SEPSimplified Employee Pension Planfor Employers and Self-Employed Individuals

Contents

SEPA Simplified Answer to Retirement Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Questions and Answers About the SEP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

An Explanation of the Morgan Stanley SEP Prototype Employer Agreement . . . . . . . . . . . . . . . 8

Disclosure Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Morgan Stanley SEP Employer Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Morgan Stanley SEP Prototype IRS Approval Letter No. C410166d* . . . . . . . . . . . . . . . . . . . . 17

How to Report Deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Instructions for Completing the Contribution Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Contribution Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

*Morgan Stanley DW Inc. received a favorable opinion letter for the Simplified EmployeePension (SEP) plan on March 4, 2004. Morgan Stanley & Co. Incorporated, as the successor to Morgan Stanley DW Inc. will file for an updated opinion letter to reflect thechange in prototype sponsor name and employer identification number. You will be furnished with a copy of the letter once it is received.

Morgan Stanley and its Financial Advisors do not provide tax or legal advice, are not fiduciaries(under ERISA, the Internal Revenue Service or otherwise) with respect to the services or activitiesdescribed herein, and this material was not intended or written to be used for the purpose of avoidingtax penalties that may be imposed on the taxpayer. Individuals are urged to consult their tax or legaladviser before engaging in any transaction involving SEP-IRAs, IRAs or other tax advantagedinvestment vehicles.

Investments and services are offered through Morgan Stanley & Co. Incorporated, member SIPC.

2SEPA Simplified Answer to Retirement PlanningHave you considered adopting a retirement plan for your company but been discouraged by the high cost,administrative burden, and permanent commitment that is usually associated with a tax-qualified employee benefitplan? A Simplified Employee Pension Plan (SEP) may be the solution! Potentially, it can provide you with theopportunity to make tax-deductible contributions in an amount up to 25% of compensation. The maximumcontribution will be the lesser of 25% of compensation or $45,000 for 2007 ($44,000 for 2006; $42,000 for2005), compensation is limited to $225,000 for 2007($220,000 for 2006; $210,000 for 2005).*

Simplified tax savings while planning for your retirementA SEP can serve as an important tax planning tool sincecontributions made to a SEP are not only tax-deductible to the employer, but are not taxable to the employee until withdrawn** from the employees IRA. Earnings also have the opportunity to grow in the employees IRA on a tax-deferred basis. Thus, retirement funds may accumulate at a potentially greater rate and provide a larger pool of capital at retirement than if they werecurrently taxed.

Most people look forward to a comfortable retirement.According to U.S. Government statistics, however, fewerthan 1 in 10 Americans are financially independent atretirement. Savings with the advantage of tax deferralhelps make it easier to accumulate the financial resourcesthat are needed for a comfortable retirement.

The following graph illustrates the substantial increase in potential earnings when pretax dollars are invested andaccumulate on a tax-deferred basis as compared to investingafter-tax dollars where earnings are also taxed annually. Inthe graph, we have assumed that an individual, age 30, whois in the 40% combined Federal, state and local tax bracket,would like to save $10,000 a year for his or her retirementand expects to receive a return of 8%. If that $10,000 isinvested through a SEP and deposited in an IRA, a fund of $1,223,459*** would be accumulated by the time theindividual reaches age 60. If, however, the individual

receives the same $10,000 as current compensation, paysapproximately $4,000 or 40% in taxes leaving $6,000 toinvest and pays a tax of 40% annually on the 8% return, a fund of $403,700*** would be accumulated by the time the individual reaches age 60. Even if all the individualsSEP IRA assets were taxed at 40% when withdrawn, theSEP would have $330,375*** more than the fundaccumulated without the benefit of a SEP.

The Advantage of a Tax-Deferred SEP ($000s)A Hypothetical Illustration

Tax-deferred accumulations in IRAs are subject to income taxationupon withdrawal. The amount actually received by the individual in theabove example will be the amount accumulated reduced by Federal,state and local income taxes (if applicable) and may be reduced by a 10% Federal penalty tax if the individual takes a withdrawal beforeattaining age 5912.

This chart is for illustrative purposes only and does not represent anyspecific investment. No specific rate of return is guaranteed andassets are not insured against market losses. All dollar amounts havebeen rounded off for illustrative purposes. Individual results will vary.

Most employers, whether self-employed individuals, owners of unincorporated businesses, partnerships, corporations, or S corporations, are eligible to adopt a SEP. Under a SEP, each Eligible Employee will adopt his or her own Individual Retirement Account (IRA) towhich the employer may contribute each year. This IRA is sometimes referred to as a SEP IRA. Consequently,selecting the right SEP IRA is an important decision for you and your employees.

* Subject to cost of living adjustments by the U.S. Treasury.** Funds from your SEP account will be taxed as ordinary income when

you take withdrawals. Distributions taken before age 59may also besubject to a 10% premature distribution tax penalty.

***All dollar amounts have been rounded off for illustrative purposes.

Years

302520151050

$1,225$1,223,459

$1,019

$815

$611

$407

$203

$403,700

3The Morgan Stanley SEP features the Morgan Stanley IRA. The IRA permits each individual to direct his or her own investments into stocks, bonds, certain limitedpartnerships, certain mutual funds, certificates of deposit,bank deposits and certain covered option strategies. Not allEligible Employees need to elect the Morgan Stanley IRA asa SEP IRA in order for you to open a Morgan Stanley SEP.However, when employees do elect the Morgan StanleyIRA, your plan administration is further simplified.

You can:

Streamline administration by sending one contributioncheck for all of your employees SEP IRAs;

Permit maximum investment flexibility for theemployees IRAs; and

Benefit from the personal attention of a professionallytrained Morgan Stanley Financial Advisor.

Ask your Morgan Stanley Financial Advisor for more information about the Morgan Stanley IRA.

Easy establishmentA SEP plan is an agreement to make SEP contributions toall Eligible Employees IRAs. Therefore, a SEP normally doesnot involve costly legal or pension administrative fees.

Establishing a Morgan Stanley SEP involves:

Completing the Morgan Stanley SEP Employer Agreement;

Giving copies of the completed and signed EmployerAgreement and accompanying Disclosure Informationto your Eligible Employees;

Having each employee establish a SEP IRA; and

Making SEP contributions to each eligible employees SEP IRA.

The Morgan Stanley SEP IRASelecting the right SEP IRA is an important decision for you and your employees. You will need to consider the choice of investments available, the ability to changeinvestments as needed, the competitiveness of the administrative fees and the ease of making SEP contributions. By adopting the Morgan Stanley SEP prototype document and the Morgan Stanley IRA account you can:

Allow employees to direct the investment of their own SEP IRA. With the Morgan Stanley IRA, eachindividual can decide upon investments such asstocks, bonds, certain mutual funds, certificates ofdeposit, bank deposits, certain annuities and certaincovered option strategies. Each individual decideswhat investment to make, how much to invest in any of one or more types of investments and when to buy or sell his or her SEP IRA investments. Theopportunity to change investment strategies anddiversify a portfolio can help increase each individualsgrowth opportunities.

In addition, each employee who selects a Morgan Stanley IRA will receive the personal attention of a professionally trained Morgan StanleyFinancial Advisor.

Benefit from competitive pricing and ease ofadministration. For SEP plans, Morgan Stanleys policy is as follows:

Each IRA account established by your employees will be charged a fee for annual administration. Also, there isa termination fee for each terminated Morgan StanleyIRA account. However, termination fees are not chargedin a year in which you attain age 59 or over, orfollowing your disability or death. A transfer fee will beimposed for accounts transferred from Morgan Stanleyto another Financial Institution. In the event that bothfees apply, only the transfer fee will be assessed. Normalbrokerage commissions will be charged for purchasesand sales within the SEP IRA account. There are no fees related to asset size or number of transactions.*

Send only one contribution check to Morgan Stanley for allEligible Employees IRA accounts, using the ContributionSheet on page 19. This saves you time because you avoidmaking SEP contributions to several separate institutions.

Note: SEP contributions will be treated as having been made by the

last day of the employers taxable year if the SEP Adoption Agreement

is executed and SEP contributions are made on or before the due date

including extensions, of the employers Federal income tax return

for the year.

* Asset-based and transaction-based fees may be available for eligibleaccount owners who choose to enroll in certain programs offered byMorgan Stanley. Ask your Financial Advisor for information.

4Questions and Answers About the SEP

EligibilityWhich types of employers are eligible to establish a Simplified Employee Pension?If you are an employera self-employed individual, soleproprietor, partnership (partners as individuals cannotestablish individual plansthe partnership is the employer)or corporationyou can establish a SEP for yourself andyour Eligible Employees.

A SEP is most appropriate for employers with a smallnumber of employees.

Must all employees be covered by the SEP?An employer must cover all employees except for employees who have not attained age 21, have not worked for the employer in at least three of the past fiveyears, are nonresident aliens or are members of a collectivebargaining unit. In addition, the employer must includeemployees of any corporations, trades or businesses undercommon control or affiliated with the employer as definedby Internal Revenue Code sections 414(b), (c), (m) and (o)and leased employees (see next question) required to betreated as employees under Code section 414(n).

Contributions must be made for all Eligible Employees who earn at least $500 during a year (subject to cost ofliving adjustments).

An employer may choose to make the eligibilityrequirements less restrictive, such as including employees of any age or requiring less than three years of service. Allemployees (including the owner) must meet all eligibilityrequirements that are established. For example, if the ownerhas only worked in the business for one year, an eligibilityrequirement greater than one year would exclude the owner.When an employer selects the eligibility requirements, it isimportant to remember that every Eligible Employee mustreceive a SEP contribution even if an Eligible Employee isnot employed on the date the actual contribution is made.

Who is considered a leased employee?A leased employee is a person who is not the common-law employee of a recipient but who:

Provides services to the recipient under an agreementbetween the recipient and a leasing organization,

Has performed services for the recipient (or for the recipient and related persons) substantially full time for at least one year, and

Performs services under the primary direction or control of the recipient.

Generally, all leased employees who meet the eligibilityrequirements must be included in the SEP unless they arecovered by a safe harbor plan maintained by the leasingorganization. If you employ leased employees you shouldconsult with your tax advisor before establishing a SEP orany other retirement plan.

Establishment dateWhat is the deadline for establishing a SEP?The SEP may be established for any taxable year by theemployers tax filing due date, including extensions, for that year.

ContributionsHow much may be contributed to the SEP?The overall maximum SEP contribution may not exceed25% of compensation up to a maximum of $45,000 for 2007 ($44,000 for 2006; $42,000 for 2005)* perparticipant. The compensation used to determine this limit may not exceed an Internal Revenue Code limit of $225,000 for 2007 ($220,000 for 2006; $210,000 for 2005).*

If other qualified employee benefit plans were evermaintained, it may be necessary to consult with aprofessional tax advisor to determine the maximumamount that may be contributed to the SEP each year.

Is there a limit on the amount of compensation orearned income which may be used to calculate SEP contributions?Yes. No amount of compensation or net earnings in excessof $225,000 for 2007 ($220,000 for 2006; $210,000 for 2005)* may be taken into account when calculating SEP contributions.

Is the SEP subject to the top heavy rules?Yes. All prototype SEP plans including the Morgan StanleySEP are deemed to be top heavy within the meaning ofInternal Revenue Code section 416. Under the top heavyrules an employer must make a required minimumcontribution to the accounts of all non-key Eligible

* Subject to cost of living adjustments by the U.S. Treasury.

5Employees. The Morgan Stanley SEP contribution formulas are designed to assure that the top heavy minimum required contribution will be made.

How are contributions made to the SEP?One or more contributions may be made during the year.However, any contribution should be prorated among allplan participants so that contributions are not deemed to be discriminatory at any time. Contributions may be madeup to the tax-filing due date of the business, includingextensions. All employer SEP contributions must be made in cash.

Can contributions to the Morgan Stanley SEP beintegrated with Social Security?Yes, integrating contributions with Social Security can result in a contribution equal to a higher percentage of compensation for employees who earn over the Social Security Taxable Wage Base. You may integrate contributions to your Morgan Stanley SEP by selecting box 2 under the Contributions section on the MorganStanley Simplified Employee Pension Plan EmployerAgreement and filling in the percentage of the TaxableWage Base to be used as the Integration Level.

Once the SEP is adopted, can the contribution formula be changed?Yes, but employers who want to change from an integratedto a uniform contribution formula, or vice versa, mustexecute a new adoption agreement and give copies to all Eligible Employees every time such a change is made.Employers who want to change the Integration Levelused to make integrated contributions must also executeand distribute a new adoption agreement.

Annual contributions to the SEP are discretionary. Everyyear the employer decides whether to contribute and theamount of the contribution. If the employer has elected a uniform contribution formula, the same percentage ratemust be used to calculate the contribution for every EligibleEmployee. The percentage selected may be different everyyear. If the employer uses an integrated formula the totalamount being contributed may be different every year but the method of allocating this amount among the SEP IRA accounts of Eligible Employees may only be done in accordance with the formula elected by theemployer in the adoption agreement.

How does a self-employed individual calculate his orher SEP contribution?SEP contributions made by a self-employed individual may not exceed the lesser of $45,000 for 2007 ($44,000 for 2006; $42,000 for 2005)* or 25% of the individualsnet earned income. Net earned income is the incomeearned by the individual from personal services rendered to or on behalf of the business adopting the SEP, lessdeductions from income (including 50% of the self-employment tax) and less the amount of contributions to the SEP.

To calculate the actual SEP contribution, the self-employedindividual must first calculate his or her net earned incomewithout taking the SEP contribution into consideration andthen use the following formula:

Net Earnings x Contribution PercentageContribution = -----------------------------------------------------------------------------------------------

1 + Contribution Percentage

If the self-employed individual wants to make the maximumallowable contribution, he or she may calculate this amountby multiplying his or her net earnings by 20% (.20).

Example: 25% contribution based on $100,000 self-employment income.

$100,000 x 25% 25,000Contribution = ------------------------------------- = ---------------------- = $20,000

1 + .25 1.25

The $20,000 contribution is deducted from the $100,000net earnings to determine the earned income figure.

Net Earnings = 100,000

Contribution = -- 20,000--------------------

Earned Income = 80,000

The contribution of $20,000 is equivalent to 25% of$80,000 of earned income.

* Subject to cost of living adjustments by the U.S. Treasury.

6How does an employer determine which employeesare to receive contributions?Any employee who has eligible earnings and has met the plans eligibility requirements is entitled to have acontribution made on his or her behalf.

When is the employee vested in the SEP?Contributions are immediately 100% vested when made under the SEP.

Can employees make contributions to their SEP IRA accounts?Yes. Employees under age 70may make annual IRAcontributions to their SEP IRA account. The deductibility of such contributions would be subject to Adjusted GrossIncome limits. More information is available in theMorgan Stanley IRA Disclosure Statement found inthe IRA Adoption Booklet.

Can employees make contributions to Roth IRA accounts?Individuals who are eligible to establish and fund a RothIRA do not lose their Roth IRA eligibility solely becausethey participate in a SEP IRA. Roth IRA contributionsmust be made to a separate Roth IRA account not to theSEP IRA account. Additional information is available in the Morgan Stanley Roth IRA Disclosure Statement found in the Morgan Stanley IRA Adoption Booklet.

DistributionsWhat are the rules concerning distributions from the SEP?Employees may take distributions from their SEP IRAaccounts under the same distribution rules that apply to standard IRA accounts. These distribution rules are explained in the Morgan Stanley Traditional IRAaccount Opening Kit. In general, employees may receivedistributions without penalty only after attaining age 59but must start taking distributions by April 1st followingthe year they reach age 70, regardless of whether theyhave stopped working.

Generally, an employee is subject to a 10% premature distribution tax if distributions begin prior to age 59 except in the case of death, disability, a 72(t) distribution in the form of a series of substantially equal periodic payments based on the life expectancyof the participant (or the joint lives of the participant and the beneficiary), a transfer of all or a portion of the SEP IRA to a spouse or former spouse under a courtorder incident to a divorce, payment of medical expenses in excess of 7.5% of adjusted gross income, payment ofmedical insurance premiums if an individual has beenreceiving unemployment insurance benefits for at least 12 weeks (or would have been eligible for such benefits but for the fact that the individual was self-employed),distributions for qualified first time home purchases (up to a $10,000 lifetime limit) or distributions for qualified higher education expenses.

7AdministrationHow do I inform my employees of the SEP?Provide each Eligible Employee with a copy of the completed and signed Employer Agreement and a copy of the Disclosure Information found on pages 9 through 12 of this booklet.

What about government reporting?The employer has no annual government reporting requirement (no Form 5500).

What reports do my employees get?Each employee will receive IRA statements from the financial institution selected to receive the SEPcontribution. Those employees who establish a Morgan Stanley IRA receive quarterly statements. A monthly statement will be sent for any month in which there is activity.

Who sets up my employees IRA accounts?You should instruct each Eligible Employee to set up anIndividual Retirement Account for SEP contributions with a qualified IRA custodian or trustee and report thename and address of the IRA custodian or trustee, as well as account number, to you. You may require that theemployee set up a SEP IRA which you select, or choose a SEP IRA from several you have selected. If so, you mustgive each Eligible Employee a clear written explanation ofthe terms of the SEP IRA(s) you select. The explanationmust include information about the terms of the IRAs, suchas rates of return if specified under the program, permissibleinvestment, administrative fees, and any restrictions on aparticipants ability to transfer or withdraw funds from theIRA. Please note that if you do restrict the ability of theemployee to take distributions from his or her IRA, youmay be required to file annual reports with the Departmentof Labor and the IRS.

If you wish to select the Morgan Stanley IRA, yourFinancial Advisor can supply informational material for you to distribute to all employees, in which the feeinformation is included. If you endorse a specific IRA in addition to Morgan Stanleys IRA, you may need toobtain additional disclosure information for employeesregarding those IRAs.

InvestmentsWhat investments are permitted under theMorgan Stanley SEP IRA?Permitted investments include:

Publicly traded securities for which there is an activerecognized market;

Covered call writing (the IRA must own the underlying securities);*

Purchasing of protective puts (the IRA must own theunderlying securities);*

Mutual funds with which Morgan Stanley has a sales agreement;

Certificates of Deposit;

Nonqualified annuities sponsored by Morgan Stanley;

Unit investment trusts;

Money market funds;**

Certain coins and bullion; and

Bank deposits.

What investments are not permitted?

Investments in the following are not permitted:

Real property;

Real estate trust deeds;

Options other than as described above under PermittedInvestments;

Collectibles (i.e., gems, coins (except as describedabove), precious metals, antiques, etc.);

Margin transactions;

Short sales of securities;

Life insurance; and

Securities which Morgan Stanley may not hold asCustodian (ask your Financial Advisor for details).

Automatic Investment of Cash BalancesOn a daily basis, all uninvested dollars in Morgan StanleySEP IRA accounts will be automatically deposited inaccounts with Morgan Stanley Bank or any other bankingaffiliate of Morgan Stanley, in any other sweep investmentvehicle specified either in an agreement applicable to youraccount, or in a sweep investment vehicle otherwise madeavailable and disclosed to you.

* Options are not suitable for all investors. If you would like todiscuss if covered call writing or purchasing protective puts maybe appropriate as part of your investment strategy, or if you wouldlike to obtain a detailed brochure entitled Characteristics and Risksof Standardized Options, please contact your Morgan StanleyFinancial Advisor.

** An investment in a money market fund is not insured orguaranteed by the Federal Deposit Insurance Corporation or anyother government agency. Although the fund seeks to preserve thevalue of your investment at $1.00 per share, it is possible to losemoney by investing in the fund.

8Who directs the investments in the SEP?Morgan Stanleys SEP IRA provides for an individual self-directed account for each employee. Therefore, employeesdirect the investment of their own accounts. This featurereduces the employers fiduciary responsibility.

What insurance protection is available for the assetsin a Morgan Stanley SEP IRA?Securities and cash held in Morgan Stanley accounts areprotected up to their full net equity value by a combinationof coverage provided by the Securities Investor ProtectionCorporation (SIPC), a nonprofit organization created byan Act of Congress and additional protection purchasedfrom a private insurer by Morgan Stanley (excess coverage).SIPC protects up to $500,000 of your securities, of whichup to $100,000 may be uninvested cash. Excess coverageprovides additional protection up to the full net equityvalue of each account including unlimited coverage for cash.SIPC and excess coverage apply only to securities and cashin the exclusive possession and control of Morgan Stanley.Mutual funds, including money market funds that may be redeemed only through Morgan Stanley, are covered.Securities, including certain mutual funds, annuities andlimited partnerships, which may be redeemed or liquidatedby direct contact with the issuer, carrier, distributor, or theiragents are generally not covered by SIPC or excess coverage.The asset protection offered by SIPC and the excesscoverage do not protect against losses of value due to marketfluctuations. In addition, bank deposits are not covered bySIPC or the excess coverage. However, for IRAs, such bankdeposits are eligible for deposit insurance by the FederalDeposit Insurance Corporation (FDIC), generally up to$250,000 per sweep bank ($500,000 in the aggregate), inaccordance with FDIC rules.

If you would like more information, please contact aMorgan Stanley Financial Advisor. Additional informationabout SIPC and asset protection may also be found atwww.sipc.org. Additional information about FDICprotection may be found in the Bank Deposit ProgramDisclosure Statement and may also be found atwww.fdic.gov.

An Explanation of the Morgan Stanley SEP Prototype Employer Agreement

EligibilityYou may determine which employees will be eligible to participate in the SEP, within the limits allowed by law. In making your choices, remember, self-employedindividuals, partners, sole proprietors, or stockholder-employees must meet the same eligibility requirements that apply to common law employees in order to be able to participate in the SEP.

If you make a contribution for a given calendar year, SEP contributions must be made for all employees who, at any time in the calendar year meet the requirements youselect, and who have earned at least $500 (subject to cost of living adjustments), even if they are no longer employedwhen you make the contribution.

If the employer is a member of an affiliated service group, a controlled group of corporations, or trades or businessesunder common control, service includes any workperformed for any period of time for any other member of such group, trades or businesses. If you establish a SEP,all of your Eligible Employees and, if any, all employees ofother members of the affiliated service group, controlledgroup of corporations, or trades or businesses undercommon control of which you are a member mustparticipate in the SEP.

Disclosure Information Under the Morgan Stanley SimplifiedEmployee Pension PlanThe Morgan Stanley Simplified Employee Pension Plan, or SEP (a prototype plan sponsored by Morgan Stanley), is an arrangement through which employers can makecontributions toward their employees retirement securitywithout becoming involved in more complex retirementplans. Under the SEP, an employer makes contributionsdirectly to each employees Individual Retirement Account(IRA). The IRA to which the employer contributes isreferred to as a SEP IRA.

An Employer who adopts the SEP is not statutorily required to make any contributions to the SEP IRAs ofEligible Employees. However, if any contribution is made,the contributions may not discriminate in favor of highlycompensated employees. Morgan Stanley will provide astatement to each participant that shows the amount of theSEP contribution. If an Eligible Employee makes less than$500 (subject to cost of living adjustments) in the year for which the contribution is made, the employer need not make a SEP contribution for that employee.

The participation requirements that the employer mayimpose cannot be more restrictive than the law provides, but they can be less restrictive. The law provides that allemployees who are at least 21 years old and who haveworked for the employer for some period of time (howevershort) in any three of the immediately preceding five years,are eligible to receive SEP contributions. If you are a member of an affiliated service group, a controlled group of corporations, or trades or businesses under commoncontrol, work includes work performed for any period of time for any other member of such group, trades, orbusinesses. Non-resident aliens without U.S. income and unionized employees who have already negotiatedwith respect to retirement benefits may be excluded from participation.

This information and the following Questions andAnswers should provide a basic understanding of what theMorgan Stanley SEP is and how it works. An employee whohas unresolved questions concerning SEPs should call theFederal tax information number, or the toll free numbershown in the white pages of the local telephone directory.

Questions and Answers

1. What is a Simplified Employee Pension (SEP)?

A SEP is a written retirement income arrangementunder which your employer may contribute into your own Individual Retirement Account (IRA).

Your Employer will provide you with a copy of theagreement containing participation requirements and a description of the basis upon which employercontributions may be made to your SEP IRA.

All amounts contributed to your SEP IRA by youremployer belong to you, even after you separate fromservice with that employer.

2. Must my employer contribute to my IRA underthe SEP?

Whether or not your employer makes a contribution to the SEP is entirely within the employers discretion.If a contribution is made under the SEP, it must beallocated to all the Eligible Employees according to the SEP agreement. The SEP may specify that thecontribution on behalf of each Eligible Employee will be the same percentage of compensation for allemployees or it may integrate contributions with SocialSecurity taxes paid by the employer, providing a higherpercentage of compensation to employees earning above the integration level (Section D. of the Employer Agreement).

3. How much may my employer contribute to my SEP IRA in any year?

Your employer will determine the amount ofcontribution to be made to your SEP IRA each year.However, the contribution for any year is limited to the lesser of $40,000 (subject to cost of livingadjustments by the U.S. Treasury for future years;$45,000 for 2007) or 25% of your compensation for that year. The compensation used to determine this limit does not include any amount which iscontributed by your employer to your IRA under theSEP and may not exceed $200,000 (subject to cost ofliving adjustments by the U.S. Treasury for future years;$225,000 for 2007). The agreement does not require anemployer to maintain a particular level of contribution.

9Do not detach. Keep in this booklet for your records. Make copies for all eligible employees.

It is possible that for a given year no employercontribution will be made. If you also maintain asalary reduction SEP, contributions to the two SEPstogether may not exceed the smaller of $40,000(subject to cost of living adjustments by the U.S.Treasury for future years; $45,000 for 2007) or 25% of compensation for any employee.

4. How do I treat my employers SEPcontributions for my taxes?

The amount your employer contributes whichdoes not exceed the limits described in Question 3is excludable from your gross income and is notincludible as taxable wages on your W-2 Form.

5. May I also contribute to my IRA if I am aparticipant in a SEP?

Yes. You may make regular contributions to an IRA.However, the amount which is deductible is subject to various limitations.

6. May I also contribute to a Roth IRA if I am aparticipant in a SEP?

If you are eligible to establish and fund a Roth IRA you remain eligible to fund your Roth IRA even if youparticipate in a SEP IRA. Contributions must be madeto a separate Roth IRA account not to your SEP IRAaccount. Additional information is available in theMorgan Stanley Roth IRA Disclosure Statement found in the Morgan Stanley IRA Adoption Booklet.

7. Are there any restrictions on the IRA account in which my SEP contributions are deposited?

Under the SEP, contributions can be made to anyTraditional IRA account selected by the employer butmay not be made to a Roth IRA, a SIMPLE IRA, oran Education Savings Account.

8. What if I dont want a SEP IRA?

If your employer decides to make SEP contributionsfor a year, then your employer is required to make a contribution to a SEP IRA established for eachEligible Employee. If your employer fails to make acontribution for every Eligible Employee, then none of the SEP contributions made to any employee willqualify for favorable tax treatment. Therefore, shouldyou refuse or for any reason be unable to establish aSEP IRA to receive your employers contributions, if any, Morgan Stanley will allow your employer toestablish a SEP IRA on your behalf to receive any SEPcontributions. Should this happen, the contributionswill be invested in bank deposits with Morgan StanleyBank or an affiliate of Morgan Stanley, in any othersweep investment vehicle specified either in an agreementapplicable to your account, or in a sweep investmentvehicle otherwise made available and disclosed to you,pending your further instructions. Your employer maynot, however, designate a beneficiary to receive the SEPIRA following your death.

9. Can I move funds from my SEP IRA to another IRA?

Yes, it is permissible for you to withdraw, or receivefunds from your SEP IRA, and no more than 60 dayslater, place such funds in another Traditional IRA orSEP IRA. This is called a rollover and may not bedone without penalty more frequently than at one-year intervals. You may also rollover your SEP IRA to a Roth IRA if your modified adjusted gross incomedoes not exceed $100,000. However, future employercontributions may only be made to a Traditional or SEP IRA. There are no restrictions on the number of times you may make transfers if you arrange tohave such funds transferred directly between thetrustees/custodians of Traditional or SEP IRAs, so that you never have possession. Both rollovers andtransfers may involve fees or expenses, depending upon whether you are closing your SEP IRA accountand the nature of investments held in your account.

10 Do not detach. Keep in this booklet for your records. Make copies for all eligible employees.

10. What happens if I withdraw my employerscontribution from my SEP IRA?

If you do not want to leave the employers contributionin your SEP IRA, you may withdraw it at any time, but any amount withdrawn is includible in yourincome unless rolled over. Also, you may be subject to a 10% penalty if withdrawals occur before attainmentof age 59, and are not on account of death ordisability, in the form of a series of substantially equalperiodic payments (not less frequently than annually)over the life or life expectancy of the participant (or the lives or joint life and last survivor expectancy of the participant and a designated beneficiary), a transferincident to a divorce, if the withdrawal is used to paymedical expenses in excess of 7.5% of your adjustedgross income, payment of medical insurance premiumsfor you, your spouse or your dependent children butonly if you have received unemployment insurancebenefits for at least 12 weeks (or would have but for thefact that you are self-employed) and the coverage is for the period of unemployment (or the first 60 days after you are reemployed).

Distributions for qualified first time home purchases(up to a $10,000 lifetime limit) or for qualified highereducation expenses are also penalty free.

11. May I participate in a SEP even though Imcovered by another plan?

Yes, you can participate in the Morgan Stanley SEPeven though you participate in another plan of the same

employer. However, contributions to all such plans aresubject to the combined limit described in section 415of the Internal Revenue Code. Also, if you work forseveral employers, you may be covered by the SEP ofone employer and a different SEP or pension or profitsharing plan of another employer.

12. What happens if too much is contributed to my SEP IRA in one year?

Any contribution that is more than the yearlylimitation may be withdrawn without penalty bythe due date (including extensions) for filing your tax return (normally April 15th), but includible in your gross income. Excess contributions left in yourSEP IRA account after that time are subject to a 6%excise tax and may also be taxed as prematurewithdrawals (see Q&A 10).

13. Can SEP contributions be reduced byemployer contributions to Social Security?

Although employer contributions under the SEP agreement must bear a uniform relationship toemployees compensation, your employer is entitled tooffset or reduce its SEP contribution by certain amountsalready paid by your employer on your account for Old Age, Survivors, and Disability Insurance (OASDI)under Social Security. This reduction may substantiallyreduce the SEP allocation you would otherwise receive.This is called integration with Social Security, and ispermissible only if statutory requirements are satisfied.If your employer chooses to integrate with SocialSecurity, the copy of the SEP agreement provided by your employer must clearly show the integrationformula. Your participation in a SEP will not, however, reduce your Social Security benefits or theSocial Security taxes paid on your behalf by youremployer and you or your business.

11Do not detach. Keep in this booklet for your records. Make copies for all eligible employees.

14. Do I need to file any additional forms with the IRS because I participate in a SEP?

No.

15. Is my employer required to provide me with information about SEP IRAs and theMorgan Stanley SEP Agreement?

Yes, your employer must provide you with a copy of the executed Morgan Stanley SEP agreement, thisdisclosure statement and provide a statement each year showing any contribution to your SEP IRA.

16. Is the financial institution where I establish my IRA also required to provide me with information?

Yes, it must provide you with a disclosure statementwhich contains the following items of information inplain, nontechnical language:

(1) the statutory requirements which relate to yourIRA;

(2) the tax consequences which follow the exercise of various options and what those options are;

(3) eligibility rules and rules on the deductibility andnondeductibility of retirement savings;

(4) the circumstances and procedures under which you may revoke your IRA, including the name, address,and telephone number of the person designated toreceive notice of revocation (this explanation must be prominently displayed at the beginning of thedisclosure statement);

(5) explanation of when penalties may be assessedagainst you because of prohibited or penalizedactivities concerning your IRA; and

(6) financial disclosure information which:

(a) either projects value growth rates of your IRAunder various contribution and retirementschedules, or describes the method of computingand allocating annual earnings and charges whichmay be assessed;

(b) describes whether, and for what period, the growthprojections for the plan are guaranteed, or astatement of the earnings rate and terms on which the projection is based; and

(c) states the sales commission to be charged in eachyear expressed as a percentage of $1,000.

See IRS Publication 590, Individual RetirementArrangements (IRAs) available at most IRS offices, for amore complete explanation of the disclosure requirements.

In addition to this disclosure statement, the financialinstitution is required to provide you with a financialstatement each year. It may be necessary to retain and refer to these statements for more than one year in order to evaluate the investment performance of the IRA and to report IRA distributions for tax purposes.

Your Morgan Stanley Financial Advisor will be glad to answer any further questions you may have about the Morgan Stanley SEP or the IRA. However, your tax advisor or attorney should be consulted as to the specific tax consequences or benefits of a SEP for you or your business.

12 Do not detach. Keep in this booklet for your records. Make copies for all eligible employees.

Morgan Stanley SimplifiedEmployee Pension Plan Employer Agreement

Name of Business

(the Employer) whose principal place of business is at

Address

Address

hereby adopts this Morgan Stanley Simplified EmployeePension Plan (the SEP or the plan) in accordance withSection 408(k) of the Internal Revenue Code (the Code).

A. Predecessor Employer For eligibility purposes, service with predecessor

employer(s) will not be considered unless this box is checked.

Name of predecessor employer(s)

Date predecessor business(es) established

B. Eligibility

The Employer agrees to make contributions for each [check box 1 or 2 and complete lines 3 and 4]:

l. Calendar Year or

2. Fiscal Year of the Employer, which ends on

in which the Employer so elects to the IndividualRetirement Account (IRA) of all employeesincluding all employees of corporations, trades orbusinesses which are controlled by or under commoncontrol with the Employer as described in Code sections414(b), (c) or (o); employees of corporations, trades orbusinesses which are in an affiliated service group withthe Employer as described in Code section 414(m);

and, leased employees who are required to be treated as employees of the Employer by Code section 414(n), who have:

3. Reached age:(21 or less)

4. Performed service for the Employer during _________(0-3)

out of five immediately preceding years; and

5. Earned at least $450, adjusted annually by the Treasury, in the current year;

but excluding [check box to exclude certain employees]

6. Employees whose retirement benefits have been thesubject of good faith collective bargaining with theEmployer.

7. Nonresident alien employees who have received no earned income from the Employer whichconstitutes earned income from sources within the United States.

(Note to Employer: An Employer may elect to use either the calendar year or its taxable (fiscal)year for participationand contribution/allocation purposes. The year selected bythe Employer for these purposes is referred to in the rest ofthis adoption agreement as the Plan Year. If the Employeralready maintains a SEP and desires to change to a Plan Yearother than a calendar year, an employee who has any serviceduring the short Plan Year must be given credit for thatservice in determining whether the employee has performedservice in three of the last five years. Such an employeemust also receive a contribution for the short Plan Year if the employee would have been entitled to a contribution for the calendar year in which the short Plan Year begins if there had been no change.)

C. Compensation

As used in this plan, Compensation shall mean as follows:

1. For any self-employed individual covered by the plan,Compensation means earned income actually paid or made available to the self-employed individualduring the Plan Year.

2. For all other employees, Compensation means wagesas defined by Code section 3401(a) and all otherpayments to the employee by his or her employer

13Do not detach. Keep in this booklet for your records. Make copies for all eligible employees.

in the course of the employers trade or business whichare required by Code sections 6041, 6051, and 6052 tobe reported as Wages, Tips and Other Compensationon IRS Form W-2, provided such wages or otherpayments are actually paid or made available to theemployee during the Plan Year. Compensation, forplan purposes, must be determined without regard to any rules under Section 3401(a) that limit theremuneration included in wages based on the nature or location of the employment or the servicesperformed (such as the exception for agricultural labor in Section 3401(a)(2)).

3. Compensationshall [check one] include / excludeany amount which is contributed on behalf of theemployee by the employer pursuant to a salary reductionagreement and which is not includible in the employeesgross income under Code sections 125 [cafeteria plans],132(f) [transit plans], 402(a)(8) [401(k) plans], 402(h)[SEPs and SAR-SEPs], 403(b) [tax exempt organizationplans] or 457 [governmental plans].

4. Compensation taken into account for an employeefor any Plan Year shall not exceed the limit set forth inCode section 401(a)(17) and regulations promulgatedthereunder (the Section 401(a)(17) Limit), adjustedby the Treasury in accordance with Code section408(k)(8), in effect for the calendar year in which thePlan Year begins. For Plan Years beginning on or afterJanuary 1, 2002, the Section 410(a)(17) Limit shall be$200,000, subject to adjustment by the Treasury. Inthe event of a short Plan Year (less than twelve (12)months), the annual compensation limit will be thelimit for the calendar year in which the short Plan Yearbegins multiplied by the ratio obtained by dividing the number of full months in the short Plan Year bytwelve (12).

5. For purposes of the $450 threshold used to determinewhether an employee is eligible for a contribution,Compensation shall have the meaning given to it in Code section 414(q)(4).

6. Code section 415 Safe-Harbor Compensation.Compensation is defined as wages, salaries, and fees for professional services and other amounts received(without regard to whether or not an amount is paid in cash) for personal services actually rendered in thecourse of employment with the employer maintaining

the SEP to the extent that the amounts are includiblein gross income (including, but not limited to,commissions paid salespersons, compensation forservices on the basis of a percentage of profits,commissions on insurance premiums, tips, bonuses,fringe benefits, and reimbursements or other expenseallowances under a non accountable plan (as describedin Treasury Regulations section 1.61-2(c)), andexcluding the following:

(a) Employer contributions to a plan of deferredcompensation which are not includible in theemployees gross income for the taxable year in which contributed, or employer contributions under a SEP, or any distributions from a plan of deferred compensation;

(b) Amounts realized from the exercise of a nonqualified stock option, or when restricted stock (or property) held by the employee either becomesfreely transferable or is no longer subject to asubstantial risk of forfeiture;

(c) Amounts realized from the sale, exchange or other disposition of stock acquired under aqualified stock option; and

(d) Other amounts which received special taxbenefits, such as premiums for group-term lifeinsurance (but only to the extent the premiums are not includible in the gross income of the employee).

7. Except where specifically stated otherwise in this plan,an employees Compensation shall include any electivedeferral described in Code section 402(g)(3) or anyamount that is contributed by the employer at theelection of the employee and that is not includible inthe gross income of the employee under Code sections125, 132(f)(4) or 457.

D. Contributions

Each employee who satisfies the eligibility requirements ofsection B above will share in an allocation as determinedunder this section D. The Employer agrees that contributionsmade under this SEP will be made as follows: [check box 1or box 2 and select an Integration Level]

1. Uniform FormulaThe Employer will allocate contributions for aPlan Year, if any, to the IRA accounts of EligibleEmployees in an amount equal to a uniform

14 Do not detach. Keep in this booklet for your records. Make copies for all eligible employees.

percentage of each employees Compensation forthe Plan Year. In no event will the contributionallocated to an employees IRA by this formulaexceed 25% of the employees Compensation for the Plan Year or $40,000, as adjusted by the U.S.Treasury (or such other maximum amount as maybe permitted), whichever is less. For purposes of the25% limitation described in the preceding sentence,an employees compensation does not include anyelective deferral described in Code section 402(g)(3)or any amount that is contributed by the employerat the election of the employee and that is notincludible in the gross income of the employee under Code sections 125, 132(f)(4) or 457.

2. Integrated FormulaThe Employer shall determine the total amount of contributions, if any, to make for a year. TheEmployer contributions will then be allocated amongthe IRA accounts of Eligible Employees using theformula set forth in Steps One, Two, Three and Fourbelow. In no event will the contribution allocated toan employees IRA by this formula exceed 25% of theemployees Compensation for the Plan or $40,000, as adjusted by the U.S. Treasury (or such othermaximum amount as may be permitted), whicheveris less. For purposes of the 25% limitation describedin the preceding sentence, an employees compensationdoes not include any elective deferral described inCode section 402(g)(3) or any amount that iscontributed by the employer at the election of the employee and that is not includible in the gross income of the employee under Code sections 125,132(f)(4) or 457.

The following definitions must be used when applying thisintegration formula:

Excess Compensation is Compensation above the Integration Level.

Integration Level is _________% of the Taxable Wage Base (1-100)

in effect on the first day of the Plan Year for whichcontributions are made.

Taxable Wage Base means the contribution and benefitbase in effect under section 230 of the Social Security Act atthe beginning of the Plan Year (i.e., the maximum amountof employee compensation on which the employer must

pay FICA taxes for Social Security Old Age, Survivor andDisability Insurance benefits).

Maximum Disparity Rate is determined using the following table:

Integration Level Maximum(as percentage of Taxable Wage Base) Disparity Rate

100% 2.7%

More than 80% but less than 100% 2.4%

More than 20% (but not less than 1.3%$10,001) and not more than 80%

20% (or $10,000, if greater) or less 2.7%

Step One: Contributions will be allocated to each EligibleEmployees IRA in the ratio that each Eligible EmployeesCompensation for the Plan Year bears to all EligibleEmployees Compensation, but not in excess of 3% of each Eligible Employees Compensation.

Step Two: Any contributions not allocated by Step Onewill be allocated to each Eligible Employees IRA in the ratio that each Eligible Employees Excess Compensation for the year bears to the Excess Compensation of all EligibleEmployees, but not in excess of 3% of each EligibleEmployees Excess Compensation. For purposes of this StepTwo, in the case of any employee who has exceeded thecumulative permitted disparity limit described below, suchemployees total compensation for the calendar year will betaken into account.

Step Three: Any contributions not allocated by Steps One and Two will be allocated to each Eligible EmployeesIRA in the ratio that each Eligible Employees compensationplus Excess Compensation for the Plan Year bears to the sum of all Eligible Employees Compensation plus ExcessCompensation but not in excess of the Maximum DisparityRate. For purposes of this Step Three, in the case of anyemployee who has exceeded the cumulative permitteddisparity limit described below, 2 times such employeestotal compensation for the calendar year will be taken into account.

Step Four: Any contributions not allocated by Steps One, Two and Three will be allocated to each EligibleEmployees IRA in the ratio that each Eligible EmployeesCompensation bears to all Eligible Employees Compensationfor the Plan Year.

15Do not detach. Keep in this booklet for your records. Make copies for all eligible employees.

Overall permitted disparity limits:

Annual overall permitted disparity limit: Notwithstandingthe preceding paragraphs, for any calendar year this SEPbenefits any employee who benefits under another SEP orqualified plan described in Code section 401(a) maintainedby the employer that provides for permitted disparity (orimputes disparity), employer contributions will be allocatedto each employees IRA in the ratio that the employees totalcompensation for the calendar year bears to all employeestotal compensation for that year.

Cumulative permitted disparity limit: Effective for calendar years beginning on or after January 1, 1995, the cumulative permitted disparity limit for an employee is 35 total cumulative permitted disparity years. Totalcumulative permitted disparity years means the number of years credited to the employee for allocation or accrualpurposes under this SEP or any other SEP or any qualifiedplan described in Code section 401(a) (whether or notterminated) ever maintained by the employer. For purposes of determining the employees cumulativepermitted disparity limit, all years ending in the samecalendar year are treated as the same year. If the employeehas not benefited under a defined benefit or target benefitplan for any year beginning on or after January 1, 1994, the employee has no cumulative permitted disparity limit.

Whichever allocation formula is used, the Employer shall communicate to all Eligible Employees, in writing, the amount, if any, of the contribution for each Plan Year, and contributions shall be made on behalf of each EligibleEmployee to the custodian of the employees IRA on orbefore the employers tax filing date (including extensions)for the Plan Year for which the contribution is made.

E. Establishment of Employees SEP IRA

Each Eligible Employee must establish a SEP IRA accountusing a traditional IRA approved by the Internal RevenueService under Section 408 of the Code such as the MorganStanley IRA. If an Eligible Employee does not establish anIRA account, the Employer may establish an IRA on behalfof the employee.

F. Coordination with Other Plans

1. Salary Reduction SEPs. The Employer may allowEligible Employees to make elective deferrals to theirSEP IRA accounts if the Employer adopted a SalaryReduction SEP (a SAR-SEP) before January 1, 1997.An Employer who has a pre-1997 SAR-SEP mayamend its plan by adopting the Morgan Stanley SalaryReduction SEP. Employees who first become eligibleafter 1996 may enroll in a SAR-SEP adopted before1997. The Employer may guarantee compliance with the top heavy rules by making an annual SEPcontribution of at least 3% of Compensation to the IRA accounts of all Eligible Employees. (Seediscussions of top heavy rules below and in the Morgan Stanley Salary Reduction SEP documents.)

2. Code Section 404 and 415 Limits. Employer contributions to this SEP must be added to employerand employee contributions to all other definedcontribution plans maintained by the employer and all commonly controlled or affiliated employers (seeSection B(2) above) to determine whether the limitsimposed by Code section 404 on deductions (25% of total compensation or $40,000 per employee,whichever is less) and Code section 415 on annualadditions to employees accounts (100% of eachemployees compensation or $40,000, whicheveris less) have been reached.

3. Code Section 416 Top Heavy Rules. This SEP issubject to the top heavy rules of Code section 416 andmust be aggregated with all other defined contributionsplans maintained by the employer and all commonlycontrolled or affiliated employers (see Section B(2)above) for purposes of determining whether theemployers plans are top heavy.

G. Signatures

Signed:

Employer: Print or Type Name

By: Signature of Authorized Officer, Partner or Sole Proprietor

Date:

16 Do not detach. Keep in this booklet for your records. Make copies for all eligible employees.

17

18

How to Report Deductions forContributions to SEP Plans

Self-employed individuals who are sole proprietorsIf a self-employed individual makes SEP contributions, the amount contributed for all employees (excluding theirown account) is reported on Schedule C, Form 1040 under Deductions on the line designated Pension and Profit-Sharing Plans.

PartnershipsSEP contributions made by a partnership are reported on page 1 of Form 1065 under Deductions. The totalamount contributed for all employees is entered on theline Retirement Plans, etc. The total contribution madeon behalf of the partners is entered on the line Paymentsfor Partners to Simplified Employee Pension.

CorporationsThe total amount of SEP contributions made for allemployees is reported on page 1 of Form 1120. The SEP contribution is entered on the line Pension, profit-sharing, etc. plans under Deductions. For tax optioncorporations or S Corporations, the total SEP contributionis reported on page 1 of Form 1120S on the line Pension,profit-sharing, etc. plans.

Your Morgan Stanley Financial Advisor will be glad toanswer any further questions you may have about theMorgan Stanley SEP or the IRA. However, your tax advisor or attorney should be consulted as to the specific tax consequences and benefits of a SEP for your business.

Instructions for Completing the Contribution Sheet1. Ask your Morgan Stanley Financial Advisor for IRA

Adoption booklets for each Eligible Employee. Afterreading the information in the IRA Adoption booklet,each employee should complete and sign the IRAAdoption Agreement. Employees should detach theAdoption Agreement and submit it to the employer, and retain the IRA booklet for reference.

2. For plans with more than one participant, compileemployee names and contribution amounts on theContribution Sheet under Contribution Information.Total the contributions and enter that figure in the boxunder Total Contributions. Please make extra copies ofthe Contribution Sheet if additional forms are neededand make reference to those pages in the box AdditionalSheets Attached. Your Morgan Stanley FinancialAdvisor will assign IRA account numbers when all thepaperwork is received. He or she will then send you a copy of the original contribution sheet complete with account numbers for your use in making future contributions.

3. As the preparer of this contribution sheet, please signthe top of the form under Authorized Signature. Makeseparate contribution and administrative fee checkspayable to Morgan Stanley. First year annual fees arepaid when the account is established. In subsequentyears, the employees account will be charged directlyfor the annual administrative fee.

Send the Contribution Sheet(s), the employee IRA Adoption Agreements, and the checks to yourFinancial Advisor at his or her Morgan Stanley office.

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Morgan Stanley Simplified Employee Pension Contribution Sheet

Employer Name Additional Sheets Attached

This is page of pages.

Address Authorized Signature

City State Zip Financial Advisor Name

Business Telephone Attention Financial Advisor:

Please send a copy of the completed form with account numbers back to the employer.

Contribution information for the tax year ___________

Employee Name IRA Account # Contribution Amount

Subtotal $

Total from reverse and $additional sheets, if any

Total Contributions $

Please provide separate contribution and fee checks payable to Morgan Stanley.

Total Number of New Accounts

x Annual Fee $50.00

Total Fees Remitted $

Fee check must be included when new accounts are established.

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Employee Name IRA Account # Contribution Amount

Subtotal $

Investments and services are offered through Morgan Stanley & Co. Incorporated, member SIPC.

2007 Morgan Stanley

37431 09/07

NYCS 5624696 09/07