Document:

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REVOLVING LINE OF CREDIT NOTE                                      EXHIBIT 10.15

$500,000.00                     HOUSTON, TEXAS                      JULY 1, 2000

         FOR VALUE RECEIVED, the undersigned, U.S. PHYSICAL THERAPY, INC., A
NEVADA CORPORATION (herein called "MAKER"), promises to pay to the order of
SOUTHWEST BANK OF TEXAS, N.A. (herein called "PAYEE," which term herein in every
instance shall refer to any owner or holder of this note) the sum of FIVE
HUNDRED THOUSAND DOLLARS ($500,000.00), together with interest on the principal
hereof from time to time outstanding from the date of advancement until
maturity, at the per annum rate hereinafter stated (computed on the basis of a
year of 365 days and paid for the actual number of days elapsed), said principal
and interest being payable in lawful money of the United States of America at
the banking quarters of Southwest Bank of Texas, N.A., 4400 Post Oak Park,
Houston, Harris County, Texas, or at such other place as Payee may designate
hereafter in writing.

         This note is issued pursuant to a letter loan agreement of even date
herewith, by and between Maker and Payee (the "LOAN AGREEMENT"), and reference
is made hereby to the Loan Agreement for certain rights as to the prepayment,
the acceleration of the maturity hereof and collateral securing the payment
hereof; and this note is entitled to all the benefits of the Loan Agreement.

         The principal balance hereof advanced and from time to time remaining
unpaid shall bear interest during each day of the term of the loan evidenced
hereby at a variable per annum rate equal to the lesser of (A) a per annum rate
that is equal to (herein called the "BASIC RATE") one-half of one percent (1/2%)
plus the prime rate of interest (herein called the "PRIME RATE"), being the
variable per annum rate of interest most recently announced by Southwest Bank of
Texas, N.A. (herein sometimes called the "BANK") as its "prime rate," with the
understanding that the Bank's "prime rate" may be one of several base rates and
serves as a basis upon which effective rates of interest are from time to time
calculated for loans making reference thereto and may not be the lowest of the
Bank's base rates, which Basic Rate shall change when and as the Prime Rate
shall change, effective on the day of such change or (B) the Maximum Rate
(hereinafter defined). Notwithstanding the foregoing, if at any time the Basic
Rate shall exceed the Maximum Rate and thereafter the Basic Rate shall become
less than the Maximum Rate, the rate of interest payable hereunder shall be the

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Maximum Rate until the Payee shall have received the amount of interest it would
have received otherwise if the interest payable hereunder had not been limited
by the Maximum Rate during the period of time the Basic Rate exceeded the
Maximum Rate.

         All past due principal and interest of this note, whether due as the
result of acceleration of maturity or otherwise, shall bear interest at the
lesser of (1) a rate that is five percentage points above the Prime Rate as it
varies or (2) the maximum lawful rate of interest permitted by the applicable
usury laws, now or hereafter enacted, which interest rate (herein called the
"MAXIMUM RATE") shall change when and as said laws shall change to the extent
permitted by said laws, effective on the day such change in said laws becomes
effective, from the date the payment thereof shall have become due until the
same have been fully discharged by payment.

         The principal and interest of this note are due and payable at the
offices of said Payee in Houston, Harris County, Texas, in accordance with, and
as set forth in, the Loan Agreement.

         Subject to the terms and conditions of the Loan Agreement, the
undersigned may borrow, pay, prepay in whole or in part and, under certain
circumstance set forth in the Loan Agreement, reborrow hereunder, so long as not
more than $500,000.00 of principal is outstanding at any one time; it being
expressly contemplated that, by reason of prepayments hereon, there may be times
when no indebtedness is owing hereunder, but, notwithstanding such occurrences,
this note shall remain valid and shall be in full force and effect as to loans
or advances made subsequent to such occurrences; and it being understood and
agreed that advances and repayments of principal under this note are not limited
to the face amount of principal, but to a maximum of the face amount of
principal at any one time outstanding. In accordance with the Loan Agreement,
Payee may advance funds pursuant to this note from time to time, and from time
to time the undersigned will make repayments on the principal of this note, so
that no more than the face amount of principal shall be outstanding at any one
time. Each advance and each payment of principal hereunder shall be reflected by
a notation made by Payee in its business records. The aggregate unpaid principal
amount of advances reflected by the notations made in Payee's business records
shall be conclusive evidence of the principal amount owing under this note,
which amount the undersigned unconditionally promises to pay to the order of
Payee under the terms hereof.

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         Maker and any and all sureties, guarantors and endorsers of this note
and all other parties now or hereafter liable hereon, severally waive grace,
demand, presentment for payment, protest, notice of any kind (including, but not
limited to, notice of dishonor, notice of protest, notice of intention to
accelerate and notice of acceleration) and diligence in collecting and bringing
suit against any party hereto, and agree (i) to all extensions and partial
payments, with or without notice, before or after maturity, (ii) to any
substitution, exchange or release of any security now or hereafter given for
this note, (iii) to the release of any party primarily or secondarily liable
hereon, and (iv) that it will not be necessary for Payee, in order to enforce
payment of this note, to first institute or exhaust Payee's remedies against
Maker or any other party liable therefor or against any security for this note.

         In the event of default hereunder or under any of the instruments
securing payment hereof and this note is placed in the hands of an attorney for
collection (whether or not suit is filed), or if this note is collected by suit
or legal proceedings or through the probate court or bankruptcy proceedings,
Maker agrees to pay all reasonable attorneys' fees and all expenses of
collection and costs of court.

         It is the intention of the parties hereto to comply with applicable
usury laws; accordingly, Section 10(f) of the Loan Agreement is incorporated
herein by reference and shall have the same force and effect as if set forth
herein.

         This note shall be governed by and construed under the laws of the
State of Texas and applicable United States federal law. This note is subject to
the arbitration provisions under Article 10(d) of the Loan Agreement.

         Any check, draft, money order or other instrument given in payment of
all or any portion hereof may be accepted by Payee and handled in collection in
the customary manner, but the same shall not constitute payment hereunder or
diminish any rights of Payee except to the extent that actual cash proceeds of
such instrument are unconditionally received by Payee.

                                             MAKER:

                                             U.S. PHYSICAL THERAPY, INC., a
                                             Nevada corporation

                                             By:   /s/ J. Michael Mullin
                                                --------------------------------
                                                J. Michael Mullin
                                                Chief Financial Officer

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                                                                    EXHIBIT 10.1

                             MORGAN STANLEY DW INC.
                        BRANCH MANAGER COMPENSATION PLAN

                         [Amended as of March 26, 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;
and was amended effective March 26, 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.

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

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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.

(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.

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                                   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 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

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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 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

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     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 the foregoing, if a
     Participant terminates employment with Morgan Stanley due to Disability or
     Retirement, all of the Participant's restricted Stock awards shall become
     vested in accordance with this Section VII without regard to the
     Participant's termination of employment. Notwithstanding anything in this
     Plan to the contrary, upon a Participant's death, all of the Participant's
     awards shall become vested immediately and payable as promptly as
     practicable.

          (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.

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(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)  In the event a Participant terminates employment with Morgan Stanley due to
     Disability or Retirement, the undistributed balance of the Participant's
     Account at the end of the Fiscal Year preceding the Participant's
     Disability or Retirement shall be paid to the Participant in the manner
     provided by this Section VII and to the extent permitted by Appendix A to
     the Plan. In the event a Participant dies, the undistributed balance of the
     Participant's Account at the end of the Fiscal Year preceding the
     Participant's death shall be paid to the personal representative of the
     Participant's estate as promptly as practicable to the extent permitted by
     Appendix A to the Plan.

(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;

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

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     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 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

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     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.

(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

                                        9

<PAGE>

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

                                       A-1
<PAGE>

          (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 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

                                       A-2

<PAGE>

     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.

     (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.

                                       A-3

<PAGE>

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 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

                                       A-4

<PAGE>

          (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 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

                                       A-5
<PAGE>

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 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.

                                       A-6

<PAGE>

     (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.

     (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-7

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