EXECUTION COPY

                       SETTLEMENT AND RELEASE AGREEMENT

 

          This Settlement and Release Agreement (this "Agreement") by and

between Morgan Stanley, a Delaware corporation (the "Company"), and Philip J.

Purcell (the "Executive"), is dated as of June 30, 2005 (the "Execution

Date").

 

          NOW, THEREFORE, the Company and the Executive hereby agree as

follows:

 

          1. Resignation. Effective as of June 30, 2005 (the "Termination

Date"), the Executive's employment with the Company shall terminate

voluntarily and the Executive shall cease to serve as Chief Executive Officer,

Chairman of the Board of Directors of the Company (the "Board") and a member

of the Board, and shall cease to serve in all other positions the Executive

then holds as an employee, officer or member of the board of directors of the

Company, its subsidiaries or affiliates (the Company, its subsidiaries and

affiliates are hereinafter referred to as the "Affiliated Entities"). The

Executive hereby agrees to execute any and all documentation to effectuate

such terminations upon request by the Company, but he shall be treated for all

purposes as having voluntarily terminated his service with the Affiliated

Entities upon the Termination Date, regardless of when or whether he executes

any such documentation. Notwithstanding the foregoing, for a period of 30 days

following the Termination Date, the Executive shall continue to receive

employee welfare benefits and perquisites as if he had continued in the employ

of the Company during such period.

 

          2. Executive's Consideration. In consideration for the covenants set

forth in this Agreement, the Company shall provide to the Executive the

following payments and benefits.

 

               (a) Bonus Payment. The Company shall pay to the Executive an

amount in cash equal to the product of (a) the product of (i) two and (ii) the

sum of (A) the Executive's annual base salary, (B) the Executive's annual

bonus and (C) the market value of the common stock of the Company underlying

the restricted stock units granted to the Executive, in each case with respect

to the Company's 2004 fiscal year as reported in the Company's most recent

annual proxy statement, and (b) the sum of (i) one and (ii) the percentage

change (expressed as a positive or negative decimal) from 2004 to 2005 in the

Company's "Pre-Tax Earnings" (as such term is defined in Section 14 of the

1995 Equity Incentive Compensation Plan (the "EICP")) as determined by the

Compensation Committee of the Board (the "Bonus Payment").

 

               For purposes of Section 14 of the EICP, "Extraordinary and

unusual" would include but not be limited to:

 

                    (i) Write downs or sales of the aircraft portfolio,

 

                    (ii) Losses from a change in significant estimates used in

calculation of Pre-Tax Earnings e.g. loan loss methodology, 02-03 reserves,

 

                    (iii) Introduction of a new compensation plan, retention

or other awards outside of the normal compensation program as applied to 2004,

severance payments in excess of the amount accrued in 2004 or other

compensation related changes,

 

 

<PAGE>

 

 

 

                    (iv) Compensation in excess of the payout rate in a range

established for the six months financials ended May 31, 2005 as published with

the press release on June 22, 2005 ("2005 YTD financials") and the two

previous years,

 

                    (v) Legal or regulatory matters costs in excess of a

normal amount e.g. $200 million in addition to the amounts accrued in the 2005

YTD financials, and

 

                    (vi) Losses associated with business decisions concerning

either owned or leased office space.

 

Fifty percent of the Bonus Payment shall be paid to the Executive on January

15, 2006 and fifty percent of the Bonus Payment shall be paid to the Executive

on January 15, 2007 or, in each case, on such later date as may be required

pursuant to Section 409A of the Internal Revenue Code of 1986, as amended (the

"Code")).

 

               (b) Retiree Medical Benefits. Following the Termination Date,

the Executive will be provided with retiree medical benefits provided to

former senior executives of the Company generally pursuant to the terms of the

Morgan Stanley Retiree Medical Plan as may be in effect from time to time.

 

               (c) Annual Payment. In lieu of benefits that otherwise would

have been provided to the Executive following the Termination Date, the

Executive shall receive an annual payment equal to $250,000 payable on the

Termination Date (or on such later date as may be required pursuant to Section

409A of the Code) and the first business day following each anniversary of the

Termination Date for the remainder of the Executive's life.

 

               (d) Charitable Contributions. Following the Termination Date,

the Company shall provide a contribution of $250,000 per year in the

Executive's name commencing in calendar year 2006 for the remainder of the

Executive's life to charitable institutions of the Executive's selection

consistent with the contributions made by the Company on behalf of other

former Chief Executive Officers of the Company on behalf of whom the Company

makes such contributions, provided that such charitable institutions and

contribution are consistent with the Company's charitable strategy.

 

               (e) Administrative Support. Following the Termination Date, the

Company shall provide to the Executive administrative support consistent with

the administrative support provided by the Company to other former Chief

Executive Officers of the Company at the sole expense of the Company for the

remainder of the Executive's life.

 

               (f) Reimbursement for Expenses. The Company shall promptly

reimburse the Executive for any reasonable expenses incurred by the Executive

in connection with his employment on or before the Termination Date in

accordance with the Company's expense reimbursement practices and policies,

provided that the Executive submits appropriate documentation evidencing such

expenses.

 

               (g) Other Benefits. Amounts that are vested benefits or that

the Executive is otherwise entitled to receive under any plan, policy,

practice or program of or any other contract or agreement with the Company or

the Affiliated Entities at or subsequent to the Termination Date, including

under any qualified or non-qualified retirement plan, shall be

 

 

 

                                      2

<PAGE>

 

 

 

payable in accordance with such plan, policy, practice or program or contract

or agreement, except as explicitly modified by this Agreement. Notwithstanding

the foregoing, the Executive shall not be entitled to any severance pay or

benefits under any severance plan, program or policy of the Company and the

Affiliated Entities.

 

          3. Equity and Performance Awards. Exhibit A hereto sets forth a

complete list of all of the Executive's currently outstanding stock options

and other equity awards (together, "Stock Incentives"), which shall vest

immediately upon the Termination Date and shall otherwise be governed in

accordance with their terms, provided that, following the Execution Date, the

only "Cancellation Events" with respect to such Stock Incentives shall be

those events set forth on Exhibit B.

 

Notwithstanding any provision of this Agreement to the contrary, in the event

that, following the Execution Date, the Executive becomes an officer, agent,

employee, partner or director of any corporation, partnership or other entity,

or otherwise renders services to or assist or hold an interest (except as a

less than 1-percent shareholder of a publicly traded company) in any Core

Competitor (as defined in the 1995 Equity Incentive Compensation Plan), the

Executive shall cease to be entitled to the payments and benefits to be paid

or provided to him or on his behalf under Sections 2(a), 2(c), 2(d) or 2(e).

 

          4. Releases.

 

               (a) Executive's Release.

 

                    (i) General. In consideration of the payments and benefits

set forth in this Agreement, the Executive for himself, his heirs,

administrators, representatives, executors, successors and assigns

(collectively "Releasors") does hereby irrevocably and unconditionally

release, acquit and forever discharge the Company, its subsidiaries and

affiliates and their respective current and former shareholders, subsidiaries,

parents, affiliates, divisions, trustees, partners, agents, directors,

officers and employees, including without limitation all persons acting by,

through, under or in concert with any of them (collectively, "Releasees"), and

each of them from any and all charges, complaints, claims, liabilities,

obligations, promises, agreements, controversies, damages, remedies, actions,

causes of action, suits, rights, demands, costs, losses, debts and expenses

(including attorneys' fees and costs) of any nature whatsoever arising out of

or relating to his employment relationship, or the termination of that

relationship, with the Company and its Affiliated Entities, known or unknown,

whether in law or equity and whether arising under federal, state or local law

and in particular including any claim for discrimination based upon race,

color, ethnicity, sex, age (including the Age Discrimination in Employment Act

of 1967, as amended ("ADEA"), national origin, religion, disability, or any

other unlawful criterion or circumstance, which the Executive and Releasors

had, now have, or may have in the future against each or any of the Releasees

from the beginning of the world until the date hereof relating to the

Executive's employment with the Company and its subsidiaries and affiliates

("Claims").

 

                    (ii) Exclusions from Release. Anything herein to the

contrary notwithstanding, nothing herein shall release the Company from any

claims or damages based on (A) any right or claim that arises after the date

hereof, (B) any right the Executive may have under this Agreement and under

any applicable plan, policy, program or other agreement or arrangement with

the Company except as modified by this Agreement or (C) the Executive's

 

 

 

                                      3

<PAGE>

 

 

 

right to indemnification as set forth in this Agreement. The parties agree

that this Agreement shall not affect the rights and responsibilities of the

U.S. Equal Employment Opportunity Commission (hereinafter "EEOC") to enforce

ADEA and other laws. In addition, the parties agree that this Agreement shall

not be used to justify interfering with the Executive's protected right to

file a charge or participate in an investigation or proceeding conducted by

the EEOC. The parties further agree that the Executive knowingly and

voluntarily waives all rights or claims that arose prior to the date hereof

that the Releasers may have against the Releasees, or any of them, to receive

any benefit or remedial relief (including, but not limited to, reinstatement,

back pay, front pay, damages, attorneys' fees, experts' fees) as a consequence

of any investigation or proceeding conducted by the EEOC ("EEOC Claims").

 

                    (iii) ADEA Rights. The Executive acknowledges that: (A)

this entire Agreement is written in a manner calculated to be understood by

him; (B) he has been advised to consult with an attorney before executing this

Agreement; (C) he was given a period of twenty-one days within which to

consider this Agreement; and (D) to the extent he executes this Agreement

before the expiration of the twenty-one-day period, he does so knowingly and

voluntarily and only after consulting his attorney. The Executive shall have

the right to cancel and revoke this Agreement during a period of seven days

following the date hereof, and this Agreement shall not become effective, and

no money shall be paid hereunder, until the day after the expiration of such

seven-day period. The seven-day period of revocation shall commence upon the

date hereof. In order to revoke this Agreement, the Executive shall deliver to

the Company's Chief Legal Officer, prior to the expiration of said seven-day

period, a written notice of revocation. Upon such revocation, this Agreement

shall be null and void and of no further force or effect.

 

                    (iv) Acknowledgement. The Executive acknowledges and

agrees that the consideration provided to him under the terms of this

Agreement exceeds anything to which he is otherwise entitled and that he is

owed no wages, commissions, bonuses, finder's fees, equity or incentive

awards, severance pay, vacation pay or any other compensation or payments or

remuneration of any kind or nature other than as specifically provided for in

this Agreement or the terms of any benefit plan in which the Executive

participates as may be modified by this Agreement.

 

               (b) Company's Release. The Company, its subsidiaries,

affiliates, partnerships and joint ventures and each of their predecessors and

successors also agree that, subject to this Agreement becoming effective, they

hereby irrevocably and unconditionally release, acquit and forever discharge

the Executive from any and all charges, complaints, claims, liabilities,

obligations, promises, agreements, controversies, damages, remedies, actions,

causes of action, suits, rights, demands, costs, losses, debts and expenses

(including attorneys' fees and costs) of any nature whatsoever, known or

unknown, whether in law or equity and whether arising under federal, state or

local law that the Company had, now has, or may have in the future against the

Executive from the beginning of the world until the date hereof arising out of

or relating to the Executive's employment, relationship, or the termination of

that relationship with the Company and its Affiliated Entities, except that

this Section 4(b) shall not apply to any act that is determined to be a

criminal act under any Federal, state or local law committed or perpetuated by

the Executive during the course of the Executive's employment with the Company

or its affiliates (including any criminal act of fraud, misappropriation of

funds or embezzlement or any other criminal action).

 

 

 

                                      4

<PAGE>

 

 

 

               (c) Exclusion from Both Releases. None of the foregoing

provisions of this Section 4 shall be considered as releasing the Company's or

Executive's respective rights or obligations with respect to any Stock

Incentives as modified by this Agreement.

 

          5. Mutual Nondisparaegment.

 

               (a) Executive's Covenant. Following the Execution Date, the

Executive shall not make, participate in the making of, or encourage or

facilitate any other person to make, any statements, written or oral, which

criticize, disparage, or defame the goodwill or reputation of, or which

embarrass or adversely affect the morale of, any of the Affiliated Entities or

any of their respective present, former or future directors, officers,

executives, employees and/or shareholders. The Executive further agrees not to

make any negative statements, written or oral, relating to his employment, the

termination of his employment, or any aspect of the business of the Affiliated

Entities.

 

               (b) Company's Covenant. Following the Execution Date, the

Company shall not and shall instruct the members of its Executive Committee,

Rule 16(b) officers and the Board not to make, participate in the making of,

or encourage or facilitate any employees or any other person to make, any

statements, written or oral, which criticize, disparage, or defame the

reputation of, or which are intended to embarrass, the Executive. In addition,

the Company shall advise its executive officers and directors not to make any

negative statements, written or oral, relating to the Executive's employment

or the termination of his employment.

 

               (c) Exclusions. Notwithstanding the foregoing provisions of

this Section 5, it shall not be a violation of this Section 5 for any person

to make truthful statements when required by order of a court or other body

having jurisdiction, or as otherwise may be required by law or under an

agreement entered into in connection with pending or threatened litigation

pursuant to which the party receiving such information agrees to keep such

information confidential.

 

          6. Confidentiality. The Executive shall hold in a fiduciary capacity

for the benefit of the Company and the other Affiliated Entities and shall not

disclose to others, copy, use, transmit, reproduce, summarize, quote or make

commercial, directly or indirectly, any secret or confidential information,

knowledge or data relating to any of the Affiliated Entities and their

businesses (including without limitation information about the Affiliated

Entities' clients' and customers' and their proprietary knowledge and trade

secrets, software, technology, research, secret data, customer lists, investor

lists, business methods, business plans, training materials, operating

procedures or programs, pricing strategies, employee lists and other business

information) that the Executive has obtained during his employment with the

Company and/or any of the other Affiliated Entities, provided that the

foregoing shall not apply to information that is generally known to the public

other than as a result of the breach of this Agreement by the Executive

("Confidential Information"). Notwithstanding the foregoing provisions, if the

Executive is required to disclose any such confidential or proprietary

information pursuant to applicable law or a subpoena or court order, the

Executive shall promptly notify the Company in writing of any such requirement

so that the Company or the appropriate Affiliated Entity may seek an

appropriate protective order or other appropriate remedy or waive compliance

with the provisions hereof. The Executive shall reasonably cooperate with the

Affiliated Entities to

 

 

 

                                      5

<PAGE>

 

 

 

obtain such a protective order or other remedy. If such order or other remedy

is not obtained prior to the time the Executive is required to make the

disclosure, or the Company waives compliance with the provisions hereof, the

Executive shall disclose only that portion of the confidential or proprietary

information which he is advised by counsel that he is legally required to so

disclose. Prior to the Termination Date, the Executive shall surrender

immediately to the Company, except as specifically provided otherwise herein,

all Confidential Information and all other property of the Company or any of

the other Affiliated Entities in the Executive's possession and all property

made available to the Executive in connection with his employment by the

Company or any of the other Affiliated Entities, including, without

limitation, any and all other records, manuals, customer and client lists,

notebooks, files, papers, computers, computer programs, computer discs, lists,

data, cellular phones, two-way pagers, palm held electronic devices,

electronically stored information and all other documents (and all copies

thereof) held or made by the Executive in the course of the Executive's

employment with the Company or any of the other Affiliated Entities. Anything

to the contrary notwithstanding, and in all cases regardless of whether the

information is retained in original form, as a copy, electronically or

otherwise, the Executive shall be entitled to retain (a) papers and other

materials of a personal nature, including, without limitation, photographs,

correspondence, personal diaries, calendars and rolodexes, files relating to

his personal affairs and personal phone books, (b) information showing his

compensation or relating to reimbursement of expenses, (c) information that

may be needed for his personal tax purposes and (d) copies of plans, programs

and agreements relating to his employment, or termination thereof, with the

Company.

 

          7. Cooperation. The Executive agrees that during and after his

employment by the Company, the Executive will assist the Affiliated Entities

in the defense of any claims, or potential claims that may be made or

threatened to be made against any member of the Affiliated Entities in any

action, suit or proceeding, whether civil, criminal, administrative,

investigative or otherwise (a "Proceeding"), and will assist the Affiliated

Entities in the prosecution of any claims that may be made by any member of

the Affiliated Entities in any Proceeding, to the extent that such claims may

relate to the Executive's employment or the period of the Executive's

employment by the Company. The Executive agrees, unless precluded by law, to

promptly inform the Company if the Executive is asked to participate (or

otherwise become involved) in any Proceeding involving such claims or

potential claims. The Executive also agrees, unless precluded by law, to

promptly inform the Company if the Executive is asked to assist in any

investigation (whether governmental or otherwise) of any member of the

Affiliated Entities (or their actions), regardless of whether a lawsuit has

then been filed against any member of the Affiliated Entities with respect to

such investigation. The Company agrees to (a) reimburse the Executive for all

of the Executive's reasonable out-of-pocket expenses associated with such

assistance, including any reasonable attorneys' fees incurred by the Executive

in connection therewith. The Company agrees to provide the Executive with

substantially similar means of transportation as was provided to the Executive

immediately prior to the Execution Date in connection with the Executive's

performance of services to the Affiliated Entities following the Execution

Date.

 

          8. Remedies. The Executive acknowledges that (a) the information to

which the Executive has had access during his employment with the Company is

specialized, unique in nature and of great value to the Company and the other

Affiliated Entities, (b) such information gives the Company and the other

Affiliated Entities a competitive advantage, (c) because of the nature of the

business in which the Company and the other Affiliated Entities are engaged

and

 

 

 

                                      6

<PAGE>

 

 

 

because of the nature of the Confidential Information to which the Executive

has had access during his employment, it would be impractical and excessively

difficult to determine the actual damages of the Company and the other

Affiliated Entities in the event the Executive breached any of the covenants

of Sections 5, 6 or 7, and (d) remedies at law (such as monetary damages) for

any breach of the Executive's covenants under Sections 5, 6 or 7 would be

inadequate. The Company acknowledges and agrees that it would be impractical

and excessively difficult to determine the actual damages of the Executive in

the event the Company breached any of the covenants of Section 5, and remedies

at law (such as monetary damages) for any breach of the Company's covenants

under Section 5 would be inadequate. The parties therefore agree and consent

that if either of them commits any such breach or threatens to commit any such

breach, the other party shall have the right (in addition to, and not in lieu

of, any other right or remedy that may be available to it) to temporary and

permanent injunctive relief from a court of competent jurisdiction, without

posting any bond or other security and without the necessity of proof of

actual damage. With respect to any provision of Sections 5, 6 or 7 that is

finally determined to be unenforceable, the Executive and the Company hereby

agree that this Agreement or any provision hereof may be reformed so that it

is enforceable to the maximum extent permitted by law. If any of the covenants

of Sections 5, 6 or 7 is determined to be wholly or partially unenforceable in

any jurisdiction, such determination shall not be a bar to or in any way

diminish the Company's right to enforce any such covenant in any other

jurisdiction.

 

          9. Entire Agreement. This Agreement sets forth the entire agreement

of the Company and the Executive with respect to the subject matter hereof,

and supersedes all prior agreements, understandings, discussions and

negotiations, whether written or oral, between the parties hereto other than

the compensation and benefit plans referred to in Sections 2 and 3 above and

the awards thereunder, all of which shall continue in accordance with their

terms, as modified by Sections 2 and 3 above and as may be further modified

with respect to participants generally. Without limiting the generality of the

foregoing, the Executive expressly acknowledges and agrees that except as

specifically set forth in this Agreement, he is not entitled to receive any

severance pay, severance benefits, compensation or employee benefits of any

kind whatsoever from the Affiliated Entities including, without limitation,

any severance or other benefits from any of the Affiliated Entities.

 

          10. Successors. This Agreement is personal to the Executive and

without the prior written consent of the Company shall not be assignable by

the Executive other than by will or the laws of descent and distribution. This

Agreement shall inure to the benefit of and be enforceable by the Executive's

spouse and by the Executive's legal representatives and the legal

representatives of his estate to the extent then applicable. This Agreement

shall inure to the benefit of and be binding upon the Company and its

successors and assigns.

 

          11. Amendment. This Agreement may be amended, modified or changed

only by a written instrument executed by the Executive and the Company. Any

waiver to be effective must be in writing and signed by the party against whom

it is being enforced.

 

          12. Governing Law; Arbitration.

 

               (a) Governing Law. This Agreement shall be governed by and

construed in accordance with the laws of the State of New York, without

reference to principles of conflict of laws.

 

 

 

                                      7

<PAGE>

 

 

 

               (b) Arbitration. Except as otherwise provided herein, the

Executive and the Company agree that any and all disputes between the

Executive and the Company and/or the Affiliated Entities, or their respective

employees, officers, directors, agents successors or assigns, which relate to,

arise out of or pertain to the Executive's employment, separation from

employment or this Agreement shall be submitted to and resolved by final and

binding arbitration. The arbitration shall be instead of any civil litigation;

this means that the Executive and the Company are each waiving any rights to a

jury trial.

 

               (c) The Executive and the Company expressly understand and

agree that there will be no court or jury trial of disputes between them

arising out of or in connection with this Agreement, the Executive's

employment or separation from employment, including, but not limited to,

claims under federal, state or local laws prohibiting employment

discrimination. The only disputes not covered by this agreement to arbitrate

are actions for injunctive relief brought by either the Executive or the

Company and/or the Affiliated Entities as provided in Section 8 of this

Agreement. Furthermore, claims for unemployment insurance benefits, for

workers' compensation insurance benefits, and for benefits under any

ERISA-governed employee benefit plan(s), shall be resolved pursuant to the

claims procedures under such benefit plans, notwithstanding this agreement to

arbitrate.

 

               (d) All disputes between the parties which are covered by this

agreement to arbitrate and which cannot be resolved within two weeks after a

demand for direct negotiation between the parties shall be submitted to

binding arbitration in New York, New York under the Commercial Arbitration

Rules of the American Arbitration Association before a panel of three (3)

neutral arbitrators selected under such Rules. Each party agrees to bear his

or its own attorneys' fees and costs in connection with such arbitration.

 

               (e) The Executive and the Company knowingly and voluntarily

agree to this arbitration provision. A decision in arbitration shall be final

and binding. Any action to confirm an arbitration award hereunder must be

filed in a court having jurisdiction and located in the State of New York or

in any state or foreign country in which the Executive resides and that also

has personal jurisdiction over both parties; provided that both parties

stipulate that personal jurisdiction exists over them in New York. The

Executive shall be reimbursed for all reasonable legal fees incurred by the

Executive in connection with the negotiation and execution of this Agreement.

 

          13. Notices. All notices and other communications hereunder shall be

in writing; shall be delivered by hand delivery to the other party or mailed

by registered or certified mail, return receipt requested, postage prepaid,

shall be deemed delivered upon actual receipt; and shall be addressed as

follows:

 

 

 

                                      8

<PAGE>

 

 

 

                      If to the Executive:

 

                      At the last address on

                      File with the Company

 

                      With a copy to:

 

                      [   ]

                      [   ]

                      [   ]

 

                      If to the Company:

 

                      1585 Broadway

                      New York, NY 10036

 

                      Attention:  Chief Legal Officer

 

                      With a copy to:

 

                      Adam D. Chinn, Esq.

                      Wachtell, Lipton, Rosen & Katz

                      51 West 52nd Street

                      New York, NY 10019

 

or to such other address as either party shall have furnished to the other in

writing in accordance herewith.

 

          14. Tax Withholding. Notwithstanding any other provision of this

Agreement, the Company may withhold from any amounts payable under this

Agreement, or any other benefits received pursuant hereto, such Federal, state

and/or local taxes as shall be required to be withheld under any applicable

law or regulation.

 

          15. No Mitigation; No Offset. Except as may otherwise be provided in

this Agreement, in no event shall the Executive be obligated to seek other

employment or take any other action by way of mitigation of the amounts

payable under this Agreement. There shall be no offset by the Company against

the Executive's entitlements under this Agreement for any compensation or

other amounts that he earns from subsequent employment or engagement of his

services on account of any claim that the Company may have against him.

 

          16. Indemnification. The Executive will be provided with

indemnification rights to the fullest extent permitted by law and the

Executive will be provided with directors' and officers' liability insurance

coverage with respect to his acts or omissions while at the Company which are

no less favorable than those provided to members of the Management Committee

(or equivalent successor committee) or members of the Board of Directors of

the Company from time to time.

 

 

 

                                      9

<PAGE>

 

 

 

          17. Non-Admission. This Agreement does not constitute an

adjudication or finding on the merits of any issue or matter and it is not to

be construed as an admission by either party hereto or any Affiliated Entity

of any violation of any policies or procedures or of any unlawful behavior

whatsoever. Moreover, neither this Agreement nor anything in this Agreement

shall be construed to be or shall be admissible in any proceeding as evidence

of, or an admission by either party hereto or any Affiliated Entity of any

violation of policies, procedures, state or federal laws, regulations or

common-law rights.

 

          18. Counterparts/Captions. This Agreement may be executed in

counterparts by facsimile signatures. The captions of this Agreement are not

part of the provisions hereof and shall have no force or effect.

 

 

 

                                      10

<PAGE>

 

 

 

          IN WITNESS WHEREOF, each of the parties hereto has duly executed

this Agreement as of the date first set forth above.

 

                                 /s/ Philip J. Purcell

                                 ---------------------------

                                 PHILIP J. PURCELL

 

 

                                 MORGAN STANLEY

 

 

                                 By: /s/ Karen C. Jamesley

                                     ------------------------

                                 Name:

                                 Date:

 

                                     /s/ Miles L. Marsh

 

 

 

 

 

 

                                      11

<PAGE>

 

 

 

                                                                     Exhibit A

 

-------------------------------------------------------------------------------

                    EXECUTIVE COMPENSATION EQUITY PORTFOLIO

                               Philip J. Purcell

                              As of June 13, 2005

 

          Status:  Active

     Intl Status:  Local

Full Career Date:  Sep 5 1998

 Retirement Date:  Sep 5 1998

 

MWD on 6/10/2005: $50.00

 

<TABLE>

<CAPTION>

                                  STOCK UNITS

-----------------------------------------------------------------------------------------------------------------------------------

 

 

                                      Units

    Award      Grant      Award    Disposed or                  Units     Conversion              Current

 Description    Date      Company   Granted     Units Held  Units Vested   Unvested   Date**     Market Value

-------------------------------------------------------------------------------------------------------------------------------

 

<S>         <C>           <C>      <C>          <C>         <C>         <C>        <C>         <C>             <C>

 

TDEPP       01/17/1997    DW600     57,399.23    57,399.23   57,399.23        0.00      (1)      $2,869,961.25  Conv. delayed for

                                                                                                                non-perf. grant

EICP        12/05/2000     MSCO    118,487.00   118,487.00  118,487.00        0.00  09/08/2005   $5,924,350.00  On Schedule

EICP        12/06/2001     MSCO     77,304.00    77,304.00   77,304.00        0.00  09/08/2006   $3,865,200.00  Anniversry of Term

                                                                                                                or On Schedule

EICP        12/05/2002     MSCO     72,254.00    72,254.00   72,254.00        0.00  09/10/2007   $3,612,700.00  Anniversry of Term

                                                                                                                or On Schedule

EICP        11/28/2003     MSCO     73,493.00    73,493.00        0.00   73,493.00  09/08/2008   $3,674,650.00  Anniversry of Term

                                                                                                                or On Schedule

EICMC       12/14/2004     MSCO    251,799.00   251,799.00        0.00  251,799.00  09/08/2009  $12,589,950.00  On Schedule

-------------------------------------------------------------------------------------------------------------------------------

   TOTAL STOCK UNITS HELD          650,736.23   650,736.23  325,444.23  325,292.00              $32,536,811.25

 

(1) First day of window period following term date.

 

</TABLE>

 

 

 

 

<TABLE>

<CAPTION>

                                STOCK OPTIONS

-----------------------------------------------------------------------------------------------------------------------------------

 

 

 

                                                                                              Expiration

   Award       Grant    Award    Options      Options      Options     Options    Restriction   Strike                  Intrinsic

Description    Date    Company   Granted       Held         Vested    Unvested     Lift Date    Price      Date           Value

-----------------------------------------------------------------------------------------------------------------------------------

 

 

<S>         <C>         <C>     <C>          <C>          <C>        <C>          <C>          <C>       <C>         <C>

EICP        12/12/1997  MSCO    252,252.00   252,252.00   252,252.00        0.00  01/02/2003   $26.9150  01/02/2008   $5,823,237.42

EICP        12/11/1998  MSCO    299,290.00   299,290.00   299,290.00        0.00  01/02/2004   $35.6450  01/02/2009   $4,296,307.95

EICP        12/09/1999  MSCO    277,172.00   277,172.00   277,172.00        0.00  01/02/2005   $60.1384  01/02/2010           $0.00

EEA10       03/24/2000  DW600    25,853.00    25,853.00    25,853.00        0.00     N/A       $95.8125  01/16/2007           $0.00

EEAP9       03/24/2000  DW600    17,346.00    17,346.00    17,346.00        0.00     N/A       $95.8125  01/16/2007           $0.00

EEA10       06/20/2000  DW600   153,161.00   153,161.00   153,161.00        0.00     N/A       $86.5625  01/16/2007           $0.00

EEAP9       06/20/2000  DW600   117,412.00   117,412.00   117,412.00        0.00     N/A       $86.5625  01/16/2007           $0.00

EICP        12/05/2000  MSCO    266,596.00   266,596.00   266,596.00        0.00  01/02/2006   $65.3375  01/02/2011           $0.00

EICP        12/06/2001  MSCO    173,934.00   173,934.00   173,934.00        0.00   6/30/2006   $57.0258  01/02/2012           $0.00

EICP        12/05/2002  MSCO    162,572.00   162,572.00   162,572.00        0.00   6/30/2006   $42.5579  01/02/2013   $1,209,877.08

EICP        11/28/2003  MSCO    165,360.00   165,360.00         0.00  165,360.00   6/30/2006   $55.4472  01/02/2014           $0.00

-----------------------------------------------------------------------------------------------------------------------------------

TOTAL STOCK OPTIONS HELD      1,910,948.00 1,910,948.00 1,745,588.00  165,360.00                                     $11,329,422.45

</TABLE>

 

 

<PAGE>

 

 

 

                                                              Exhibit B

 

Cancellation Events are:

 

          The Executive engages in a Wrongful Solicitation

 

 

A "Wrongful Solicitation" occurs upon either of the following events:

 

          while employed or within 180 days following termination of the

Executive's employment, the Executive directly or indirectly hires or attempts

to hire any person who is, or during the 90 days preceding termination of the

Executive's employment was, employed by the Company; or

 

          while employed or within 90 days following termination of the

Executive's employment, the Executive solicits any business of any person or

entity who is or was a customer or client of the Company, or works for, or on

behalf of, any such customer or client, provided, however, that the Executive

had worked on a project or assignment for such customer or client during the

90 days preceding the termination of the Executive's employment.