. Issuance of Stock

            (a) Restrictions on Transferability. All shares of Stock delivered
under the Plan shall be subject to such stop-transfer orders and other
restrictions as the Company may deem advisable or legally necessary under any
laws, statutes, rules, regulations and other legal requirements, including,
without limitation, those of any stock exchange upon which the Stock is then
listed and any applicable federal, state or foreign securities law.

            (b) Compliance with Laws. Anything to the contrary herein
notwithstanding, the Company shall not be required to issue any shares of Stock
under the Plan if, in the opinion of legal counsel to the Company, the issuance
and delivery of such shares would constitute a violation by the Eligible
Director or the Company of any applicable law or regulation of any governmental
authority, including, without limitation, federal and state securities laws, or
the regulations of any stock exchanges on which the Company's securities may
then be listed.

Section 11. Withholding Taxes

            The Company may require as a condition of delivery of any shares of
Stock that the Eligible Director remit an amount sufficient to satisfy all
foreign, federal, state, local and other governmental withholding tax
requirements relating thereto (if any) and any or all indebtedness or other
obligation of the Eligible Director to the Company or any of its subsidiaries.

Section 12. Plan Amendments and Termination

            The Board of Directors of the Company may suspend or terminate the
Plan at any time and may amend it at any time and from time to time, in whole or
in part.

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Section 13. Listing, Registration and Legal Compliance

            If the Plan Administrators shall at any time determine that any
Consent (as hereinafter defined) is necessary or desirable as a condition of, or
in connection with, the granting of any award under the Plan, the issuance or
purchase of shares or other rights hereunder or the taking of any other action
hereunder (each such action being hereinafter referred to as a "Plan Action"),
then such Plan Action shall not be taken, in whole or in part, unless and until
such Consent shall have been effected or obtained. The term "Consent" as used
herein with respect to any Plan Action means (i) the listing, registrations or
qualifications in respect thereof upon any securities exchange or under any
foreign, federal, state or local law, rule or regulation, (ii) any and all
consents, clearances and approvals in respect of a Plan Action by any
governmental or other regulatory bodies, or (iii) any and all written agreements
and representations by an Eligible Director with respect to the disposition of
Stock or with respect to any other matter, which the Plan Administrators shall
deem necessary or desirable in order to comply with the terms of any such
listing, registration or qualification or to obtain an exemption from the
requirement that any such listing, qualification or registration be made.

Section 14. Right of Discharge Reserved

            Nothing in the Plan shall confer upon any Eligible Director the
right to continue as a director of the Company or affect any right that the
Company or any Eligible Director may have to terminate the service of such
Eligible Director.

Section 15. Rights as a Stockholder

            Except as otherwise provided by the terms of any applicable Benefit
Plan Trust (as hereinafter defined), an Eligible Director shall not, by reason
of any Director Option, Director Stock, Elective Option, Stock Unit or Stock
Amount, have any rights as a stockholder of the Company until Stock has been
issued to such Eligible Director.

Section 16. Unfunded Plan

            The Plan shall be unfunded and shall not create (or be construed to
create) a trust or a separate fund or funds. The Plan shall not establish any
fiduciary relationship between the Company and any Eligible Director or other
person. To the extent any person holds any rights by virtue of a pending grant
or deferral under the Plan, such rights shall be no greater than the rights of
an unsecured general creditor of the Company. Notwithstanding the foregoing, the
Company may (but shall not be obligated to) contribute shares of Stock
corresponding to Stock Units to any trust established by the Company under which
Eligible Directors, or Eligible Directors and participants in designated
employee benefit plans of the Company, constitute the principal beneficiaries (a
"Benefit Plan Trust").

Section 17. Governing Law

            The Plan is deemed adopted, made and delivered in Delaware and shall
be governed by the laws of the State of Delaware applicable to agreements made
and to be performed entirely within such state.

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Section 18. Severability

            If any part of the Plan is declared by any court or governmental
authority to be unlawful or invalid, such unlawfulness or invalidity shall not
invalidate any portion of the Plan not declared to be unlawful or invalid. Any
Section or part of a Section so declared to be unlawful or invalid shall, if
possible, be construed in a manner that will give effect to the terms of such
Section or part of a Section to the fullest extent possible while remaining
lawful and valid.

Section 19. Notices

            All notices and other communications hereunder shall be given in
writing and shall be deemed given when personally delivered against receipt or
five days after having been mailed by registered or certified mail, postage
prepaid, return receipt requested, addressed as follows: (a) if to the Company,
Morgan Stanley Dean Witter & Co., 1585 Broadway, New York, New York 10036,
Attention: Corporate Secretary; and (b) if to an Eligible Director, at the
Eligible Director's principal residential address last furnished to the Company.
Either party may, by notice, change the address to which notice to such party is
to be given.

Section 20. Section Headings

            The Section headings contained herein are for the purposes of
convenience only and are not intended to define or limit the contents of said
Sections.

                                       10<PAGE>

                                                                   Exhibit 10.41
                                                                   -------------

                             MORGAN STANLEY DW INC.
                        BRANCH MANAGER COMPENSATION PLAN
                        [Amended as of December 11, 2001]

                                    SECTION I
                                  INTRODUCTION

The name of this Plan is the Morgan Stanley DW Inc. Branch Manager Compensation
Plan (the "Plan"). The Plan was initially adopted for Fiscal Years beginning
with 1984; was amended and restated on December 23, 1985 retroactive to 1984;
was further amended as of December 8, 1986, January 1, 1988, December 23, 1990,
and July 15, 1991; was amended and restated January 1, 1992; amended and
restated as of April 21, 1992, retroactive to January 1, 1992; amended and
restated effective October 1, 1993; amended effective January 1, 1994; amended
and restated effective January 1, 1994; amended and restated effective October
21, 1994; amended effective June 18, 1997; amended effective September 25, 1998;
amended effective September 21, 1999; was amended effective December 9, 1999;
was amended effective March 26, 2001; and was amended effective December 11,
2001.

                                   SECTION II
                                 PURPOSE OF PLAN

The purpose of the Plan is to retain and recruit key Branch Managers for Morgan
Stanley DW Inc. by enabling them to accumulate significant net worth based on
the profitable management of Branch Offices of Morgan Stanley.

                                   SECTION III
                                   DEFINITIONS

(a)  "Account" means a Branch Manager Compensation Plan Account maintained in a
     confidential ledger by Morgan Stanley pursuant to Section VI of the Plan
     for each Participant in the Plan. MIC awards are also made under the Plan
     but Accounts are maintained only for Participants, i.e., those who get
     challenge or other awards.

(b)  "Financial Advisor" means an Employee performing the functions of that
     position for Morgan Stanley.

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(c)  "Agreement" means a subordination agreement described in Section VIII and
     Appendix A.

(d)  "Board" means the Compensation Committee of the Board of Directors of
     Morgan Stanley.

(e)  "Branch Office" means any branch office of Morgan Stanley.

(f)  "Branch Manager" means an Employee performing the functions of that
     position for Morgan Stanley. For purposes of this Plan, "Branch Manager"
     shall also mean a Satellite Manager, unless otherwise specified in the
     Plan.

(g)  "Disability" means termination of employment from Morgan Stanley due to a
     medically determinable physical or mental incapacity which is reasonably
     expected to be of long-term duration or result in death. The determination
     of Morgan Stanley shall be conclusive on all parties as to whether a
     Participant is Disabled.

(h)  "MWD" means Morgan Stanley Dean Witter & Co., a Delaware corporation.

(i)  "Morgan Stanley" means Morgan Stanley DW Inc., a Delaware corporation.

(j)  "Employee" means an employee of Morgan Stanley.

(k)  "Fair Market Value" means:

(1) for purposes of determining the number of shares of Stock to be allocated
pursuant to Section VII(b)(i) to a Deferred Bonus awarded pursuant to Section V,
the fair market value thereof as of the relevant date of determination, as
determined in accordance with a valuation methodology approved by the Board of
Directors of MWD or a committee thereof designated by such Board of Directors
(such Board of Directors or committee is hereinafter referred to as the "MWD
Committee"); and

(2) for purposes of crediting a Participant pursuant to Section VII(b)(iii) with
shares of Stock based upon cash dividends paid or deemed to be paid on shares of
Stock credited to the Participant as of the record date for such dividends, the
average of the high and low sales prices, regular way, of a share of Stock as
reported on the New York Stock Exchange Composite Tape (the "High/Low Price") on
the relevant dividend payment date, or, if Stock is not traded on public markets
on the relevant dividend payment date, the first preceding date on which Stock
is traded on public markets; provided, however, that in the event a "Fair Market
Value" cannot be determined pursuant to the foregoing, the fair market value
thereof as of the relevant date of determination, as determined in accordance
with a valuation methodology approved by the MWD Committee; and

(3) for purposes of distributing cash in lieu of a fractional share pursuant to
Section VII(b)(i), the High/Low Price on the date of the distribution, or, if
Stock is not traded on public markets on the date of the distribution, the first
preceding date on which Stock is traded on public markets; provided, however,
that in the event a "Fair Market Value" cannot be determined pursuant to the

                                       2

<PAGE>

foregoing, the fair market value thereof as of the relevant date of
determination, as determined in accordance with a valuation methodology approved
by the MWD Committee; and

     (4) for such other purposes as may arise in connection with the Plan, the
fair market value of a share of Stock as of the relevant date of determination,
as determined in accordance with a valuation methodology approved by the MWD
Committee.

(1)  "Fiscal Year" means the Fiscal Year of Morgan Stanley.

(m)  "MIC" means the Branch Manager Management Incentive Compensation Plan.

(n)  "Net Income After Allocated Expense" means the Branch Office monthly gross
     revenue less all expenses charged to such Branch Office, both direct and
     allocated, before accrual of income taxes and the Branch Manager's MIC
     credit as reflected in the statements of revenue and expense prepared by
     Morgan Stanley in accordance with its standard accounting practices.

(o)  "Non-Producing Branch Manager" means a Branch Manager who does not
     personally produce gross revenues for Morgan Stanley through the sale of
     securities and other investments to clients of Morgan Stanley.

(p)  "Office Gross Revenue" means the gross revenue generated in a Fiscal Year
     by a Branch Office as reflected in the statements of revenue and expense
     prepared by Morgan Stanley in accordance with its standard accounting
     practices.

(q)  "Participant" means a Branch Manager to whom a Challenge Bonus has been
     awarded or to whom another deferred bonus has been awarded, pursuant to
     Section V.

(r)  "Producing Branch Manager" means a Branch Manager who personally produces
     gross revenues for Morgan Stanley through the sale of securities and other
     investments to clients of Morgan Stanley.

(s)  "Profit Margin" means the Branch Office Net Income After Allocated Expense
     divided by the Branch Office Total Gross Income.

(t)  "Regional Director" means an Employee performing the functions of that
     position for Morgan Stanley.

(u)  "Retirement" means termination of employment from Morgan Stanley (i) after
     attaining age 65, (ii) as defined in the Morgan Stanley DW Inc. Pension
     Plan whether or not the individual is a participant therein, or (iii) as
     otherwise specified by written agreement between Morgan Stanley and a
     Branch Manager.

(v)  "Stock" means the common stock of MWD, par value $.01 per share.

(w)  "Satellite Manager" means the manager of a satellite sales office of Morgan
     Stanley.

                                       3

<PAGE>

(x)  "Total Gross Income" means the monthly gross income generated by a Branch
     Office as reflected in the statements of revenue and expense prepared by
     Morgan Stanley in accordance with its standard accounting practices.

(y)  "Valuation Date" means the last day of each Fiscal Year.

                                   SECTION IV
                                   ELIGIBILITY

All Branch Managers shall be eligible to participate in the Plan.

                                    SECTION V
                                  COMPENSATION

(a)  Salaries. Salary levels for Branch Managers shall be established each year
     by Morgan Stanley in its sole discretion taking into account such factors
     as Office Gross Revenue for each Branch Manager's respective Branch Office
     and/or such other factors as Morgan Stanley may determine. The criteria for
     determining Branch Manager salaries on an annual basis may be the same or
     different for Non-Producing Branch Managers, Producing Branch Managers
     and/or Satellite Managers. Salaries shall be paid in cash on a periodic
     basis throughout each Fiscal Year. Salary payments will cease immediately
     upon termination of employment.

(b)  MIC Award. Branch Managers shall be eligible for an MIC award to be based
     on a formula which shall be determined by the Board from time to time. A
     Branch Manager's MIC award shall be based on the monthly Profit Margin of
     his or her respective Branch Office. However, in the event of a Branch
     Office loss, such loss shall be carried forward to succeeding months and
     shall be used to reduce the monthly Profit Margin in such succeeding months
     in calculating MIC until such losses shall have been offset in whole by the
     Branch Office's Profit Margins in successive months of the same Fiscal
     Year. The amount of any Branch Manager's MIC award may be increased at any
     time by Morgan Stanley in its sole discretion. MIC award payments shall be
     paid in cash.

(c)  Challenge Bonuses.

     (1) Branch Managers shall also be eligible for an additional "Challenge
Bonus." The Challenge Bonus will be based on the achievement of challenge goals
agreed to between each Branch Manager and his or her Regional Director at the
beginning of each Fiscal Year. The Regional Director shall establish a Target
Challenge Bonus for a Branch Manager at such time as challenge goals are agreed
to with each Branch Manager.

     (2) The Board, in its sole discretion, shall determine whether a Branch
Manager has achieved and/or exceeded the challenge goals agreed on by the Branch
Manager and Regional Director. If the Board determines that a Branch Manager has
exceeded the challenge goals agreed to between the Branch Manager and the
Regional Director, it may award a Challenge Bonus up to two

                                       4

<PAGE>

times the target Challenge Bonus. If a Branch Manager has not achieved the
challenge goals for a Fiscal Year agreed to between the Branch Manager and the
Regional Director, the Branch Manager may receive a Challenge Bonus that is less
than the target Challenge Bonus, in an amount determined solely by the Board.

     (3) Morgan Stanley shall pay 80% of the Challenge Bonus in cash as soon as
practicable following the end of the Fiscal Year in which a Challenge Bonus is
earned. The remaining 20% (the "Deferred Bonus"), will be paid in the form of
shares of common stock of MWD, par value $.01 per share ("Stock") in accordance
with Section VII and subject to Appendix A.

(d)  Other Deferred Bonus Awards. At the beginning of any Fiscal Year, the Board
     may establish any other criteria which will entitle a Branch Manager to
     receive a deferred bonus award under the Plan for that or any one or more
     succeeding Fiscal Years. A Branch Manager who achieves such other criteria
     in a Fiscal Year shall receive an award for that Fiscal Year. Any deferred
     bonus awards made pursuant to this paragraph shall be made subject to the
     same terms and conditions as the deferred portion of a Challenge Bonus
     Award made under Section V(c)(3) and shall be Payment Obligations for
     purposes of Section VIII except that the Board may in its sole discretion,
     elect not to credit deferred bonus awards made pursuant to this subsection
     with the annual increments described in Section VI(c).

(e)  The MWD Committee, may, in its discretion from time to time, make to an
     individual, in consideration of such individual becoming (and remaining for
     such period of time, if any, as the MWD Committee determines) a Branch
     Manager and such other consideration, if any, as the MWD Committee
     determines, an award of Stock on such terms and conditions as the MWD
     Committee may determine, which terms and conditions need not be uniform
     with the terms and conditions of Section VI, VII or VIII hereof, but which
     shall be set forth in a written award certificate or award agreement
     delivered or made available by Morgan Stanley to the individual as soon as
     practicable following the date of the award. Awards of Stock under this
     Section V(e) shall be satisfied only out of shares held in treasury and not
     out of authorized but unissued shares.

                                   SECTION VI
                             ACCOUNTS - ESCROW AGENT

(a)  A separate Account shall be maintained by Morgan Stanley for each
     Participant in a confidential ledger for each Fiscal Year. Each such
     Account shall be credited with such deferred bonuses as may be awarded to
     the Participant pursuant to Section V of the Plan. Each such Account shall
     be decreased by any (i) payments of deferred awards, or (ii) forfeitures of
     deferred awards pursuant to Section VII.

(b)  Within a reasonable time after the end of each Fiscal Year the Controller
     of Morgan Stanley shall give each Participant a written report of the
     status of such Participant's

                                       5

<PAGE>

     Account under the Plan, including the value thereof. For each Fiscal Year,
     Accounts shall be valued as of the Valuation Date.

(c)  As a condition to participation in this Plan, each eligible Employee shall
     be required to hold restricted Stock awards hereunder in an escrow account
     and such Employee's decision to participate in the Plan shall constitute
     the appointment of Morgan Stanley Dean Witter Trust FSB, or such other
     custodian as Morgan Stanley shall designate (the "Custodian"), as the
     custodial agent for the purpose of holding such Stock. Such escrow account
     will be governed by and subject to the terms and conditions of a written
     agreement with the Custodian.

                                   SECTION VII
                                 AWARD PAYMENTS

(a)  In order to be entitled to any payment of compensation an Employee must be
     employed by Morgan Stanley on the date such compensation is paid. If any
     Employee terminates employment after any MIC, bonus or other compensation
     is or becomes determinable but before actual payment of such MIC, bonus, or
     other compensation is paid by Morgan Stanley in the normal course of
     business, the Employee shall not be entitled to receive any such payment.
     Notwithstanding the foregoing, in the event of the death or Disability of
     an Employee, compensation, including MIC and other bonuses under this Plan,
     which is determinable as of the last day of employment, shall be paid to
     the Employee or the Employee's representative at the times specified herein
     for the payment of such compensation.

(b)  (i) Deferred Bonuses will be paid in the form of Stock, payable as soon as
practicable following the close of the Fiscal Year for which the award is made.
For purposes of determining the number of shares of Stock that constitutes a
Deferred Bonus, the Stock may be valued at a discount, determined by the MWD
Committee, from Fair Market Value. Deferred bonuses under Section V(d) may be
paid in cash or in Stock as determined by the Compensation Committee of the
Board of Directors of Morgan Stanley. The number of shares of Stock payable with
respect to a Deferred Bonus shall be calculated by reference to the amount of
the Deferred Bonus determined under Section V. Payments to Participants of
Deferred Bonuses made in the form of Stock shall be made in the form of a
certificate for whole shares and cash in lieu of any fractional share. A
Participant on a leave of absence approved by Morgan Stanley or who is absent
due to disability on the date payment is made shall not be entitled to payment
of such Deferred Bonus until the Participant returns to Morgan Stanley following
completion of such leave of absence or disability.

     (ii) Stock awarded with respect to a Fiscal Year shall vest four years and
three months following the close of that Fiscal Year, provided that the
Participant's status as an Employee has not been terminated prior to such date.
Upon the Participant's termination of employment with Morgan Stanley, all
unvested Stock shall be forfeited. Notwithstanding anything in this Plan to the
contrary, if a Participant terminates employment with Morgan Stanley due to
Disability or Retirement, or upon a Participant's death, all of the
Participant's awards shall vest immediately and be paid as promptly as
practicable.

                                       6

<PAGE>

     (iii) A Participant may vote and receive dividends on any Stock awarded to
such Participant under Section VII(b)(i) or credited under this Section
VII(b)(iii); provided that all dividends on Stock (other than dividends payable
in Stock) shall be reinvested in shares of Stock at 100% of the Fair Market
Value of Stock which shares shall be credited to the Participant and held by the
Custodian. All shares of Stock received as a distribution with respect to Stock
or acquired with reinvested dividends hereunder shall be subject to the same
restrictions as shares of Stock on which such distribution or dividend is
awarded.

(c)  Except as provided in Section VII(b), payments made hereunder shall be made
     in cash and shall not be eligible for rollover or transfer into other
     retirement or deferred compensation plans sponsored by Morgan Stanley, MWD
     or any of their affiliates.

(d)  [Intentionally omitted.]

(e)  Morgan Stanley reserves the right to accelerate payment of a Participant's
     entire Account balance and/or the vesting of any Stock awarded pursuant to
     Section V(c) or Section V(d) of the Plan, subject to the provisions of
     Section VIII and an Agreement. The MWD Committee reserves the right to
     accelerate the vesting of any Stock awarded pursuant to Section V(e) of the
     Plan; provided that if the award of such Stock was made subject to Section
     VIII and an Agreement, then vesting of such Stock shall be subject to
     Section VIII and an Agreement.

(f)  A Participant shall be entitled to payment of his or her Account pursuant
     to Section VII(b) provided the Participant is employed by Morgan Stanley at
     the time such payment is due, regardless of the position in which the
     Participant is employed at such time.

(g)  In accordance with the provisions of an Agreement, if Morgan Stanley must
     recover a Payment Obligation previously paid to a Participant pursuant to
     this Section VII, a Participant shall be required to repay such amount.
     With respect to amounts awarded in Stock, the Participant shall be required
     to repay the number of shares of Stock received (or an amount in cash equal
     to the fair market value of such Stock as of the date of such repayment).
     If any such amount is not repaid, Morgan Stanley reserves the right to
     withhold from the Participant's compensation the amount of any Payment
     Obligation which a Participant fails to repay as required herein.

(h)  All federal, state, local and other withholding tax requirements, if any,
     relating to the Plan shall be met pursuant to procedures determined by
     Morgan Stanley which may include:

     1. Withholding from any cash amounts payable to a Participant under the
     Plan including salary, bonus or any other amounts payable from Morgan
     Stanley or any affiliate of Morgan Stanley;

     2. Requiring Participants to remit to Morgan Stanley an amount in cash
     prior to the delivery of any certificate for Stock or other payments under
     the Plan;

                                        7

<PAGE>

     3. At the election of the Participant, tendering to Morgan Stanley a number
     of shares of Stock;

     4. At the election of the Participant, withholding by Morgan Stanley of
     shares of Stock. In the event that the Custodian is directed by Morgan
     Stanley to withhold shares pursuant to this Section VII(h)(4), the
     Custodian shall distribute such shares from the custodial account to Morgan
     Stanley (or, at the direction of Morgan Stanley, sell such shares on public
     markets and distribute the cash proceeds to Morgan Stanley) and Morgan
     Stanley shall make appropriate withholding tax payments.

     5. If a Participant is subject to Section 16(b) of the Securities Exchange
     Act of 1934, Morgan Stanley may prescribe such requirements or limitations
     on the Participant's ability to elect the withholding options contained in
     Sections VII(h)(3) and (4) of the Plan as may be required by Securities and
     Exchange Commission rule 16b-3 or by any comparable or successor exemption.

(i)  The commencement of Related Employment by a Participant shall not be
     treated for purposes of the Plan and any Deferred Bonus or Other Deferred
     Bonus Award hereunder as a termination of employment. The Retirement,
     Disability or death of an individual during a period of Related Employment
     shall be treated for purposes of the Plan and any Deferred Bonus or Other
     Deferred Bonus Award hereunder as if such event had occurred while the
     individual was an Employee. For purposes of this Section VII(i), "Related
     Employment" shall mean the employment of a Participant by an employer other
     than Morgan Stanley, provided that: (1) such employment is undertaken by
     the individual at the request or with the consent of Morgan Stanley; (2)
     immediately prior to undertaking such employment the individual was an
     Employee or was engaged in Related Employment as defined herein; and (3)
     such employment is recognized by Morgan Stanley, in its discretion, as
     Related Employment.

                                  SECTION VIII
                        SUBORDINATION OF DEFERRED BONUSES

(a)  All Branch Managers, as a condition of participation, shall execute and
     deliver a written agreement (the "Agreement") within forty-five (45) days
     after notice of eligibility to Participate or the announcement of a
     Deferred Bonus Award made after December 24, 1990, that such Branch
     Manager's right to any payment hereunder (the "Payment Obligation") is
     subordinate to the prior payment or provision for payment in full of all
     claims of all present and future creditors of Morgan Stanley arising out of
     any matter occurring prior to the date on which the related Payment
     Obligation matures consistent with all applicable statutes, regulations and
     rules, except for claims which are the subject of subordination agreements
     which ran on the same priority (which claims shall be paid pari passu) or
     are junior to the Payment Obligation under the Agreement. The Agreement
     shall also provide that the Participant's right to

                                        8

<PAGE>

     payment hereunder shall be subordinate to claims which are now or hereafter
     expressly stated in the instruments creating such claims to be senior in
     right of payment to the claims of the class of claims created hereunder
     which arise out of any matter occurring prior to the maturity date of any
     payment under the Payment Obligation.

(b)  The form of the Agreement shall be determined by Morgan Stanley. In the
     event Morgan Stanley elects to treat Payment Obligations as subordinated
     liabilities for purposes of determining net capital under Rule 15c3-1
     promulgated by the Securities and Exchange Commission under the Securities
     Exchange Act of 1934 and similar regulations promulgated under the
     Commodities Exchange Act, the form of the Agreement shall be subject to
     approval of the Examining Authority as defined by the Agreement. A copy of
     the Agreement is annexed hereto as Appendix "A", and incorporated by
     reference as fully as if set forth herein at length.

(c)  Any amount credited to a Participant's Account shall not be segregated but
     shall remain a part of the general corporate funds of Morgan Stanley
     subject to the claims of general, unsecured creditors of Morgan Stanley to
     which claims the rights of the Participant to receive payment of the amount
     credited to his or her Account shall be subordinated pursuant to the terms
     of an Agreement.

(d)  If a Participant does not execute and deliver an Agreement within the
     forty-five (45) day period described in (a) above, such Participant shall
     cease to have any rights whatsoever hereunder with respect to awards
     deferred under Sections V(c)(3) and (d).

                                   SECTION IX
                                 ADMINISTRATION

(a)  Morgan Stanley shall have full power and authority to construe, interpret
     and administer the Plan. Its decision shall be final, conclusive and
     binding upon all persons, including Employees and officers and the
     beneficiaries and personal representatives of such employees and officers.

(b)  The expenses of administering the Plan shall be borne by Morgan Stanley.

(c)  The interest and property rights of any person in the Plan or in any
     distribution to be made under the Plan shall not be subject to option nor
     be assignable either by voluntary or involuntary assignment or by operation
     of law, including (without limitation) bankruptcy, garnishment, attachment
     or other creditor's process and any act in violation hereof shall be void.

(d)  Nothing herein shall be construed to require Morgan Stanley or any
     affiliate to segregate or set aside any funds or any property for the
     purpose of making award payments hereunder.

                                        9

<PAGE>

(e)  Morgan Stanley's determinations under the Plan need not be uniform and may
     be made by it selectively among persons who receive or are eligible to
     receive awards under the Plan (whether or not such persons are similarly
     situated). Without limiting the generality of the foregoing, Morgan Stanley
     shall be entitled, among other things, to make non-uniform and selective
     determinations and to enter into non-uniform and selective Plan agreements
     as to (1) the persons to receive awards under the Plan; (2) the terms and
     provisions of awards under the Plan; and (3) the exercise by Morgan Stanley
     of its discretion in respect of the terms of the Plan.

                                    SECTION X
                                  MISCELLANEOUS

(a)  The establishment of the Plan, the granting of benefits or any action by
     Morgan Stanley or any other person shall not be held or construed to confer
     upon any person any right to employment by Morgan Stanley nor, upon
     termination of employment, to confer any right or interest other than as
     provided herein. No provision of the Plan shall restrict the right of
     Morgan Stanley to terminate any Employee's employment with or without
     cause.

(b)  If, in the opinion of Morgan Stanley, any person becomes unable to handle
     properly any amount payable to such person under the Plan, Morgan Stanley
     may make any reasonable arrangement for payment on such person's behalf as
     it deems appropriate.

(c)  Where appropriate, the use of masculine terms within the Plan shall mean
     the feminine, the use of singular terms shall mean the plural, and vice
     versa.

                                   SECTION XI
            EFFECTIVE DATE, AMENDMENT, SUSPENSION AND DISCONTINUANCE

(a)  Morgan Stanley reserves the right to amend the Plan, in whole or in part,
     or to suspend or discontinue the Plan, in whole or in part, at any time.
     Morgan Stanley further reserves the right to change the criteria for
     awarding MIC or Challenge Bonuses provided that it gives adequate notice of
     such change to Branch Managers prior to the beginning of the Fiscal Year
     for which such changes are effective.

(b)  If any part of this Plan, including Appendix A hereto, fails to receive any
     required approval of a regulatory or governing body or is otherwise
     declared void and of no effect, the rest of the Plan shall continue in full
     force.

(c)  This Plan shall govern Payment Obligations of deferred Challenge Bonuses
     accrued for the Fiscal Year beginning in 1984 and thereafter.

(d)  The Plan shall continue in effect as amended from time to time until
     suspended or discontinued by Morgan Stanley.

                                       10

<PAGE>

                                   APPENDIX A
                                     TO THE
                             MORGAN STANLEY DW INC.
                        BRANCH MANAGER COMPENSATION PLAN

For purposes of this Appendix A, a Branch Manager who is designated in writing
by Morgan Stanley as a participant under the Plan, shall be known as a
"Participant", Morgan Stanley DW Inc. shall be known as "Morgan Stanley," and
Morgan Stanley's "Payment Obligation" shall be as defined below.

1.   Payment Obligation
     ------------------

     (a) Payment Obligations shall consist of any deferred payments of Challenge
Bonuses owed from time to time to a Participant by Morgan Stanley pursuant to
the Plan.

     (b) Payment Obligations including the dates payments are due, shall be
determined in accordance with the provisions of the Plan as in effect on the
date hereof, or as hereafter amended. As provided in Sections 4 and 5 of this
Appendix A, no payment of any amount of a Payment Obligation may be made sooner
than five years following the year for which such Payment Obligation is accrued
by Morgan Stanley. If any provision of the Plan as now in effect or as hereafter
amended shall be inconsistent with this Appendix A, this Appendix A shall
govern.

2.   Subordination of Right of Payment
     ---------------------------------

     (a) Payment Obligations are and shall be subordinated in right of payment
and subject to prior payment or provision for payment in full of all claims of
other present and future creditors of Morgan Stanley whose claims are not
similarly subordinated (claims hereunder shall rank pari passu with claims
similarly subordinated) and to claims which are now or hereafter expressly
stated in the instruments creating such claims to be senior in right of payment
to the claims or the class of claims hereunder which arise out of any matter
occurring prior to the maturity date of any payment under the Payment
Obligation.

     (b) In the event of the appointment of a receiver or trustee for the Morgan
Stanley or in the event of its insolvency, liquidation pursuant to the
Securities Investor Protection Act of 1970 ("SIPA") or otherwise, its
bankruptcy, assignment for the benefit of creditors, reorganization whether or
not pursuant to bankruptcy laws or any other marshaling of the assets and
liabilities of Morgan Stanley, Participant shall not be entitled to participate
or share, ratably or otherwise, in the distribution of the assets of Morgan
Stanley until all claims of all other present and future creditors of Morgan
Stanley whose claims are senior to claims hereunder have been fully satisfied or
provision has been made therefor.

     (c) Notwithstanding the maturing of the Payment Obligation under any
provision of the Plan or this Appendix A, the right of a Participant to receive
payment of any Payment Obligation is and shall remain subordinate as provided in
this Section 2.

3.   Suspension of Maturity During Net Capital Stringency
     ----------------------------------------------------

     (a) Morgan Stanley's Payment Obligations shall be suspended and not mature
for any period of time during which, after giving effect to such Payment
Obligations (together with the payment of

                                      A-1

<PAGE>

any other subordinated obligation of Morgan Stanley payable at or prior to such
payment of the Payment Obligations),

          (i)   if Morgan Stanley is not operating pursuant to the alternative
     net capital requirements provided for in paragraph (f) of Rule 15c3-1 (the
     "Rule") under the Securities Exchange Act of 1934 (the "Act"), the
     aggregate indebtedness of Morgan Stanley would exceed 1,200 percentum of
     its net capital, as those terms are defined in the Rule, as in effect at
     the time such payment is to be made, or such percentum as may be made
     applicable to Morgan Stanley from time to time by the Examining Authority
     (as defined in paragraph 7(f) hereof) plus an amount equal to the guaranty
     deposits with clearing organizations, other than the Chicago Board of Trade
     ("CBOT") which were included in current assets under Section 211 of the
     CBOT "Capital Requirements for Member FCM's" to the extent such deposits
     cannot be used for margin purposes, or

          (ii)  if Morgan Stanley is operating pursuant to the alternative net
     capital requirements provided for in paragraph (f) of the Rule, its net
     capital would be less than five (5) percentum of aggregate debit items (or
     such other percentum as may be made applicable to Morgan Stanley by the
     Examining Authority) computed in accordance with Exhibit A to Rule 15c3-3
     under the Act or any successor rule as in effect at the time such payment
     is to be made, plus an amount equal to the guaranty deposits with clearing
     organizations other than the CBOT, which were included in current assets
     under Section 211 of the CBOT "Capital Requirements for Member FCM's", to
     the extent such deposits cannot be used for margin purposes, or

          (iii) if Morgan Stanley is registered as a futures commission merchant
     under the Commodity Exchange Act (the "CEA"), the net capital of Morgan
     Stanley would be less than the greatest of (A) six (6) percentum of the
     funds required to be segregated pursuant to the CEA and Commodities Futures
     Trading Commission ("CFTC") Regulations and the foreign futures or foreign
     options secured amount exclusive of the market value of commodity options
     purchased by option customers of Morgan Stanley on or subject to the rules
     of a contract market or a foreign board of trade, provided the deduction
     for each option customer shall be limited to the amount of customer funds
     in each option customer's account(s) and foreign futures and foreign
     options secured amounts plus an amount equal to the guaranty deposits with
     clearing organizations other than the CBOT, which were included in current
     assets under Section 211 of the CBOT "Capital Requirements for Member
     FCM's", to the extent such deposits cannot be used for margin purposes, (B)
     such amount as may be made applicable to Morgan Stanley at the time of such
     payment by the Examining Authority under Rule 15c3-1(b)(7), or (C)
     $2,000,000 (or such other amount as required by the CEA and CFTC
     Regulations), or

          (iv)  if Morgan Stanley's net capital, as defined in the Rule or any
     successor rule as in effect at the time such payment is to be made, would
     be less than 120 percentum (or such other percentum as may be made
     applicable to Morgan Stanley at the time of such payment by the Examining
     Authority) of the minimum dollar amount

                                      A-2

<PAGE>

     required by the Rule as in effect at such time, or such dollar amount as
     may be made applicable to Morgan Stanley by the Examining Authority, plus
     an amount equal to the guaranty deposits with clearing organizations other
     than the CBOT, which were included in current assets under Section 211 of
     the CBOT "Capital Requirements for Member FCM's", to the extent such
     deposits cannot be used for margin purposes, or

          (v)  if Morgan Stanley is registered as a futures commission merchant
     under the CEA and if its net capital, as defined in the CEA or CFTC
     Regulations thereunder as in effect at the time of such payment, would be
     less than 120 percentum (or such other percentum as may be made applicable
     to Morgan Stanley by the Examining Authority) of the minimum dollar amount
     required by the CEA or the regulations thereunder as in effect at such time
     (or such other dollar amount as may be made applicable to Morgan Stanley by
     the Examining Authority at the time of such payment), plus an amount equal
     to the guaranty deposits with clearing organizations other than the CBOT,
     which were included in current assets under Section 211 of the CBOT
     "Capital Requirements for Member FCM's", to the extent such deposits cannot
     be used for margin purposes, or

          (vi) if Morgan Stanley is subject to the provisions of paragraph
     (a)(6)(v) or (a)(7)(iv) or (c)(2)(x)(B)(1) of the Rule, its net capital
     would be less than the amount required to satisfy the 1,000 percentum test
     (or such other percentum test as may be made applicable to Morgan Stanley
     by the Examining Authority at the time of such payment) stated in such
     applicable paragraph, plus an amount equal to the guaranty deposits with
     clearing organizations other than the CBOT, which were included in current
     assets under Section 211 of the CBOT "Capital Requirements for Member
     FCM's", to the extent such deposits cannot be used for margin purposes.

     The net capital required by (i)-(vi) above, is hereinafter referred to as
the "Applicable Minimum Capital". During any such suspension Morgan Stanley
shall, as promptly as consistent with the protection of its customers, reduce
its business to a condition whereby payment due under Payment Obligations could
be made (together with the payment of any other subordinated obligation of
Morgan Stanley payable at or prior to such payment) without Morgan Stanley's net
capital being below the Applicable Minimum Capital, at which time Morgan Stanley
shall make payment due under Payment Obligations on not less than five days
prior written notice to the Examining Authority.

     (b) If immediately after any payment of a Payment Obligation Morgan
Stanley's net capital is less than the Applicable Minimum Capital, whether or
not the Participant had any knowledge or notice of such fact at the time of any
such payment, a Participant must repay to Morgan Stanley, its successors or
assigns, any sum so paid, to be held by Morgan Stanley pursuant to the
provisions of the Plan as if such payment had never been made; provided,
however, that any suit for the recovery of any such payment must be commenced
within two years of the date of such payment. Morgan Stanley reserves the right
to withhold from the Participant's compensation the amount of any Payment
Obligation which a Participant fails to repay as required herein.

                                      A-3

<PAGE>

     (c) If pursuant to the terms hereof payment of Morgan Stanley's Payment
Obligations are suspended, Morgan Stanley may be summarily suspended by the
Examining Authority.

4.   Permissive Prepayment
     ---------------------

     With the prior written permission of the Examining Authority, Morgan
Stanley may, at its option and to the extent permitted by the Plan, pay all or
any portion of the Payment Obligation to the Participant (such payment
hereinafter referred to as a "Prepayment") at any time subsequent to one year
from the date subordinated funds became subject to this Appendix A. No
Prepayment shall be made, however, if after giving effect thereto (and to all
other payments of any other subordinated obligation of Morgan Stanley payable
within six months of such Prepayment) without reference to any projected profit
or loss of Morgan Stanley,

          (i)   in the event that Morgan Stanley is not operating pursuant to
     the alternative net capital requirement provided for in paragraph (f) of
     the Rule, the aggregate indebtedness of Morgan Stanley would exceed 1,000
     percentum of its net capital as those terms are defined in the Rule or any
     successor rule as in effect at the time such Prepayment is to be made (or
     such other percentum as may be made applicable at such time to Morgan
     Stanley by the Examining Authority), plus an amount equal to the guaranty
     deposits with clearing organizations other than the CBOT, which were
     included in current assets under Section 211 of the CBOT "Capital
     Requirements for Member FCM's", to the extent such deposits cannot be used
     for margin purposes, or

          (ii)  in the event that Morgan Stanley is operating pursuant to such
     alternative net capital requirement, the net capital of Morgan Stanley
     would be less than 5 percentum (or such other percentum as may be made
     applicable to Morgan Stanley at the time of such Prepayment by the
     Examining Authority) of aggregate debit items computed in accordance with
     Exhibit A to Rule 15c3-3 under the Act or any successor rule as in effect
     at such time, plus an amount equal to the guaranty deposits with clearing
     organizations other than the CBOT, which were included in current assets
     under Section 211 of the CBOT "Capital Requirements for Member FCM's", to
     the extent such deposits cannot be used for margin purposes, or

          (iii) in the event that Morgan Stanley is registered as a futures
     commission merchant under the CEA, the net capital of Morgan Stanley (as
     defined in the CEA or CFTC Regulations as in effect at the time of such
     Prepayment) would be less than the greatest of (A) 7 percentum (or such
     other percentum as may be made applicable to Morgan Stanley at the time of
     such Prepayment by the Examining Authority) of the funds required to be
     segregated pursuant to the CEA and CFTC Regulations and the foreign futures
     or foreign options secured amount, exclusive of the market value of
     commodity options purchased by option customers on or subject to the rules
     of a contract market or a foreign board of trade (provided the deduction
     for each option customer shall be limited to the amount of customer funds
     in each option customer's account(s) and foreign futures and foreign
     options secured amounts), plus an amount equal to the guaranty deposits
     with clearing organizations other than the CBOT, which were included in
     current assets under Section 211 of the CBOT "Capital Requirements for
     Member FCM's", to the extent such deposits cannot be used for

                                      A-4

<PAGE>

     margin purposes, (B) such amount as may be made applicable to Morgan
     Stanley by an Examining Authority under Rule 15c3-1(b)(7) or (C) $2,000,000
     (or such other amount as required by the CEA or CFTC Regulations), or

          (iv) Morgan Stanley's net capital as defined in the Rule or any
     successor rule as in effect at the time of such Prepayment, would be less
     than 120 percentum (or such other percentum as may be made applicable to
     Morgan Stanley at the time of such Prepayment by the Examining Authority)
     of the minimum dollar amount required by the rule as in effect at such time
     (or such other dollar amount as may be made applicable to Morgan Stanley at
     the time of such Prepayment by the Examining Authority), plus an amount
     equal to the guaranty deposits with clearing organizations other than the
     CBOT, which were included in current assets under Section 211 of the CBOT
     "Capital Requirements for Member FCM's", to the extent such deposits cannot
     be used for margin purposes, or

          (v)  in the event that Morgan Stanley is registered as a futures
     commission merchant under the CEA, its net capital, as defined in the CEA
     or the regulations thereunder, as in effect at the time of such Prepayment
     would be less than 120 percentum (or such other percentum as may be made
     applicable to Morgan Stanley at the time of such Prepayment by the
     Examining Authority) of the minimum dollar amount required by the CEA or
     the regulations thereunder as in effect at such time or such other dollar
     amount as may be made applicable to Morgan Stanley at the time of such
     Prepayment by the Examining Authority, plus an amount equal to the guaranty
     deposits with clearing organizations other than the CBOT, which were
     included in current assets under Section 211 of the CBOT "Capital
     Requirements for Member FCM's", to the extent such deposits cannot be used
     for margin purposes, or

          (vi) in the event that Morgan Stanley is subject to the provision of
     paragraph (a)(6)(v) or (a)(7)(iv) or (c)(2)(x)(B)(1) of the Rule, the net
     capital of Morgan Stanley would be less than the amount required to satisfy
     the 1,000 percentum test (or such other percentum test as may be made
     applicable to Morgan Stanley at the time of such Prepayment by the
     Examining Authority) stated in such applicable paragraph, plus an amount
     equal to the guaranty deposits with clearing organizations other than the
     CBOT which were included in current assets under Section 211 of the CBOT
     "Capital Requirements for Member FCM's," to the extent such deposits cannot
     be used for margin purposes.

     If Prepayment is made of all or any part of the Payment Obligation before
the date payment is due and if Morgan Stanley's net capital is less than the
amount required to permit such Prepayment pursuant to the foregoing provisions
of this paragraph, the Participant agrees irrevocable (whether or not such
Participant had any knowledge or notice of such fact at the time of such
Prepayment) to repay Morgan Stanley, its successors or assigns, the sum so paid
to be held by Morgan Stanley pursuant to the provisions hereof as if such
Prepayment had never been made; provided, however, that any suit for the
recovery of any such Prepayment must be commenced within two years of the date
of such Prepayment. Morgan Stanley reserves the right to withhold from the
Participant's

                                      A-5

<PAGE>

compensation the amount of any Payment Obligation which a Participant fails to
repay as required herein.

5.   Special Prepayment
     -------------------

     Morgan Stanley, at its option and as permitted by the Plan, but not at the
option of the Participant, may make a payment of all or any portion of the
Payment Obligation hereunder sooner than one year from the date on which such
amount became subject to this agreement (a "Special Prepayment"), if the written
consent of the appropriate regulatory authority is first obtained. If Morgan
Stanley shall be a futures commission merchant, as that term is defined in the
CEA and CFTC Regulations, no such prepayment shall be made if:

          (i)  after giving effect thereto (and to all payments of payment
     obligations under any other Subordination Agreements then outstanding, the
     maturities or accelerated maturities of which are scheduled to fall due
     within six months after the date such Special Prepayment is to occur
     pursuant to this provision or on or prior to the date on which the Payment
     Obligation with respect to such Special Prepayment is scheduled to mature
     disregarding this provision whichever date is earlier) without reference to
     any projected profit or loss of Morgan Stanley the net capital of Morgan
     Stanley is less than the greatest of (A) 10 percentum of the funds required
     to be segregated pursuant to the CEA and CFTC Regulations and the foreign
     futures or foreign options secured amount, exclusive of the market value of
     commodity options purchased by option customers of Morgan Stanley on or
     subject to the rules of a contract market or a foreign board of trade
     (provided the deduction for each option customer shall be limited to the
     amount of customer funds in such option customer's account(s) and foreign
     futures and foreign options secured amount), plus an amount equal to the
     guaranty deposits with clearing organizations, other than the CBOT, which
     were included in current assets under Section 211, (B) if Morgan Stanley is
     a securities broker or dealer, the amount of net capital specified in Rule
     15c3-1d(c)(5)(ii) of the regulations of the Securities and Exchange
     Commission (17 C.F.R. 240.15c3-1d(c)5(ii), or (C) $2,000,000 (or such other
     amount as required by the CEA or CFTC Regulations), or

          (ii) Pretax losses during the latest three month period were greater
     than 15% of current excess adjusted net capital.

6.   Maturity Upon Certain Events
     ----------------------------

     Notwithstanding the provisions of Section 3 hereof, the Payment Obligation
shall (to the extent not already matured) forthwith mature, together with all
other Subordination Agreements then outstanding, in the event of any
receivership, insolvency, liquidation pursuant to SIPA or otherwise, bankruptcy,
assignment for the benefit of creditors, reorganization whether or not pursuant
to bankruptcy laws, or any other marshaling of the assets and liabilities of
Morgan Stanley.

7.   Miscellaneous Provisions
     ------------------------

     (a) Participants may not rely upon any commodity exchange or securities
exchange to provide any information concerning or relating to Morgan Stanley.
Such exchanges have no responsibility to disclose to the Participant any
information concerning or relating to Morgan

                                      A-6

<PAGE>

Stanley which they may have now or at any future time. The Participant agrees
that the New York Stock Exchange (the "NYSE"), its Special Trust Fund or any
director, officer, trustee or employee of the NYSE or said Trust Fund or any
other exchange or director, officer, trustee or employee thereof shall not be
liable to the Participant with respect to the Plan or any distribution pursuant
thereto.

     (b) The funds represented by the Payment Obligations shall be dealt with in
all respects as capital of Morgan Stanley, shall be subject to the risks of the
business and may be deposited in an account or accounts in Morgan Stanley's name
in any bank or trust company.

     (c) Payment Obligations under the Plan may not be transferred, sold,
assigned, pledged or otherwise encumbered or disposed of and no lien, charge or
other encumbrance may be created or permitted to be created hereon, without the
prior written consent of the Examining Authority.

     (d) If Morgan Stanley is a futures commission merchant as that term is
defined in the CEA, Morgan Stanley agrees, consistent with the requirements of
Section 1.17(h) of the CFTC Regulations that whenever prior written notice by
Morgan Stanley to the Examining Authority is required pursuant to the provisions
of this agreement, the same prior written notice shall be given by Morgan
Stanley to (1) the CFTC at its principal office in Washington, D.C., Attention
Chief Accountant of Division of Trading and Markets, and/or (2) the commodity
exchanges of which the Corporation is a member and which are then designated by
the CFTC as Morgan Stanley's designated self-regulatory organizations as defined
in Section 1.3(ff) of the CFTC Regulations (the "DSROs").

     (e) "Subordination Agreement" as used herein shall include any subordinated
loan agreement and any secured demand note agreement constituting a satisfactory
subordination agreement under the Rule under which Morgan Stanley is the
borrower or the pledgee of collateral, and reference herein to the payment of a
subordinated obligation of Morgan Stanley shall be deemed to include the return
to the maker-pledgor of any secured demand note and the collateral therefor held
by Morgan Stanley.

     (f) The term "Examining Authority" shall refer to the regulatory body,
specified in paragraph (c)(12) of the Rule, responsible for inspecting or
examining Morgan Stanley for compliance with financial responsibility
requirements. If Morgan Stanley is and continues to be a member of the NYSE, the
references herein to the Examining Authority shall be deemed to refer to the
NYSE. If Morgan Stanley is and continues to be a futures commission merchant as
that term is defined in the CEA and regulations thereunder, references to the
Examining Authority shall also be deemed to refer to the CFTC and Morgan
Stanley's DSROs.

     (g) The provisions of this Appendix A shall be binding upon and inure to
the benefit of Morgan Stanley, its successors and assigns and the Participant
and the Participant's heirs, executors and administrators.

     (h) Any controversy arising out of or relating to this Plan shall be
submitted to and settled by arbitration pursuant to the Constitution and Rules
of the NYSE, Morgan Stanley and Participant shall be conclusively bound by such
arbitration.

                                      A-7

<PAGE>

     (i) Morgan Stanley shall not modify, amend or cancel this Appendix or any
provision of the Plan governing the Payment Obligations that are the subject of
the Appendix without the prior approval of the Examining Authority.

     (j) This agreement shall be deemed to have been made under and shall be
governed by the laws of the State of New York.

                                      A-8

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