Document:

EXHIBIT
4.23

     

     

    The Commissioners
of Her Majesty’s Treasury (the “Treasury”)

    1 Horse Guards
Road

    London

    SW1A
2HQ

     

    The Secretary of
State, Department for Business, Enterprise and Regulatory Reform (“BERR”)

    1 Victoria
Street

    London

    SW1H
0ET

     

    The Secretary of
State, Department for Communities and Local Government (“DCLG”)

    Eland House

    Bressenden Place

    London

    SW1E 5DU

     

     

               February 2009

     

    

    Ladies and
Gentlemen,

     

    LENDING
COMMITMENTS

     

    
      	
              1.  

            	
              Introduction

            

    

     

    The Royal Bank of
Scotland plc (the “Participating Institution”) notes that:

     

    
      	
              (A)  

            	
              the Asset
      Protection Scheme (the “APS”) and the extension to the Credit Guarantee
      Scheme (the “CGS” and, together with the APS, the “Schemes”) announced by
      the Government on 19 January 2009 are part of a comprehensive package of
      measures the objective of which is to reinforce the stability of the
      financial system, and together with the Working Capital Scheme announced
      by the Government on 14 January 2009 (the “WCS”), to increase confidence
      and capacity to lend, and in turn to support the recovery of the
      economy;

            

    

     

    
      	
              (B)  

            	
              participation
      in either or both of the Schemes by an institution having eligible
      liabilities (as determined by the Bank of England) above a threshold to be
      specified by the Treasury is subject to a
      verifiable commitment to be agreed between each participating institution
      and the Government to support lending to creditworthy borrowers in the
      real economy in a commercial manner;
and

            

    

     

    
      	
              (C)  

            	
              in
      determining the requisite lending commitments, the Treasury, BERR and DCLG
      (together, the “Government Departments”) have consulted closely with each
      other in relation to sectors of the economy for which they have
      responsibilities, and will continue

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	to
      consult closely with each other as appropriate in relation to the
      implementation and operation of the lending commitments given or to be
      given by certain institutions which participate in either or both of the
      Schemes.

    

     

    In
connection with the above, this document is being entered into by the
Participating Institution by way of a deed poll in favour of the Government
Departments and specifies: (i) the lending commitments given by the
Participating Institution for itself and on behalf of its Group, in connection
with its proposed participation in the Schemes, comprising a Business Lending
Commitments and a Homeowner Lending Commitment (each as defined in paragraph 3(A)
and together, the “Lending Commitments”); and (ii) certain associated
undertakings being given by the Participating Institution in connection with the
implementation and operation of the Lending Commitments.

     

    The Participating
Institution agrees that the undertakings given in this Deed Poll (including the
Lending Commitments) are intended to be binding on it and the provision of such
undertakings is a pre-requisite to the Participating Institution’s proposed
participation in the Schemes.

     

    References in this
Deed Poll to the “Participating Institution” mean (where appropriate) the
Participating Institution and the members of the Participating Institution’s
Group forming part of its UK banking operations.

     

    
      	
              2.  

            	
              Commencement
      of Lending Commitments

            

    

     

    The Participating
Institution undertakes (for itself and on behalf of its Group) to implement the
Lending Commitments with effect from 1 March 2009 and in doing so, to act in
good faith, having regard to the purpose of the Lending Commitments to support
lending to creditworthy borrowers in the real economy in a commercial
manner.

     

    
      	
              3.  

            	
              The
      Lending Commitments: General

            

    

     

    The Participating
Institution undertakes:

     

    
      	
              (A)  

            	
              to increase
      the supply of lending by the UK banking operations of the Participating
      Institution to UK businesses (as further described
      in paragraph 4 below)
      (the “Business Lending Commitments”) and to homeowners (including first
      time buyers) (as further described in paragraph 5 below) (the
      “Homeowner Lending Commitment”);
and

            

    

     

    
      	
              (B)  

            	
              to implement
      the Business Lending Commitments and the Homeowner Lending Commitment
      without distortion to its continued lending activities to other sectors of
      the real economy (including unsecured consumer lending) in the UK and, in
      doing so, to pay due regard to the level of demand and the normal
      distribution of maturities of lending to other sectors of the real economy
      granted by the Participating Institution in
  2008.

            

    

     

    Notwithstanding the
foregoing, the Participating Institution notes that the Lending Commitments are
not intended to require or cause the Participating Institution to do anything
that would constitute a breach by it of the Financial Services and Markets Act
2000 (“FSMA”), the rules 

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    made by the
Financial Services Authority (“FSA”) or the FSA’s capital supervisory framework
(together, the “FSA Requirements”), to lend in excess of its single name or
sectoral risk concentration limits or otherwise to engage in uncommercial
practices.

     

    In
implementing the Lending Commitments, the Participating Institution will adhere
to Principle 6 of the FSA’s Principles for Business (“a firm must pay due regard
to the interests of its customers and treat them fairly”) in respect of its
lending activities.

     

    In
complying with: (i) the Business Lending Commitments, additional lending will be
subject to the Participating Institution’s ordinary course pricing and other
terms and commercial and risk assessment; and (ii) the Homeowner Lending
Commitment, additional residential mortgage lending will be subject to the
Participating Institution’s ordinary course pricing and other terms and, subject
to paragraph
5.4(B), to the
Participating Institution’s standard credit and other acceptance
criteria.

     

    
      	
              4.  

            	
              The
      Business Lending Commitments

            

    

     

    
      	
              4.1  

            	
              Scope
      of Business Lending Commitments

            

    

     

    The Business
Lending Commitments apply to lending by the UK banking operations of the
Participating Institution to the following UK business categories (each, a
“Relevant Business Category” and together, “Relevant Businesses”):

     

    
      	
              (A)  

            	
              small and
      medium sized enterprises (or “SMEs”), which means UK businesses which are
      categorised by the Participating Institution as being small or medium
      sized enterprises by reference to their turnover typically being £25
      million or less;

            

    

     

    
      	
              (B)  

            	
              “Mid-Corporates”,
      which means UK businesses which are categorised by the Participating
      Institution as being mid-corporates by reference to their turnover
      typically being £500 million or less, excluding SMEs;
  and

            

    

     

    
      	
              (C)  

            	
              “Large
      Corporates”, which means UK businesses which are categorised by the
      Participating Institution as being large corporates by reference to their
      turnover typically being more than £500
million.

            

    

     

    For the purposes of
this Deed Poll: (i) “UK businesses” refers to firms, companies, partnerships,
joint ventures, associations and other undertakings engaged in economic activity
in the UK (including subsidiaries and branches of overseas entities
conducting such economic activities); and (ii) “turnover” refers to the relevant
UK business’s turnover, as stated in its most recent annual
accounts.

     

    
      	
              4.2  

            	
              Baseline
      for determining compliance with Business Lending
    Commitments

            

    

     

    The Participating
Institution undertakes:

     

    
      	
              (A)  

            	
              in respect of
      the 12 month period commencing 1 March 2009 (the “2009 commitment period”)
      and the 12 month period commencing 1 March 2010 (the “2010 commitment
      

            

    

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	 	period”), to
      increase lending (as defined in paragraph
      4.9) above the
      lending figure specified in the baseline budget by the amounts specified
      in paragraphs 4.3 to
      4.8 inclusive;
      and

    

     

    
      	
              (B)  

            	
              to implement
      the Business Lending Commitments in line with demand from different
      industry sectors operating in the real economy and, subject to demand, in
      line with the normal distribution of maturities of loans to each Relevant
      Business Category, in each case granted by the Participating Institution
      in 2008.

            

    

     

    For the purposes of
this Deed Poll, the “baseline budget” means the Participating Institution’s
forecast as at 31 December 2009 (before the impact of the Lending Commitments)
that the Participating Institution has shared with the Government Departments (a
copy of which is attached as an Appendix to this Deed Poll).

     

    
      	
              4.3  

            	
              Aggregate
      Business Lending Commitment

            

    

     

    In
respect of the 2009 commitment period, the Participating Institution undertakes
to increase its lending to Relevant Businesses by, in aggregate, an additional
£16 (sixteen) billion above the amount shown in the baseline budget. In
satisfying this aggregate lending commitment, the Participating Institution
shall increase its lending to each Relevant Business Category by (at a minimum)
the amount specified in paragraphs 4.4 to 4.6 inclusive.

     

    
      	
              4.4  

            	
              SMEs:
      2009 commitment

            

    

     

    The Participating
Institution undertakes that, in respect of the 2009 commitment period, its
lending to SMEs will be at least *** above the amount shown in the baseline
budget.

     

    
      	
              4.5  

            	
              Mid-Corporates:
      2009 commitment

            

    

     

    The Participating
Institution undertakes that, in respect of the 2009 commitment period, its
lending to Mid-Corporates will be at least *** above the
amount shown in the baseline budget.

     

    
      	
              4.6  

            	
              Large
      Corporates: 2009 commitment

            

    

     

    The Participating
Institution undertakes that, in respect of the 2009 commitment period, its
lending to Large Corporates will be at least *** above the amount shown in the
baseline budget.

     

    The Participating
Institution will work constructively by: (i) participating in forums established
or supported by the Government or the Bank of England; (ii) working with the
Government and the Bank of England to develop guidelines for lenders; and (iii)
continuing its ordinary course activities and processes (including with respect
to the syndication of facilities), to address or reduce any risk concentrations
arising from this Business Lending Commitment.

     

      
        

      

    

    
      
        	
                 
      

              	
                ***
      Indicates omission of material, which has been separately filed, pursuant
      to a request for confidential
treatment.

              

      

       

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	
              4.7  

            	
              Inter-relationship
      between WCS and Business Lending
Commitments

            

    

     

    The Participating
Institution has agreed to participate in the WCS and undertakes that the capital
released by its participation in the Scheme will be redeployed in support of
lending to

     

    SMEs and
Mid-Corporates for all forms of finance. This release of capital will enable the
Participating Institution to provide *** of the *** increase
in lending to SMEs and Mid-Corporates referred to in paragraphs 4.4 and 4.5 above and, as
such, the Participating Institution notes that the commitment given in respect
of capital released by its participation in the WCS: (i) is incorporated within
the Business Lending Commitment for the Relevant Business Categories; and (ii)
will be subject to the monitoring, reporting and compliance arrangements
described in paragraphs 8, 9 and 11.

     

    
      	
              4.8  

            	
              Lending
      to business: 2010 commitment

            

    

     

    In
respect of the 2010 commitment period, the Participating Institution undertakes
to maintain similar levels of lending to each of the Relevant Business
Categories as in the 2009 commitment period, subject to adjustment of the
commitments (pursuant to paragraph 6) by agreement
with the Treasury and BERR to reflect circumstances at the start of the 2010
commitment period.

     

    
      	
              4.9  

            	
              Application
      of Business Lending Commitments

            

    

     

    For the purpose of
the Business Lending Commitments “lending” means financing
facilities:

     

    
      	
              (A)  

            	
              in respect of
      SMEs and Mid-Corporates, drawn; and

            

    

     

    
      	
              (B)  

            	
              in respect of
      Large Corporates, granted (whether drawn or
  undrawn),

            

    

     

    in
each case by or to real economy UK businesses, including (without limitation)
loans, overdrafts, asset finance, invoice discounting and export finance, but
excluding (without limitation) derivatives and interbank financing and which are
outstanding as at the end of the 2009 commitment period or the 2010 commitment
period (as appropriate).

     

    
      
        

      

      
        
          	
                   
      

                	
                  ***
      Indicates omission of material, which has been separately filed, pursuant
      to a request for confidential
treatment.

                

        

      

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    For the purposes of
the above: (i) debt which is exchanged for equity in a restructuring of a
borrower, and impairments and write-offs of outstanding lending (save to the
extent such impairments and write-offs are already reflected in the baseline
budget), shall be treated as if it was still lending, except to the extent that
such adjustments to the quantum of outstanding lending are recovered or
recoverable through the APS; and (ii) ***.

     

    
      	
              4.10  

            	
              Marketing
      relating to Business Lending
Commitments

            

    

     

    The Participating
Institution undertakes that it will promptly ensure that its staff are aware of
the Business Lending Commitments and actively seek to implement such commitments
through sales and marketing activities which are targeted at Relevant
Businesses, which shall include both existing borrowers and new potential
borrowers. These activities will make specific provision for UK businesses that
would be categorised by the Participating Institution as Mid-Corporates or Large
Corporates and whose borrowings were financed, or are financed, by financial
institutions that have reduced, or are in the process of, reducing their lending
activities to UK businesses.

     

    
      	
              4.11  

            	
              General
      provisions about lending to
business

            

    

     

    In
relation to lending to Relevant Businesses, the Participating Institution
will:

     

    
      	
              (A)  

            	
              commit to its
      lending allocation under the Enterprise Finance
  Guarantee;

            

    

     

    
      	
              (B)  

            	
              apply for
      and, if approved, use the European Investment Bank’s intermediated
      financing schemes aimed specifically at SMEs and “Midcaps” (as defined by
      the European Investment Bank);

            

    

     

    
      	
              (C)  

            	
              actively and
      constructively participate in the funding of UK export credits where such
      funding is subject to the Export Credits Guarantee Department guarantee
      arrangements;

            

    

     

    
      	
              (D)  

            	
              abide by the
      revised British Bankers’ Association statement of principles for small
      business lending released on 12 December 2008 (as agreed at the Small
      Business Finance Forum held on 11 November
  2008);

            

    

     

    
      	
              (E)  

            	
              not reduce or
      withdraw, or increase its charges on, working capital lines when credit
      insurance covering the borrower’s suppliers has been reduced or withdrawn,
      without due and careful consideration and unless it is satisfied, through
      the application of its ordinary course commercial and risk assessment,
      that there has been a material adverse change in the credit risk
      associated with the relevant business that justifies such an
      action;

            

    

     

     

      
        

      

    

    
      
        	
                 
      

              	
                ***
      Indicates omission of material, which has been separately filed, pursuant
      to a request for confidential
treatment.

              

      

       

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	
              (F)  

            	
              continue to
      apply the normal commercial practices in effect prior to 2008 in
      determining whether to call a default against a business to which it has
      made a loan; and

            

    

     

    
      	
              (G)  

            	
              work
      constructively with other lenders and, where appropriate, the Government
      in exploring the full range of restructuring possibilities for corporate
      borrowers, and to do so in compliance with the International Association
      of Restructuring, Insolvency and Bankruptcy Professionals’ (INSOL)
      “Statement of Principles for a Global Approach to Multi-creditor
      Workouts”.

            

    

     

    The Participating
Institution notes that it has already committed to funding of £6.25
million to be made available through the Capital for Enterprise Fund
(announced by BERR on 14 January 2009), which is a fund being established to
provide long term finance for businesses which have exhausted their normal
lending facilities and which is part of Government's commitment to support the
de-leveraging of over-leveraged businesses.

     

    
      	
              5.  

            	
              Homeowner
      Lending Commitment

            

    

     

    
      	
              5.1  

            	
              Scope
      of Homeowner Lending Commitment

            

    

     

    The Homeowner
Lending Commitment applies to residential mortgage lending by the UK banking
operations of the Participating Institution to homeowners, including first time
buyers, in respect of properties in the UK.

     

    
      	
              5.2  

            	
              Homeowner
      Lending Commitment: 2009 commitment

            

    

     

    The Participating
Institution undertakes that, in respect of the 2009 commitment period, its
residential mortgage lending will be at least £9 (nine) billion above the amount
shown in the baseline budget.

     

    
      	
              5.3  

            	
              Homeowner
      Lending Commitment: 2010 commitment

            

    

     

    In
the 2010 commitment period, the Participating Institution undertakes to maintain
similar levels of residential mortgage lending as in the 2009 commitment period,
subject to adjustment of the commitment by agreement with the Government
Departments to reflect circumstances at the start of the 2010 commitment
period.

     

    
      	
              5.4  

            	
              Application
      of Homeowner Lending Commitment

            

    

     

    For the purposes of
the Homeowner Lending Commitment, the Participating Institution will ensure
that:

     

    
      	
              (A)  

            	
              a reasonably
      competitive range of residential mortgage products are available for
      residential mortgage applicants for residential mortgages up to at least
      90% loan-to-value (“LTV”);

            

    

     

    
      	
              (B)  

            	
              applications
      for residential mortgage products are promptly processed and granted,
      subject to applicants meeting the Participating Institution’s standard
      credit and other 

            

    

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      	 	acceptance
      criteria which must be both reasonable and consistent with market
      practice; and

    

     

    
      	
              (C)  

            	
              additional
      residential mortgage lending will be offered across the LTV bands (up to
      at least 90% LTV) and maturities, in line with the distribution of
      residential mortgages across such bands granted by the Participating
      Institution in 2008.

            

    

     

    
      	
              5.5  

            	
              Marketing
      relating to Homeowner Lending
Commitment

            

    

     

    The Participating
Institution undertakes that it will promptly ensure that its staff are aware of
the Homeowner Lending Commitment and actively seek to implement such commitment
through sales and marketing activities targeted at residential homeowners
(including first time buyers). The communication of the Homeowner Lending
Commitment to staff, and the marketing of such commitment to residential
homeowners shall, in particular, address the specific obligations undertaken by
the Participating Institution pursuant to paragraph 5.4.

     

    
      	
              5.6  

            	
              General
      provisions about lending to
homeowners

            

    

     

    The Participating
Institution will:

     

    
      	
              (A)  

            	
              actively
      participate in the Government’s Homeowners Mortgage Support Scheme,
      Mortgage Rescue Scheme and Support for Mortgage Interest and work to
      ensure that its eligible borrowers have the opportunity to benefit from
      these Schemes (where appropriate) and avoid
  repossession;

            

    

     

    
      	
              (B)  

            	
              actively and
      constructively participate in the Home Finance Forum;
  and

            

    

     

    
      	
              (C)  

            	
              review its
      policies for supporting individual borrowers in difficulty, with
      appropriate input from consumer
groups.

            

    

     

    
      	
              5.7  

            	
              Other
      provisions

            

    

     

    The Participating
Institution will:

     

    
      	
              (A)  

            	
              actively and
      constructively participate in the Consumer Finance
  Forum;

            

    

     

    
      	
              (B)  

            	
              abide by the
      principles agreed as part of the Credit Card Summit on 28 November 2008;
      and

            

    

     

    
      	
              (C)  

            	
              work closely
      with registered social landlords with a view to continuing the supply of
      appropriate finance.

            

    

     

    
      	
              6.  

            	
              Adjustment
      of Lending Commitments

            

    

     

    The Government
Departments may, in their discretion but acting reasonably: (i) reduce the
quantum of the Homeowner Lending Commitment and/or one or more of the Business
Lending Commitments; or (ii) allow the Participating Institution to increase its
lending to one or more 

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    Relevant Business
Categories by the amount of any shortfall in residential mortgage lending (a
“Commitment Adjustment”).

     

    The circumstances
in which the Government Departments may make such an adjustment to the Lending
Commitments include, but are not confined to, the following:

     

    
      	
              (A)  

            	
              changes to
      economic conditions (including, without limitation, the level of demand
      for business and residential mortgage lending at the Participating
      Institution’s ordinary course pricing and terms and the level of
      availability within the market of other forms of debt and equity finance
      to UK businesses);

            

    

     

    
      	
              (B)  

            	
              significant
      changes to the utilisation rates of lending to Large Corporates assumed in
      the baseline budget;

            

    

     

    
      	
              (C)  

            	
              changes to
      the Government Departments’ expectations as to the amount of lending
      needed to maintain economic activity;
and

            

    

     

    
      	
              (D)  

            	
              updated
      assessments of the extent to which the Participating Institution has
      relied on Government support and the nature of the support utilised by the
      Participating Institution.

            

    

     

    In
determining whether to make a Commitment Adjustment, the Participating
Institution understands that the Government Departments will have regard to (and
act reasonably in considering) any submissions made by the Participating
Institution as part of its ongoing dialogue with the Government Departments
regarding the operation and implementation of the Lending Commitments (including
(without limitation) with respect to the Homeowner Lending Commitment and
Business Lending Commitments applicable in respect of the 2010 commitment
period) .

     

    If
the Government Departments are satisfied that the Lending Commitments are no
longer necessary to address the Government’s objectives of reinforcing the
stability of the financial system, increasing confidence and capacity to lend,
and in turn supporting the recovery of the economy, they may agree that they
should cease to apply.

     

    The Participating
Institution will comply with the Lending Commitments in accordance with the
provisions of this Deed Poll on the understanding and assumption that: (i) the
Schemes will be established by the Government; and (ii) the Participating
Institution will participate in either or both of the Schemes on terms to be
agreed with the Government.

     

    It
is understood that: (i) the Lending Commitments will cease if the Participating
Institution does not participate in either of the Schemes by 1 June 2009; and
(ii) if the Participating Institution only participates in one of the
Schemes prior to 1 June 2009 the Government will, in consultation with
the Participating Institution 

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    and acting
reasonably, make appropriate reductions in the Lending Commitments having regard
to the quantum of financial support being provided by the Government to the
Participating Institution.

     

    
      	
              7.  

            	
              Interaction
      of Lending Commitments with previous
commitments

            

    

     

    The Participating
Institution notes that the Lending Commitments supersede the lending commitments
given by the Participating Institution in October 2008 in connection with its
participation in the Government’s Recapitalisation Scheme and in January 2009 in
connection with the proposed conversion of the preference shares held by the
Treasury in the Participating Institution into ordinary shares.

     

    
      	
              8.  

            	
              Monitoring
      and Reporting

            

    

     

    
      	
              8.1  

            	
              General
      requirements

            

    

     

    The Participating
Institution agrees that:

     

    
      	
              (A)  

            	
              compliance
      with the Lending Commitments will be subject to a monitoring and reporting
      process between the Participating Institution and the Government
      Departments which will be detailed, transparent and determined by the
      Government Departments (acting reasonably) in consultation with the
      Participating Institution;

            

    

     

    
      	
              (B)  

            	
              it will
      report to the Government
Departments:

            

    

     

    
      	
                   
      (i)  

            	
              on a monthly
      basis in a format, with content and within timescales, to be determined by
      the Government Departments (acting reasonably) in consultation with the
      Participating Institution (the “monthly reports”) and that: (i) in respect
      of the Business Lending Commitments, the monthly report will include
      (without limitation) the information and data described in paragraph 8.2; and (ii) in
      respect of the Homeowner Lending Commitment, each monthly report will
      include (without limitation) the information and data described in
      paragraph 8.3;
      and

            

    

     

    
      	
                   
      (ii)  

            	
              on an annual
      basis in a format, with content and within timescales, to be determined by
      the Government Departments (acting reasonably) in consultation with the
      Participating Institution (the “annual reports”) to facilitate the
      reporting by the Government Departments envisaged in paragraph 8.5(B) and that
      each annual report will include (without limitation) the information and
      data described in paragraph 8.4;
      and

            

    

     

    
      	
              (C)  

            	
              the monthly
      reports and annual reports will be submitted to the board of directors of
      the Participating Institution (the “Board”) prior to delivery to the
      Government Departments and, upon delivery to the Government Departments,
      will be accompanied by a certificate from a Board director that, to the
      best of his or her knowledge and belief, having made reasonable enquiries,
      the report fairly presents the relevant data and is not misleading
      

            

    

     

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
      	 	for
      the purpose of assessing compliance with the Lending Commitments or the
      achievement of their purpose.

    

     

    Without prejudice
to the specific requirements set out in this paragraph 8, the Participating
Institution undertakes to be open and honest in its dealings with the Government
Departments in relation to the implementation and operation of the Lending
Commitments and will promptly provide each Government Department with such other
information as it reasonably requires in connection with the Lending
Commitments.

     

    
      	
              8.2  

            	
              Business
      Lending Commitments: monthly
reports

            

    

     

    In
relation to the Business Lending Commitments, the monthly reports will
include:

     

    
      	
              (A)  

            	
              a segmental
      analysis showing new and outstanding lending divided by both size of
      business (corresponding to the Relevant Business Categories) and industry
      sector;

            

    

     

    
      	
              (B)  

            	
              (in respect
      of SMEs) application numbers and acceptance rates by type of financing,
      together with the credit assessments of applicants, against the
      corresponding numbers for 2008;

            

    

     

    
      	
              (C)  

            	
              a summary of
      the distributions of the pricing and terms on which lending is being made
      available and details of the credit and risk assessment
      methodology;

            

    

     

    
      	
              (D)  

            	
              a narrative
      commentary on new lending activities in respect of new and existing
      borrowers; and

            

    

     

    
      	
              (E)  

            	
              a narrative
      commentary on the data, explaining the reasons for any significant
      variances in the amount of outstanding loans and availability of credit by
      size of business or sector from the baseline
  budget.

            

    

     

    
      	
              8.3  

            	
              Homeowner
      Lending Commitment: monthly reports

            

    

     

    In
relation to the Homeowner Lending Commitment, the monthly reports will
include:

     

    
      	
              (A)  

            	
              a segmental
      analysis showing new loans and credit availability divided by transaction
      type (including LTV and Loan to Income (“LTI”)
  ratios);

            

    

     

    
      	
              (B)  

            	
              application
      numbers and acceptance rates by product, together with the credit rating
      scores of applicants, against the corresponding numbers for
      2008;

            

    

     

    
      	
              (C)  

            	
              a summary of
      the distributions of the pricing and terms
      on which lending is being made available and of the credit and risk
      assessment methodology; and

            

    

     

    
      	
              (D)  

            	
              a narrative
      commentary on the data, explaining the reasons for any significant
      variances in the amount of outstanding loans and availability of credit by
      transaction type from the baseline
budget.

            

    

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    
      	
              8.4  

            	
              Lending
      Commitments: annual reports

            

    

     

    The annual reports
will include information of a type which is broadly equivalent to the data and
information to be contained in the monthly reports, except that (in relation to
the segmental analysis referred to in paragraph 8.3(A)), the analysis
will be broken down by reference to outstanding loans at the end of the period
rather than new loans granted in such period.

     

    
      	
              8.5  

            	
              Public
      disclosure

            

    

     

    The Participating
Institution agrees that:

     

    
      	
              (A)  

            	
              the
      Government Departments may publicly announce details of the Lending
      Commitments and the associated obligations and undertakings of the
      Participating Institution as described in this Deed Poll;
    and

            

    

     

    
      	
              (B)  

            	
              each of the
      Government Departments may report to Parliament and Parliamentary
      committees (including the Public Accounts Committee and the House of
      Commons Treasury Select Committee) on implementation of, and compliance
      with, the Lending Commitments, with such reporting expected to be
      undertaken on an annual basis.

            

    

     

    
      	
              8.6  

            	
              Confidentiality

            

    

     

    Certain data and
information to be included within the monthly reports, or otherwise provided to
the Government Departments by the Participating Institution pursuant to this
Deed Poll, will be anonymised to preserve customer confidentiality and will
constitute confidential, commercially sensitive data.

     

    Confidential
information provided to Government Departments pursuant to this Deed Poll will
(without prejudice to the rights of the Government Departments described in
paragraph
8.5(A)) be subject
to confidentiality arrangements between the Participating Institution and each
of the Government Departments (on substantially similar terms to the
confidentiality agreement entered into between HM Treasury and the Participating
Institution on 17 February, 2009).

     

    
      	
              9.  

            	
              Implementation
      plan

            

    

     

    The Participating
Institution undertakes that, promptly after the Lending Commitment takes effect,
it will prepare and present to the Government Departments a plan which will
address how the Lending Commitments are to be implemented. Such implementation
plan will include the Participating Institution’s proposals regarding the
marketing and sales activities to be undertaken pursuant to paragraphs 4.10 and 5.5.

     

    
      	
              10.  

            	
              Incentivisation

            

    

     

    The Participating
Institution will, in applying its balanced scorecard approach to remuneration,
ensure that the performance assessment for staff employed in business units
responsible for delivery of the Lending Commitments will include an assessment
of new lending arising from the 

     

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    marketing and sales
activities undertaken pursuant to the Participating Institution’s obligations
under paragraphs 4.10 and 5.5.

     

    
      	
              11.  

            	
              Compliance

            

    

     

    Any failure to
comply with the Lending Commitments or the other obligations of, or undertakings
given by, the Participating Institution under this Deed Poll will initially be
addressed through the reporting mechanism which will provide the Government
Departments with a framework to discuss with the Participating Institution the
background to and reasons for such failure.

     

    ***

     

    
      	
              12.  

            	
              Miscellaneous

            

    

     

    
      	
              12.1  

            	
              Representations
      and warranties

            

    

     

    The Participating
Institution represents and warrants that:

     

    
      	
              (A)  

            	
              it has the
      corporate power and the authority to enter into this Deed Poll and to
      carry out its obligations, and the undertakings given by it,
      hereunder;

            

    

     

    
      	
              (B)  

            	
              it is duly
      organised and validly existing under the laws of its jurisdiction of
      organisation, and the execution of this Deed Poll and the consummation of
      the transactions contemplated herein have been duly authorised by all
      necessary action, and no other act or proceeding, corporate or otherwise,
      on its part is necessary to authorise the execution of this Deed Poll or
      the consummation of any of the transactions contemplated hereby;
      and

            

    

     

    
      	
              (C)  

            	
              it has duly
      executed and delivered this Deed
Poll.

            

    

     

    
      	
              12.2  

            	
              Costs

            

    

     

    The Participating
Institution agrees that it shall pay its own costs and expenses in relation to
the negotiation, preparation, execution and carrying into effect of this Deed
Poll.

     

    
      	
              12.3  

            	
              Remedies

            

    

     

    The Participating
Institution agrees that:

     

    
      	
              (A)  

            	
              (without
      prejudice to any other rights or remedies which any Government Department
      may have) damages would not be an adequate remedy for any breach by the
      Participating Institution of the provisions of this Deed Poll and each
      Government 

            

    

    
       

       

        
          

        

      

      
        	
                 
      

              	
                ***
      Indicates omission of material, which has been separately filed, pursuant
      to a request for confidential
treatment.

              

      

       

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    
      	 	
              Department
      shall be entitled to seek the remedies of injunction, specific performance
      and other equitable relief for any threatened or actual breach of any such
      provision by the Participating Institution and no proof of special damages
      shall be necessary for the enforcement by any Government Department of its
      rights under this Deed Poll;

            

    

     

    
      	
              (B)  

            	
              no failure of
      any Government Department to exercise, and no delay by any Government
      Department in exercising, any right, power or remedy in connection with
      this Deed Poll will operate as a waiver thereof, nor will any single or
      partial exercise of any such right preclude any other or further exercise
      of such right or the exercise of any other right;
  and

            

    

     

    
      	
              (C)  

            	
              the rights
      provided in this Deed Poll are cumulative and not exclusive of any rights
      (whether provided by law or
otherwise).

            

    

     

    
      	
              12.4  

            	
              Invalidity

            

    

     

    If
any provision of this Deed Poll shall be held to be illegal, invalid or
unenforceable, in whole or in part, under any enactment or rule of law, such
provision or part shall to that extent be deemed not to form part of this Deed
Poll but the legality, validity and enforceability of the remainder of this Deed
Poll shall not be affected.

     

    
      	
              12.5  

            	
              Assignment

            

    

     

    The Participating
Institution agrees that each of the Government Departments may assign their
respective rights under this Deed Poll to: (i) a governmental,
quasi-governmental or regulatory body; or (ii) a body or
entity established by, or owned by, one or more of the Government Departments
(including any body or entity established to monitor and administer the
APS).

     

    
      	
              12.6  

            	
              Variation

            

    

     

    Any term of this
Deed Poll may be amended, and the observance of any term of this Deed Poll may
be waived (either generally or in a particular instance and either retroactively
or prospectively), only with the written consent of the Government
Departments.

     

    
      	
              12.7  

            	
              Governing
      law

            

    

     

    This Deed Poll and
any non-contractual obligations arising out of or in connection with it shall be
governed by and construed in accordance with the laws of England.

     

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    IN WITNESS WHEREOF this Deed
Poll has been executed and delivered as a deed on 26 February 2009.

     

    
      	
              The
      Royal Bank of Scotland plc

            	
              )

            	
              By:           

            	 /s/
      illegible	 
	 	)	      
              duly
      authorised by power of attorney to act as attorney on its behalf in
      

            
	 	)	executing and
      delivering this Deed Poll	 
	 	)	 	 	 
	 	)	 	 	 
	 	 	Name:	 /s/
      illegible	 
	 	 	 	 	 
	 	 	Title:	Attorney	 

    

     

    
       

    

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    Appendix
– Baseline Budget

     

    
      
        	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Appendix
      - Baseline Budget for 2009 and Lending Commitments

              	 
      	 
      	 
      	 
      
	
                £ billions

              	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                The
      Business Lending Commitment

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Aggregate Business Lending
      Commitment

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                2009 Lending -
      Commitment

              	 
      	 
      	 
      	 
      	 
      	
                ***

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Minimum Lending Commitment by
      Business Category

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                Small and Medium Sized Enterprises
      (SME)

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                2008 total
      lending

              	 
      	
                ***

              	 
      	 
      	 
      	 
      
	 
      	
                (a)

              	
                2009 lending - Baseline
      Budget

              	 
      	
                ***

              	 
      	 
      	 
      	 
      
	 
      	
                (b)

              	
                2009 Lending Commitment (above
      Baseline Budget)

              	 
      	 
      	 
      
	 
      	
                (a)+(b)

              	
                2009 total
      lending

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                2009 Baseline impairments and
      write offs

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                Mid
    Corporates

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                2008 total
      lending

              	 
      	
                ***

              	 
      	 
      	 
      	 
      
	 
      	
                (a)

              	
                2009 lending - Baseline
      Budget

              	 
      	
                ***

              	 
      	 
      	 
      	 
      
	 
      	
                (b)

              	
                2009 Lending Commitment (above
      Baseline Budget)

              	 
      	 
      	 
      
	 
      	
                (a)+(b)

              	
                2009 total
      lending

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                2009 Baseline impairments and
      write offs

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                Large
      Corporates

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                2008 total
      lending

              	 
      	
                ***

              	 
      	 
      	 
      	 
      
	 
      	
                (a)

              	
                2009 lending - Baseline
      Budget

              	 
      	
                ***

              	 
      	 
      	 
      	 
      
	 
      	
                (b)

              	
                2009 Lending Commitment (above
      Baseline Budget)

              	 
      	 
      	 
      
	 
      	
                (a)+(b)

              	
                2009 total
      lending

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                2009 Average utilisation -
      Baseline

              	 
      	
                %

              	 
      	 
      	 
      	 
      
	 
      	 
      	
                (drawn facilities/committed
      facilities)

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                2009 Baseline impairments and
      write offs

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                The
      Homeowner Lending Commitment

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                2008 total
      lending

              	 
      	
                ***

              	 
      	 
      	 
      	 
      
	 
      	
                (a)

              	
                2009 lending - Baseline
      Budget

              	 
      	
                ***

              	 
      	 
      	 
      	 
      
	 
      	
                (b)

              	
                2009 Lending Commitment (above
      Baseline Budget)

              	 
      	 
      	
                ***

              
	 
      	
                (a)+(b)

              	
                2009 total
      lending

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Total 2009 Lending Commitment
      (above Baseline Budget)

              	 
      	 
      	 
      	 
      	 
      	
                ***

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      

      

      
        
          

        

      

      
        	
                *** Indicates omission of
      material, which has been separately filed, pursuant to a request for
      confidential treatment.

              

      

       

       

      16Exhibit
10.1

     

    
      MORGAN STANLEY

      

      2007
EQUITY INCENTIVE COMPENSATION PLAN

      (Amended
and Restated as of March 10, 2009)

      

      

      1.   Purpose. The primary purposes
of the Morgan Stanley 2007 Equity Incentive Compensation Plan are to
attract, retain and motivate employees, to compensate them for their
contributions to the growth and profits of the Company and to encourage them to
own Morgan Stanley Stock.

      

      2.           
Definitions. Except as
otherwise provided in an applicable Award Document, the following capitalized
terms shall have the meanings indicated below for purposes of the Plan and any
Award:

      

      “Administrator”
means the individual or individuals to whom the Committee delegates authority
under the Plan in accordance with Section 5(b).

      

      “Award”
means any award of Restricted Stock, Stock Units, Options, SARs or Other Awards
(or any combination thereof) made under and pursuant to the terms of the
Plan.

      

      “Award
Date” means the date specified in a Participant’s Award Document as the
grant date of the Award.

      

      “Award
Document” means a written document (including in electronic form) that
sets forth the terms and conditions of an Award. Award Documents shall be
authorized in accordance with Section 12(e).

      

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

      

      “Code”
means the Internal Revenue Code of 1986, as amended, and the applicable rulings,
regulations and guidance thereunder.

      

      “Committee”
means the Compensation, Management Development and Succession Committee of the
Board, any successor committee thereto or any other committee of the Board
appointed by the Board to administer the Plan or to have authority with respect
to the Plan, or any subcommittee appointed by such Committee.

      

      “Company”
means Morgan Stanley and all of its Subsidiaries.

      

      “Eligible
Individuals” means the individuals described in Section 6 who are
eligible for Awards.

      

      “Employee
Trust” means any trust established or maintained by the Company in
connection with an employee benefit plan (including the Plan) under which
current and former employees of the Company constitute the principal
beneficiaries.

      

      “Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the
applicable rulings and regulations thereunder.

      

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

      

      “Fair Market
Value” means, with respect to a Share, the fair market value thereof as
of the relevant date of determination, as determined in accordance with a
valuation methodology approved by the Committee.

      

      “Incentive Stock
Option” means an Option that is intended to qualify for special federal
income tax treatment pursuant to Sections 421 and 422 of the Code, as now
constituted or subsequently amended, or pursuant to a successor provision of the
Code, and which is so designated in the applicable Award Document.

      

      “Morgan
Stanley” means Morgan Stanley, a Delaware corporation.

      

      “Option” or
“Stock
Option” means a right, granted to a Participant pursuant to Section 9, to
purchase one Share.

      

      “Other
Award” means any other form of award authorized under Section 11 of the
Plan, including any such Other Award the receipt of which was elected pursuant
to Section 12(a).

      

      “Participant”
means an individual to whom an Award has been made.

      

      “Plan”
means the Morgan Stanley 2007 Equity Incentive Compensation Plan, as amended
from time to time in accordance with Section 15(e) below.

      

      “Restricted
Stock” means Shares granted or sold to a Participant pursuant to Section
7.

      

      “SAR” means
a right, granted to a Participant pursuant to Section 10, to receive upon
exercise of such right, in cash or Shares (or a combination thereof) as
authorized by the Committee, an amount equal to the increase in the Fair Market
Value of one Share over a specified exercise price.

      

      “Section 162(m)
Participant” means, for a given fiscal year of Morgan Stanley, any
Participant designated by the Committee as a Participant whose compensation may
be subject to the limit on deductible compensation imposed by Section 162(m) of
the Code (or any successor provisions thereto).

      

      “Section 162(m)
Performance Goals” means the performance formula that was approved by
Morgan Stanley’s stockholders on March 22, 2001 or any other performance formula
or performance goals approved by Morgan Stanley’s stockholders pursuant to
Section 162(m) of the Code (or any successor provisions thereto).

      

      “Section
409A” means Section 409A of the Code (or any successor provisions
thereto).

      

      “Shares”
means shares of Stock.

      

      “Stock”
means the common stock, par value $0.01 per share, of Morgan
Stanley.

      

      “Stock
Unit” means a right, granted to a Participant pursuant to Section 8, to
receive one Share or an amount in cash equal to the Fair Market Value of one
Share, as authorized by the Committee.

      

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      “Subsidiary”
means (i) a corporation or other entity with respect to which Morgan Stanley,
directly or indirectly, has the power, whether through the ownership of voting
securities, by contract or otherwise, to elect at least a majority of the
members of such corporation’s board of directors or analogous governing body, or
(ii) any other corporation or other entity in which Morgan Stanley, directly or
indirectly, has an equity or similar interest and which the Committee designates
as a Subsidiary for purposes of the Plan.

      

      “Substitute
Awards” means Awards granted upon assumption of, or in substitution for,
outstanding awards previously granted by, or held by employees of, a company or
other entity or business acquired (directly or indirectly) by Morgan Stanley or
with which Morgan Stanley combines.

      

      3.     Effective
Date and Term of Plan.

      

      (a) Effective Date. The Plan
shall become effective upon its adoption by the Board, subject to its approval
by Morgan Stanley’s stockholders. Prior to such stockholder approval, the
Committee may grant Awards conditioned on stockholder approval, but no Shares
may be issued or delivered pursuant to any such Award until Morgan Stanley’s
stockholders have approved the Plan. If such stockholder approval is not
obtained at or before the first annual meeting of stockholders to occur after
the adoption of the Plan by the Board, the Plan and any Awards made thereunder
shall terminate ab
initio and be of no further force and effect.

      

      (b) Term of Plan. No Awards may
be made under the Plan after the date that is five years from the date of
shareholder approval.

      

      4.     Stock
Subject to Plan.

      

      (a) Overall Plan Limit. The total
number of Shares that may be delivered pursuant to Awards shall be
125,000,000 as calculated pursuant to Section 4(c). The number of Shares
available for delivery under the Plan shall be adjusted as provided in Section
4(b). Shares delivered under the Plan may be authorized but unissued shares or
treasury shares that Morgan Stanley acquires in the open market, in private
transactions or otherwise.

      

      (b) Adjustments for Certain
Transactions. In the event of a stock split, reverse stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, extraordinary dividend
or distribution, split-up, spin-off, combination, reclassification or exchange
of shares, warrants or rights offering to purchase Stock at a price
substantially below Fair Market Value or other change in corporate structure or
any other event that affects Morgan Stanley’s capitalization, the Committee
shall equitably adjust (i) the number and kind of shares authorized for delivery
under the Plan, including the maximum number of Shares available for Awards of
Options or SARs as provided in Section 4(d) and the maximum number of Incentive
Stock Options as provided in Section 4(e), and (ii) the number and kind of
shares subject to any outstanding Award and the exercise or purchase price per
share, if any, under any outstanding Award. In the discretion of the Committee,
such an adjustment may take the form of a cash payment to a Participant. The
Committee shall make all such adjustments, and its determination as to what
adjustments shall be made, and the extent thereof, shall be final. Unless the
Committee determines otherwise, such

      

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      adjusted Awards shall be subject to the same vesting schedule and
restrictions to which the underlying Award is subject.

      

      (c) Calculation of Shares Available for
Delivery. In calculating the number of Shares that remain available for
delivery pursuant to Awards at any time, the following rules shall apply
(subject to the limitation in Section 4(e)):

      

      1. The
number of Shares available for delivery shall be reduced by the number of Shares
subject to an Award and, in the case of an Award that is not denominated in
Shares, the number of Shares actually delivered upon payment or settlement of
the Award.

      

      2. The
number of Shares tendered (by actual delivery or attestation) or withheld from
an Award to pay the exercise price of the Award or to satisfy any tax
withholding obligation or liability of a Participant shall be added back to the
number of Shares available for delivery pursuant to Awards.

      

      3. The
number of Shares in respect of any portion of an Award that is canceled or that
expires without having been paid or settled by the Company shall be added back
to the number of Shares available for delivery pursuant to Awards to the extent
such Shares were counted against the Shares available for delivery pursuant to
clause (1).

      

      4. If an
Award is settled or paid by the Company in whole or in part through the delivery
of consideration other than Shares, or by delivery of fewer than the full number
of Shares that was counted against the Shares available for delivery pursuant to
clause (1), there shall be added back to the number of Shares available for
delivery pursuant to Awards the excess of the number of Shares that had been so
counted over the number of Shares (if any) actually delivered upon payment or
settlement of the Award.

      

      5. Any
Shares underlying Substitute Awards shall not be counted against the number of
Shares available for delivery pursuant to Awards and shall not be subject to
Section 4(d).

      

      (d) Individual Limit on Options and
SARs. The maximum number of Shares that may be subject to Options or
SARs granted to or elected by a Participant in any fiscal year shall be
2,000,000 Shares. The limitation imposed by this Section 4(d) shall not include
Options or SARs granted to a Participant pursuant to Section 162(m) Performance
Goals.

      

      (e) ISO Limit. The full number of
Shares available for delivery under the Plan may be delivered pursuant to
Incentive Stock Options, except that in calculating the number of Shares that
remain available for Awards of Incentive Stock Options the rules set forth in
Section 4(c) shall not apply to the extent not permitted by Section 422 of the
Code.

      

      5.     Administration.

      

      (a) Committee Authority
Generally. The Committee shall administer the Plan and shall have full
power and authority to make all determinations under the Plan, subject to the
express provisions hereof, including without limitation: (i) to select
Participants from among the Eligible Individuals; (ii) to make Awards; (iii) to
determine the number of Shares subject to each Award or the cash amount payable
in connection with an Award; (iv) to establish the terms and

      

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      

      conditions of each Award, including, without limitation, those
related to vesting, cancellation, payment, exercisability, and the effect, if
any, of certain events on a Participant’s Awards, such as the Participant’s
termination of employment with the Company; (v) to specify and approve the
provisions of the Award Documents delivered to Participants in connection with
their Awards; (vi) to construe and interpret any Award Document delivered under
the Plan; (vii) to prescribe, amend and rescind rules and procedures relating to
the Plan; (viii) to make all determinations necessary or advisable in
administering the Plan and Awards, including without limitation determinations
as to whether (and if so as of what date) a Participant has commenced, or has
experienced a termination of, employment; provided, however, that to the extent
full or partial payment of any Award that constitutes a deferral of compensation
subject to Section 409A is made upon or as a result of a Participant’s
termination of employment, the Participant will be considered to have
experienced a termination of employment if, and only if, the Participant has
experienced a separation from service with the Participant’s employer for
purposes of Section 409A; (ix) to vary the terms of Awards to take account of
securities law and other legal or regulatory requirements of jurisdictions in
which Participants work or reside or to procure favorable tax treatment for
Participants; and (x) to formulate such procedures as it considers to be
necessary or advisable for the administration of the Plan.

      

      (b) Delegation. To the extent not
prohibited by applicable laws or rules of the New York Stock Exchange, the
Committee may from time to time delegate some or all of its authority under the
Plan to one or more Administrators consisting of one or more members of the
Committee as a subcommittee or subcommittees thereof or of one or more members
of the Board who are not members of the Committee or one or more officers of the
Company (or of any combination of such persons). Any such delegation shall be
subject to the restrictions and limits that the Committee specifies at the time
of such delegation or thereafter. The Committee may at any time rescind all or
part of the authority delegated to an Administrator or appoint a new
Administrator. At all times, an Administrator appointed under this Section 5(b)
shall serve in such capacity at the pleasure of the Committee. Any action
undertaken by an Administrator in accordance with the Committee’s delegation of
authority shall have the same force and effect as if undertaken directly by the
Committee, and any reference in the Plan to the Committee shall, to the extent
consistent with the terms and limitations of such delegation, be deemed to
include a reference to an Administrator.

      

      (c) Authority to Construe and
Interpret. The Committee shall have full power and authority, subject to
the express provisions hereof, to construe and interpret the Plan.

      

      (d) Committee Discretion. All of
the Committee’s determinations in carrying out, administering,
construing and interpreting the Plan shall be made or taken in its sole
discretion and shall be final, binding and conclusive for all purposes and upon
all persons. In the event of any disagreement between the Committee and an
Administrator, the Committee’s determination on such matter shall be final and
binding on all interested persons, including any Administrator. The Committee’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, the Committee shall be entitled, among other
things, to make non-uniform and selective determinations, and to enter into
non-uniform and selective Award Documents, as to

      

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      the persons receiving Awards under the Plan, and the terms and
provisions of Awards under the Plan.

      

      (e) No Liability. Subject to
applicable law: (i) no member of the Committee or any Administrator shall be
liable for anything whatsoever in connection with the exercise of authority
under the Plan or the administration of the Plan except such person’s own
willful misconduct; (ii) under no circumstances shall any member of the
Committee or any Administrator be liable for any act or omission of any other
member of the Committee or an Administrator; and (iii) in the performance of its
functions with respect to the Plan, the Committee and an Administrator shall be
entitled to rely upon information and advice furnished by the Company’s
officers, the Company’s accountants, the Company’s counsel and any other party
the Committee or the Administrator deems necessary, and no member of the
Committee or any Administrator shall be liable for any action taken or not taken
in good faith reliance upon any such advice.

      

      6. Eligibility. Eligible
Individuals shall include all officers, other employees (including prospective employees)
and consultants of, and other persons who perform services for, the Company,
non-employee directors of Subsidiaries and employees and consultants of joint
ventures, partnerships or similar business organizations in which Morgan Stanley
or a Subsidiary has an equity or similar interest. Any Award made to a
prospective employee shall be conditioned upon, and effective not earlier than,
such person’s becoming an employee. Members of the Board who are not Company
employees will not be eligible to receive Awards under the Plan. An individual’s
status as an Administrator will not affect his or her eligibility to receive
Awards under the Plan.

      

      7. Restricted Stock. An Award of
Restricted Stock shall be subject to the terms and conditions established
by the Committee in connection with the Award and specified in the applicable
Award Document. Restricted Stock may, among other things, be subject to
restrictions on transfer, vesting requirements or cancellation under specified
circumstances.

      

      8. Stock Units. An Award of Stock
Units shall be subject to the terms and conditions established by the
Committee in connection with the Award and specified in the applicable Award
Document. Each Stock Unit awarded to a Participant shall correspond to one
Share. Upon satisfaction of the terms and conditions of the Award, a Stock Unit
will be payable, at the discretion of the Committee, in Stock or in cash equal
to the Fair Market Value on the payment date of one Share. As a holder of Stock
Units, a Participant shall have only the rights of a general unsecured creditor
of Morgan Stanley. A Participant shall not be a stockholder with respect to the
Shares underlying Stock Units unless and until the Stock Units convert to
Shares. Stock Units may, among other things, be subject to restrictions on
transfer, vesting requirements or cancellation under specified
circumstances.

      

      
        9.  Options.

      

      

      (a) Options Generally. An Award
of Options shall be subject to the terms and conditions established by the
Committee in connection with the Award and specified in the applicable Award
Document. The Committee shall establish (or shall authorize the method for
establishing) the exercise price of all Options awarded under the Plan, except
that the exercise

      

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      price of an Option shall not be less than 100% of the Fair Market
Value of one Share on the Award Date. Notwithstanding the foregoing, the
exercise price of an Option that is a Substitute Award may be less than the Fair
Market Value per Share on the Award Date, provided that such substitution
complies with applicable laws and regulations, including the listing
requirements of the New York Stock Exchange and Section 409A or Section 424, as
applicable, of the Code. Upon satisfaction of the conditions to exercisability
of the Award, a Participant shall be entitled to exercise the Options included
in the Award and to have delivered, upon Morgan Stanley’s receipt of payment of
the exercise price and completion of any other conditions or procedures
specified by Morgan Stanley, the number of Shares in respect of which the
Options shall have been exercised. Options may be either nonqualified stock
options or Incentive Stock Options. Options and the Shares acquired upon
exercise of Options may, among other things, be subject to restrictions on
transfer, vesting requirements or cancellation under specified
circumstances.

      

      (b) Prohibition on Restoration Option
Grants. Anything in the Plan to the contrary notwithstanding, the
terms of an Option shall not provide that a new Option will be granted,
automatically and without additional consideration in excess of the exercise
price of the underlying Option, to a Participant upon exercise of the
Option.

      

      (c) Prohibition on Repricing of Options
and SARs. Anything in the Plan to the contrary notwithstanding, the
Committee may not reprice any Option or SAR. “Reprice” means any action that
constitutes a “repricing” under the rules of the New York Stock
Exchange.

      

      (d) Payment of Exercise Price.
Subject to the provisions of the applicable Award Document and to the
extent authorized by rules and procedures of Morgan Stanley from time to time,
the exercise price of the Option may be paid in cash, by actual delivery or
attestation to ownership of freely transferable Shares already owned by the
person exercising the Option, or by such other means as Morgan Stanley may
authorize.

      

      (e) Maximum Term on Stock Options and
SARs. No Option or SAR shall have an expiration date that is
later than the tenth anniversary of the Award Date thereof.

      

      10. SARs. An Award of SARs
shall be subject to the terms and conditions established by the Committee in
connection with the Award and specified in the applicable Award Document. The
Committee shall establish (or shall authorize the method for establishing) the
exercise price of all SARs awarded under the Plan, except that the exercise
price of a SAR shall not be less than 100% of the Fair Market Value of one Share
on the Award Date. Notwithstanding the foregoing, the exercise price of any SAR
that is a Substitute Award may be less than the Fair Market Value of one Share
on the Award Date, subject to the same conditions set forth in Section 9(a) for
Options that are Substitute Awards. Upon satisfaction of the conditions to the
payment of the Award, each SAR shall entitle a Participant to an amount, if any,
equal to the Fair Market Value of one Share on the date of exercise over the SAR
exercise price specified in the applicable Award Document. At the discretion of
the Committee, payments to a Participant upon exercise of an SAR may be made in
Shares, cash or a combination thereof. SARs and the Shares that may be acquired
upon exercise of SARs may, among other things, be subject to restrictions on
transfer, vesting requirements or cancellation under specified
circumstances.

      

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      11.  Other Awards.
The Committee shall have the authority to establish the terms and provisions of other
forms of equity-based or equity-related Awards (such terms and provisions to be
specified in the applicable Award Document) not described above that the
Committee determines to be consistent with the purpose of the Plan and the
interests of the Company, which Awards may provide for (i) cash or Stock
payments based in whole or in part on the value or future value of Stock or on
any amount that Morgan Stanley pays as dividends or otherwise distributes with
respect to Stock, (ii) the acquisition or future acquisition of Stock, (iii)
cash or Stock payments (including payment of dividend equivalents in cash or
Stock) based on one or more criteria determined by the Committee unrelated to
the value of Stock, or (iv) any combination of the foregoing. Awards pursuant to
this Section 11 may, among other things, be made subject to restrictions on
transfer, vesting requirements or cancellation under specified
circumstances.

      

      
        12.  General
Terms and Provisions.

      

      

      (a) Awards in General. Awards
may, in the discretion of the Committee, be made in substitution in whole
or in part for cash or other compensation payable to an Eligible Individual. In
accordance with rules and procedures authorized by the Committee, an Eligible
Individual may elect one form of Award in lieu of any other form of Award, or
may elect to receive an Award in lieu of all or part of any compensation that
otherwise might have been paid to such Eligible Individual; provided, however, that any such
election shall not require the Committee to make any Award to such Eligible
Individual. Any such substitute or elective Awards shall have terms and
conditions consistent with the provisions of the Plan applicable to such Award.
Awards may be granted in tandem with, or independent of, other Awards. The
grant, vesting or payment of an Award may, among other things, be conditioned on
the attainment of performance objectives, including without limitation
objectives based in whole or in part on net income, pre- tax income, return on
equity, earnings per share, total shareholder return or book value per
share.

      

      (b) Discretionary Awards. All
grants of Awards and deliveries of Shares, cash or other property under the Plan
shall constitute a special discretionary incentive payment to the Participant
and shall not be required to be taken into account in computing the amount of
salary, wages or other compensation of the Participant for the purpose of
determining any contributions to or any benefits under any pension, retirement,
profit-sharing, bonus, life insurance, severance or other benefit plan of the
Company or other benefits from the Company or under any agreement with the
Participant, unless Morgan Stanley specifically provides otherwise.

      

      (c) Dividends and Distributions.
If Morgan Stanley pays any dividend or makes any distribution to holders
of Stock, the Committee may in its discretion authorize payments (which may be
in cash, Stock (including Restricted Stock) or Stock Units or a combination
thereof) with respect to the Shares corresponding to an Award, or may authorize
appropriate adjustments to outstanding Awards, to reflect such dividend or
distribution. The Committee may make any such payments subject to vesting,
deferral, restrictions on transfer or other conditions. Any determination by the
Committee with respect to a Participant’s entitlement to receive any amounts
related to dividends or distributions to holders of Stock, as well as the terms
and conditions of such entitlement, if any, will be part of the terms and
conditions of the Award, and will be included in the Award Document for such
Award.

      

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      (d) Deferrals.
In accordance with the procedures authorized by, and subject to the approval of, the
Committee, Participants may be given the opportunity to defer the payment or
settlement of an Award to one or more dates selected by the Participant. To the
extent an Award constitutes a deferral of compensation subject to Section 409A,
the Committee shall set forth in writing (which may be in electronic form), on
or before the date the applicable deferral election is required to be
irrevocable in order to meet the requirements of Section 409A, the conditions
under which such election may be made.

      

      (e) Award Documentation and Award
Terms. The terms and conditions of an Award shall be set forth in an
Award Document authorized by the Committee. The Award Document shall include any
vesting, exercisability, payment and other restrictions applicable to an Award
(which may include, without limitation, the effects of termination of
employment, cancellation of the Award under specified circumstances,
restrictions on transfer or provision for mandatory resale to the
Company).

      

      (f) Awards to Section 162(m)
Participants. Except for Options and SARs the shares underlying which are
counted against the individual limit set forth in Section 4(d), all Awards to
Section 162(m) Participants shall be made pursuant to the attainment of Section
162(m) Performance Goals as certified by the Committee in accordance with the
requirements of Section 162(m) of the Code. Without any further action by the
Board or the Committee, this Section 12(f) shall cease to apply on the effective
date of the repeal of Section 162(m) of the Code (and any successor provision
thereto).

      

      13.   Certain
Restrictions.

      

      (a) Stockholder Rights. No
Participant (or other persons having rights pursuant to an Award) shall have any
of the rights of a stockholder of Morgan Stanley with respect to Shares subject
to an Award until the delivery of the Shares, which shall be effected by entry
of the Participant’s (or other person’s) name in the share register of Morgan
Stanley or by such other procedure as may be authorized by Morgan Stanley.
Except as otherwise provided in Section 4(b) or 12(c), no adjustments shall be
made for dividends or distributions on, or other events relating to, Shares
subject to an Award for which the record date is prior to the date such Shares
are delivered. Notwithstanding the foregoing, the terms of an Employee Trust may
authorize some or all Participants to give voting or tendering instructions to
the trustee thereof in respect of Shares that are held in such Employee Trust
and are subject to Awards. Except for the risk of cancellation and the
restrictions on transfer that may apply to certain Shares (including
restrictions relating to any dividends or other rights) or as otherwise set
forth in the applicable Award Document, the Participant shall be the beneficial
owner of any Shares delivered to the Participant in connection with an Award
and, upon such delivery shall be entitled to all rights of ownership, including,
without limitation, the right to vote the Shares and to receive cash dividends
or other dividends (whether in Shares, other securities or other property)
thereon.

      

      (b) Transferability. No Award
granted under the Plan shall be transferable, whether voluntarily or
involuntarily, other than by will or by the laws of descent and distribution;
provided that, except with respect to Incentive Stock Options, the Committee may
permit transfers on such terms and conditions as it shall determine. During the
lifetime of a Participant

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      

      to whom Incentive Stock Options were awarded, such Incentive Stock
Options shall be exercisable only by the Participant.

      

      14. Representation; Compliance with Law.
The Committee may condition the grant, exercise, settlement or
retention of any Award on the Participant making any representations required in
the applicable Award Document. Each Award shall also be conditioned upon the
making of any filings and the receipt of any consents or authorizations required
to comply with, or required to be obtained under, applicable law.

      

      
        15.  Miscellaneous
Provisions.

      

      

      (a) Satisfaction of Obligations.
As a condition to the making or retention of any Award, the vesting, exercise
or payment of any Award or the lapse of any restrictions pertaining thereto,
Morgan Stanley may require a Participant to pay such sum to the Company as may
be necessary to discharge the Company’s obligations with respect to any taxes,
assessments or other governmental charges (including FICA and other social
security or similar tax) imposed on property or income received by a Participant
pursuant to the Award or to satisfy any obligation that the Participant owes to
the Company. In accordance with rules and procedures authorized by Morgan
Stanley, (i) such payment may be in the form of cash or other property,
including the tender of previously owned Shares, and (ii) in satisfaction of
such taxes, assessments or other governmental charges or, exclusively in the
case of an Award that does not constitute a deferral of compensation subject to
Section 409A, of other
obligations that a Participant owes to the Company, Morgan Stanley may make
available for delivery a lesser number of Shares in payment or settlement of an
Award, may withhold from any payment or distribution of an Award or may enter
into any other suitable arrangements to satisfy such withholding or other
obligation. To the extent an Award constitutes a deferral of compensation
subject to Section 409A, the Company may not offset from the payment of such
Award amounts that a Participant owes to the Company with respect to any such
other obligation except to the extent such offset is not prohibited by Section
409A and would not cause a Participant to recognize income for United States
federal income tax purposes prior to the time of payment of the Award or to
incur interest or additional tax under Section 409A.

      

      (b) No Right to Continued
Employment. Neither the Plan nor any Award shall give rise to any right on the part
of any Participant to continue in the employ of the Company.

      

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

      

      (d) Governing Law. The Plan and
all rights hereunder shall be construed in accordance with and governed by
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.

      

      (e) Amendments and Termination.
The Board or Committee may modify, amend, suspend or terminate
the Plan in whole or in part at any time and may modify or amend the terms and
conditions of any outstanding Award (including by amending or supplementing the
relevant Award Document at any time); provided, however, that no such
modification, amendment,

      

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      suspension or termination shall, without a Participant’s consent,
materially adversely affect that Participant’s rights with respect to any Award
previously made; and provided, further, that the Committee shall have the right
at any time, without a Participant’s consent and whether or not the
Participant’s rights are materially adversely affected thereby, to amend or
modify the Plan or any Award under the Plan in any manner that the Committee
considers necessary or advisable to comply with any law, regulation, ruling,
judicial decision, accounting standards, regulatory guidance or other legal
requirement. Notwithstanding the preceding sentence, neither the Board nor the
Committee may accelerate the payment or settlement of any Award, including,
without limitation, any Award subject to a prior deferral election, that
constitutes a deferral of compensation for purposes of Section 409A except to
the extent such acceleration would not result in the Participant incurring
interest or additional tax under Section 409A. No amendment to the Plan may
render any Board member who is not a Company employee eligible to receive an
Award at any time while such member is serving on the Board. To the extent
required by applicable law or the rules of the New York Stock Exchange,
amendments to the Plan shall not be effective unless they are approved by Morgan
Stanley’s stockholders.

       

       

       

      11

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00157-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00157-of-00352.parquet"}]]