EXHIBIT 4.1


                             FIXED RATE SENIOR NOTE


REGISTERED                                                 REGISTERED
No. FXR                                                    U.S.$
                                                           CUSIP:

     Unless this certificate is presented by an authorized representative of
The Depository Trust Company (55 Water Street, New York, New York) to the
issuer or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or such other name
as requested by an authorized representative of The Depository Trust Company
and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered
owner hereof, Cede & Co., has an interest herein.


                                      A-1

<PAGE>


                                 MORGAN STANLEY
                    SENIOR GLOBAL MEDIUM-TERM NOTE, SERIES C
                                  (Fixed Rate)

                    2% EXCHANGEABLE NOTES DUE APRIL 30, 2011
                       (EXCHANGEABLE FOR SHARES OF COMMON
                     STOCK OF THE PROCTER & GAMBLE COMPANY)


<TABLE>
========================================================================================================
<S>                     <C>                         <C>                        <C>
ORIGINAL ISSUE DATE:    INITIAL REDEMPTION          INTEREST RATE: 2% pe r     MATURITY DATE:
                          DATE: March 1, 2005.        annum
                          See also "Morgan
                          Stanley Call Right"
                          below.
--------------------------------------------------------------------------------------------------------
INTEREST ACCRUAL        INITIAL REDEMPTION          INTEREST PAYMENT           OPTIONAL
  DATE:                   PERCENTAGE: See             DATE(S):                   REPAYMENT
                          "Morgan Stanley Call                                   DATE(S): N/A
                          Right" below.
--------------------------------------------------------------------------------------------------------
SPECIFIED CURRENCY:     ANNUAL REDEMPTION           INTEREST PAYMENT           APPLICABILITY OF
  U.S. dollars            PERCENTAGE                  PERIOD: Semi-annually      MODIFIED
                          REDUCTION: N/A                                         PAYMENT UPON
                                                                                 ACCELERATION:
                                                                                 See "Alternate
                                                                                 Exchange Calculation
                                                                                 in Case of an Event
                                                                                 of Default" below.
--------------------------------------------------------------------------------------------------------
IF SPECIFIED            REDEMPTION NOTICE           APPLICABILITY OF           If yes, state Issue Price:
  CURRENCY                PERIOD: See also            ANNUAL INTEREST
  OTHER THAN U.S.         "Morgan Stanley Notice      PAYMENTS: N/A
  DOLLARS, OPTION         Date" below.
  TO ELECT
  PAYMENT IN U.S.
  DOLLARS: N/A
--------------------------------------------------------------------------------------------------------
EXCHANGE RATE           TAX REDEMPTION AND                                     ORIGINAL YIELD TO
  AGENT: N/A            PAYMENT OF                                             MATURITY: N/A
                        ADDITIONAL
                        AMOUNTS: NO
--------------------------------------------------------------------------------------------------------
OTHER PROVISIONS:       IF YES, STATE INITIAL
  See below.            OFFERING DATE: N/A
========================================================================================================
</TABLE>

Exchange Right.............  On any Exchange Date, subject to a prior call of
                             this Note for cash in an amount equal to the
                             applicable Call Price (as defined below) by the
                             Issuer as described under "Morgan Stanley Call
                             Right" below, the holder of this Note shall be
                             entitled, upon the holder's


                                      A-2
<PAGE>


                             o  completion and delivery to the Issuer and the
                                Calculation Agent of an Official Notice of
                                Exchange (in the form of Annex A attached
                                hereto) prior to 11:00 a.m. (New York City
                                time) on such date; and

                             o  transfer of this Note to the Trustee on the
                                Issuer's behalf on or before the Exchange
                                Settlement Date (as defined below),

                             to exchange each $1,000 principal amount of this
                             Note for a number of shares of common stock of The
                             Procter & Gamble Company ("Procter & Gamble
                             Stock") at the Exchange Ratio (as defined below)
                             as of the close of business on such Exchange Date,
                             subject to any adjustment (x) to the Exchange
                             Ratio or (y) resulting in other Exchange Property
                             (as defined below) being required to be delivered
                             instead of or in addition to such Procter & Gamble
                             Stock as a result of any corporate event described
                             under "Antidilution Adjustments" below, in each
                             case, required to be made prior to the close of
                             business on such Exchange Date.

                             Upon any exercise of the Exchange Right (including
                             upon the automatic exercise of the Exchange
                             Right), the holder of this Note shall not be
                             entitled, with respect to the principal amount of
                             this Note that is exchanged, to receive any cash
                             payment representing any accrued but unpaid
                             interest on this Note. Consequently, if this Note
                             is exchanged so that the Exchange Settlement Date
                             occurs during the period from the close of
                             business on a Record Date (as defined below) for
                             the payment of interest and prior to the next
                             succeeding Interest Payment Date, this Note must,
                             as a condition to the delivery of Procter & Gamble
                             Stock, other Exchange Property or cash, be
                             accompanied by funds equal to the interest payable
                             on the succeeding Interest Payment Date on the
                             principal amount so exchanged.

                             Upon any such exchange, the Issuer may, at its
                             sole option, either deliver such shares of Procter
                             & Gamble Stock (or such other Exchange Property)
                             or pay an amount in cash for each $1,000 principal
                             amount of this Note equal to the Exchange Ratio as
                             of the close of business on such Exchange Date
                             times the Closing Price (as defined below) of
                             Procter & Gamble Stock (or such


                                      A-3
<PAGE>


                             other Exchange Property) on the Exchange Date, as
                             determined by the Calculation Agent, in lieu of
                             such Procter & Gamble Stock (or such other
                             Exchange Property).

                             The Issuer shall, or shall cause the Calculation
                             Agent to, deliver such shares of Procter & Gamble
                             Stock or cash to the Trustee for delivery to the
                             holder of this Note on the third Business Day
                             after any Exchange Date, subject to delivery of
                             this Note to the Trustee on such day (such third
                             Business Day, or, if later, the day on which this
                             exercised Note is delivered to the Trustee, the
                             "Exchange Settlement Date"); provided, that upon
                             the automatic exercise of the Exchange Right, the
                             Exchange Settlement Date shall be the Maturity
                             Date.

                             Prior to 9:30 a.m. on the first Business Day
                             immediately succeeding any Exchange Date,
                             including upon the automatic exercise of the
                             Exchange Right, the Issuer shall cause the
                             Calculation Agent to provide written notice to the
                             Trustee at its New York office and to The
                             Depository Trust Company, or any successor
                             depositary (the "Depositary"), on which notice the
                             Trustee and the Depositary may conclusively rely,
                             (i) of its receipt of any such "Official Notice of
                             Exchange" (which shall not be required upon the
                             automatic exercise of the Exchange Right), (ii) of
                             the Issuer's determination to deliver Procter &
                             Gamble Stock (or, if applicable, any other
                             Exchange Property to be delivered as a result of
                             any corporate event described in paragraphs 3 or 4
                             under "Antidilution Adjustments" below) or to pay
                             an equivalent amount of cash for each $1,000
                             principal amount of this Note and (iii) if Procter
                             & Gamble Stock (or, if applicable, any other
                             Exchange Property) is to be delivered, of the
                             number of shares of Procter & Gamble Stock (or the
                             amount of such other Exchange Property) to be
                             delivered for each $1,000 principal amount of this
                             Note and of the amount of any cash to be paid in
                             lieu of any fractional share of Procter & Gamble
                             Stock (or of any other securities included in
                             other Exchange Property, if applicable), or, if
                             cash is to be paid, of the amount of such cash for
                             each $1,000 principal amount of this Note.

Minimum Exchange...........  The Exchange Right may only be exercised with
                             respect to aggregate principal amounts of $25,000
                             or greater,


                                      A-4
<PAGE>


                             unless the principal amount of this Note to be
                             exchanged represents the entire principal amount
                             of the interest in this Note beneficially owned by
                             the owner causing the exchange, as determined by
                             the Calculation Agent.

No Fractional Shares.......  If upon any exchange or call of this Note the
                             Issuer delivers shares of Procter & Gamble Stock
                             (and, if applicable, any other stock or other
                             securities), the Issuer shall pay cash in lieu of
                             delivering any fractional share of Procter &
                             Gamble Stock (and, if applicable, of any other
                             stock or securities) in an amount equal to the
                             corresponding fractional Closing Price of Procter
                             & Gamble Stock (and, if applicable, any such other
                             stock or other securities) as determined by the
                             Calculation Agent on the applicable Exchange Date
                             or on the second Trading Day immediately preceding
                             the Call Date (as defined below).

Exchange Ratio.............               , subject to adjustment for certain
                             corporate events relating to The Procter & Gamble
                             Company ("Procter & Gamble") described under
                             "Antidilution Adjustments" below.

Exchange Date..............  Any Trading Day on which a holder of this Note has
                             duly completed and delivered to the Issuer and the
                             Calculation Agent, as described under "Exchange
                             Right" above, through the Depositary an official
                             notice of exchange prior to 11:00 a.m., or if the
                             Issuer receives it after 11:00 a.m., the next
                             Trading Day; provided that such Trading Day falls
                             during the period beginning March 30, 2004 and
                             ending on the Trading Day prior to the earliest of
                             (i) the fifth scheduled Trading Day prior to the
                             Maturity Date, (ii) the fifth scheduled Trading
                             Day prior to the Call Date and (iii) in the event
                             of a call for the applicable cash Call Price as
                             described under "Morgan Stanley Call Right" below,
                             the Morgan Stanley Notice Date.

Automatic Exercise of
Exchange Right at Maturity.  Notwithstanding the procedures described under
                             "Exchange Right" above and subject to the exercise
                             of the Morgan Stanley Call Right, if (i) Parity
                             (as defined below) on April 27, 2011 is equal to
                             or greater than $1,000 and (ii) this Note has not
                             been called on or prior to April 27, 2011, the
                             Exchange Right will be automatically exercised on
                             April 27, 2011, and such date or any other date on


                                      A-5
<PAGE>


                             which the Exchange Right shall be automatically
                             exercised in accordance with this paragraph shall
                             be deemed an Exchange Date, even though the holder
                             of this Note has not delivered an Official Notice
                             of Exchange in respect of this Note or transferred
                             this Note to the Trustee; provided, that if a
                             Market Disruption Event (as defined below) occurs
                             on April 27, 2011, Parity will be determined and,
                             if applicable, the Exchange Right will be
                             automatically exercised on the immediately
                             succeeding Trading Day; provided further, that if
                             a Market Disruption Event occurs on each scheduled
                             Trading Day through and including the second
                             scheduled Trading Day prior to the Maturity Date,
                             Parity will be determined and, if applicable, the
                             Exchange Right will be automatically exercised on
                             such second scheduled Trading Day prior to the
                             Maturity Date notwithstanding the occurrence of a
                             Market Disruption Event on such day. In such
                             event, the Closing Price used by the Calculation
                             Agent to calculate Parity will be determined as
                             provided under "Closing Price" below.

                             Upon automatic exercise of the Exchange Right, the
                             Trustee will deliver shares of Procter & Gamble
                             Stock, or the cash value of those shares, as
                             described above under "Exchange Right."

                             If this Note is not surrendered for exchange on or
                             before the Exchange Settlement Date relating to an
                             automatic exercise of the Exchange Right, it shall
                             be deemed to be no longer Outstanding under, and
                             as defined in, the Senior Indenture (as defined
                             below) after said Exchange Settlement Date, except
                             with respect to the holder's right to receive
                             Procter & Gamble Stock (and, if applicable, any
                             other Exchange Property) or cash due in connection
                             with such Exchange Right.

Morgan Stanley Call Right..  On or after March 1, 2005 to and including the
                             Maturity Date, the Issuer may call this Note, in
                             whole but not in part, for mandatory exchange into
                             Procter & Gamble Stock (and, if applicable, any
                             other Exchange Property) at the Exchange Ratio
                             (with respect to each $1,000 principal amount of
                             this Note), or, at the Issuer's subsequent
                             election on the third scheduled Trading Day prior
                             to the Call Date, the cash value of such shares of
                             Procter & Gamble Stock determined by the
                             Calculation Agent based


                                      A-6
<PAGE>


                             on the Closing Price of Procter & Gamble Stock on
                             the third scheduled Trading Day prior to the Call
                             Date; provided that, if Parity (as defined below)
                             on the Trading Day immediately preceding the
                             Morgan Stanley Notice Date, as determined by the
                             Calculation Agent, is less than the Call Price (as
                             defined below) for the specified Call Date, the
                             Issuer shall pay the applicable Call Price,
                             described under "Call Price" below, in cash on the
                             Call Date.

                             Unless the Issuer has called this Note for the
                             Call Price in cash pursuant to the Morgan Stanley
                             Call Right, prior to the fifth scheduled Trading
                             Day prior to the Call Date, the holder of this
                             Note shall continue to be entitled to exchange
                             this Note and receive any amounts described under
                             "Exchange Right" above.

                             On the Morgan Stanley Notice Date, the Issuer
                             shall give notice of the Issuer's exercise of the
                             Morgan Stanley Call Right (i) to the holder of
                             this Note by mailing notice of such exercise by
                             first class mail, postage prepaid, at the holder's
                             last address as it shall appear upon the registry
                             books, (ii) to the Trustee by telephone or
                             facsimile confirmed by mailing such notice to the
                             Trustee by first class mail, postage prepaid, at
                             its New York office and (iii) to the Depositary by
                             telephone or facsimile confirmed by mailing such
                             notice to the Depositary by first class mail,
                             postage prepaid, at its New York office. Any
                             notice which is mailed in the manner herein
                             provided shall be conclusively presumed to have
                             been duly given, whether or not the holder of this
                             Note receives the notice. Failure to give notice
                             by mail, or any defect in the notice to the holder
                             of any Note shall not affect the validity of the
                             proceedings for the exercise of the Morgan Stanley
                             Call Right with respect to any other Note.

                             The notice of the Issuer's exercise of the Morgan
                             Stanley Call Right shall specify (i) the Call Date
                             (as defined below), (ii) whether Parity on the
                             Trading Day immediately prior to the Morgan
                             Stanley Notice Date, as determined by the
                             Calculation Agent, is less than the applicable
                             Call Price for the specified Call Date so that the
                             Issuer shall pay such Call Price in cash on the
                             Call Date, (iii) the place or places of payment in
                             cash (in the event of a call for the applicable
                             Call Price) or, if Parity


                                      A-7
<PAGE>


                             on the Trading Day immediately prior to the Morgan
                             Stanley Notice Date, as determined by the
                             Calculation Agent, is equal to or greater than the
                             applicable Call Price, the place or places of
                             delivery of the Procter & Gamble Stock (and, if
                             applicable, of any other Exchange Property to be
                             delivered as a result of any corporate event
                             described in paragraphs 3 or 4 under "Antidilution
                             Adjustments" below) (and of any cash to be paid in
                             lieu of any fractional share of Procter & Gamble
                             Stock (and, if applicable, of any such other stock
                             or securities)), (iv) the number of shares of
                             Procter & Gamble Stock (and, if applicable, the
                             quantity of any other Exchange Property), if any,
                             to be delivered per $1,000 principal amount of
                             this Note, (v) that such delivery shall be made
                             upon presentation and surrender of this Note and
                             (vi) that such exchange is pursuant to the Morgan
                             Stanley Call Right.

                             If the Issuer has exercised the Morgan Stanley
                             Call Right to exchange shares of Procter & Gamble
                             Stock for this Note and subsequently elects to
                             deliver the cash value of the shares of Procter &
                             Gamble Stock on the Call Date (determined as
                             provided above under "Morgan Stanley Call Right"),
                             the Issuer shall give notice of its election on or
                             prior to the Trading Day immediately following the
                             third scheduled Trading Day prior to the Call Date
                             (i) to the holder of this Note by mailing notice
                             of such exercise by first class mail, postage
                             prepaid, at the holder's last address as it shall
                             appear upon the registry books, (ii) to the
                             Trustee by telephone or facsimile confirmed by
                             mailing such notice to the Trustee by first class
                             mail, postage prepaid, at its New York office and
                             (iii) to the Depositary by telephone or facsimile
                             confirmed by mailing such notice to the Depositary
                             by first class mail, postage prepaid, at its New
                             York office. Any notice which is mailed in the
                             manner herein provided shall be conclusively
                             presumed to have been duly given, whether or not
                             the holder of this Note receives the notice.
                             Failure to give notice by mail, or any defect in
                             the notice to the holder of any Note shall not
                             affect the validity of the proceedings for the
                             exercise of the Morgan Stanley Call Right with
                             respect to any other Note. The notice of such
                             election to pay the cash value of the shares of
                             Procter & Gamble Stock shall specify (i) the place
                             or places of payment in cash, (ii) the amount of
                             cash to be delivered per $1,000 principal amount
                             of this Note and (iii) that


                                      A-8
<PAGE>


                             such delivery shall be made upon presentation and
                             surrender of this Note.

                             The notice of the Issuer's exercise of the Morgan
                             Stanley Call Right shall be given by the Issuer
                             or, at the Issuer's request, by the Trustee in the
                             name and at the expense of the Issuer.

                             If shares of Procter & Gamble Stock (and, if
                             applicable, any other Exchange Property) are to be
                             delivered and, as a result of any corporate event
                             described under "Antidilution Adjustments"
                             occurring during the period from and including the
                             Morgan Stanley Notice Date to the close of
                             business on the third Trading Day prior to the
                             Call Date, the Calculation Agent makes any
                             adjustment to the Exchange Ratio and consequent
                             adjustment to the number of shares of Procter &
                             Gamble Stock to be delivered or any adjustment to
                             the quantity of any other Exchange Property due to
                             the holder of this Note, the Calculation Agent
                             shall give prompt notice of any such adjustments
                             to the Trustee at its New York office and to the
                             Depositary, on which notice the Trustee and the
                             Depositary may conclusively rely. No adjustment to
                             the Exchange Ratio shall be made as a result of
                             any corporate event occurring after the close of
                             business on the third Trading Day prior to the
                             Call Date.

                             If this Note is so called for mandatory exchange
                             by the Issuer, then, unless the holder of this
                             Note subsequently exercises the Exchange Right
                             (the exercise of which shall not be available to
                             the holder of this Note following a call for cash
                             in an amount equal to the applicable Call Price),
                             the Procter & Gamble Stock (and, if applicable,
                             any other Exchange Property) or (in the event of a
                             call for cash in an amount equal to the applicable
                             Call Price, as described above, or a subsequent
                             election by the Issuer to deliver the cash value
                             of Procter & Gamble Stock) cash to be delivered to
                             the holder of this Note shall be delivered on the
                             Call Date fixed by the Issuer and set forth in its
                             notice of its exercise of the Morgan Stanley Call
                             Right, upon delivery of this Note to the Trustee.
                             The Issuer shall, or shall cause the Calculation
                             Agent to, deliver such shares of Procter & Gamble
                             Stock or cash to the Trustee for delivery to the
                             holder of this Note.


                                      A-9
<PAGE>


                             Upon any call by the Issuer (as described above),
                             the holder of this Note shall not receive any
                             accrued but unpaid interest on the Note for the
                             period from and including the most recent Interest
                             Payment Date to but excluding the specified Call
                             Date.

                             If this Note is not surrendered for exchange on
                             the Call Date, it shall be deemed to be no longer
                             Outstanding under, and as defined in, the Senior
                             Indenture (as defined below) after the Call Date,
                             except with respect to the holder's right to
                             receive Procter & Gamble Stock (and, if
                             applicable, any other Exchange Property) or cash
                             due in connection with the Morgan Stanley Call
                             Right.

Morgan Stanley Notice Date.  The scheduled Trading Day on which the Issuer
                             issues its notice of mandatory exchange, which
                             must be at least 30 but no more than 60 days prior
                             to the Call Date.

Call Date..................  The scheduled Trading Day on or after March 1,
                             2005 or the Maturity Date (regardless of whether
                             the Maturity Date is a scheduled Trading Day) as
                             specified by the Issuer in its notice of mandatory
                             exchange on which the Issuer shall deliver shares
                             of Procter & Gamble Stock or, at the Issuer's
                             subsequent election, the cash value of those
                             shares, or cash equal to the applicable Call Price
                             to the holder of this Note for mandatory exchange.

Parity.....................  With respect to any Trading Day, an amount equal
                             to the Exchange Ratio on such Trading Day times
                             the Closing Price (as defined below) of Procter &
                             Gamble Stock (and any other Exchange Property) on
                             such Trading Day.

Call Price.................  The table below sets forth the Call Price per each
                             $1,000 principal amount of this Note, in effect
                             for any Call Date or other day during each of the
                             periods presented.

<TABLE>
                                                  Call Period                           Call
                                                                                        Price
                             -----------------------------------------------------------------
<S>                            <C>                                                     <C>
                               From March 1, 2005 to and including April 30, 2006      103.0%
                               From May 1, 2006 to and including April 30, 2007        102.5%
                               From May 1, 2007 to and including April 30, 2008        102.0%
                               From May 1, 2008 to and including April 30, 2009        101.5%
                               From May 1, 2009 to and including April 30, 2010        101.0%
</TABLE>


                                      A-10
<PAGE>


<TABLE>
<S>                            <C>                                                     <C>
                               From May 1, 2010 to and including April 30, 2011        100.5%
</TABLE>


Closing Price..............  The Closing Price for one share of Procter &
                             Gamble Stock (or one unit of any other security
                             for which a Closing Price must be determined) on
                             any Trading Day (as defined below) means:

                             o if Procter & Gamble Stock (or any such other
                             security) is listed or admitted to trading on a
                             national securities exchange, the last reported
                             sale price, regular way, of the principal trading
                             session on such day on the principal United States
                             securities exchange registered under the
                             Securities Exchange Act of 1934, as amended (the
                             "Exchange Act"), on which Procter & Gamble Stock
                             (or any such other security) is listed or admitted
                             to trading,

                             o if Procter & Gamble Stock (or any such other
                             security) is a security of the Nasdaq National
                             Market (and provided that the Nasdaq National
                             Market is not then a national securities
                             exchange), the Nasdaq official closing price
                             published by The Nasdaq Stock Market, Inc. on such
                             day, or

                             o if Procter & Gamble Stock (or any such other
                             security) is not listed or admitted to trading on
                             any national securities exchange or a security of
                             the Nasdaq National Market but is included in the
                             OTC Bulletin Board Service (the "OTC Bulletin
                             Board") operated by the National Association of
                             Securities Dealers, Inc. (the "NASD"), the last
                             reported sale price of the principal trading
                             session on the OTC Bulletin Board on such day.

                             If Procter & Gamble Stock (or any such other
                             security) is listed or admitted to trading on any
                             national securities exchange or is a security of
                             the Nasdaq National Market but the last reported
                             sale price or Nasdaq official closing price, as
                             applicable, is not available pursuant to the
                             preceding sentence, then the Closing Price for one
                             share of Procter & Gamble Stock (or one unit of
                             any such other security) on any Trading Day will
                             mean the last reported sale price of the principal
                             trading session on the over-the-counter market as
                             reported on the Nasdaq National Market or the OTC
                             Bulletin Board on such day. If, because of a
                             Market Disruption Event (as defined below) or
                             otherwise, the last reported sale price or Nasdaq


                                      A-11
<PAGE>


                             official closing price, as applicable, for Procter
                             & Gamble Stock (or any such other security) is not
                             available pursuant to either of the two preceding
                             sentences, then the Closing Price for any Trading
                             Day will be the mean, as determined by the
                             Calculation Agent, of the bid prices for Procter &
                             Gamble Stock (or any such other security) obtained
                             from as many recognized dealers in such security,
                             but not exceeding three, as will make such bid
                             prices available to the Calculation Agent. Bids of
                             MS & Co. or any of its affiliates may be included
                             in the calculation of such mean, but only to the
                             extent that any such bid is the highest of the
                             bids obtained. The term "security of the Nasdaq
                             National Market" will include a security included
                             in any successor to such system, and the term OTC
                             Bulletin Board Service will include any successor
                             service thereto.

Trading Day................  A day, as determined by the Calculation Agent, on
                             which trading is generally conducted on the New
                             York Stock Exchange, Inc. ("NYSE"), the American
                             Stock Exchange LLC, the Nasdaq National Market,
                             the Chicago Mercantile Exchange and the Chicago
                             Board of Options Exchange and in the
                             over-the-counter market for equity securities in
                             the United States and on which a Market Disruption
                             Event has not occurred.

Calculation Agent..........  Morgan Stanley & Co. Incorporated and its
                             successors ("MS & Co.").

                             All determinations made by the Calculation Agent
                             shall be at the sole discretion of the Calculation
                             Agent and shall, in the absence of manifest error,
                             be conclusive for all purposes and binding on the
                             holder of this Note and the Issuer.

Antidilution Adjustments...  The Exchange Ratio shall be adjusted as follows:

                             1. If Procter & Gamble Stock is subject to a stock
                             split or reverse stock split, then once such split
                             has become effective, the Exchange Ratio shall be
                             adjusted to equal the product of the prior
                             Exchange Ratio and the number of shares issued in
                             such stock split or reverse stock split with
                             respect to one share of Procter & Gamble Stock.


                                      A-12
<PAGE>


                             2. If Procter & Gamble Stock is subject (i) to a
                             stock dividend (issuance of additional shares of
                             Procter & Gamble Stock) that is given ratably to
                             all holders of shares of Procter & Gamble Stock or
                             (ii) to a distribution of Procter & Gamble Stock
                             as a result of the triggering of any provision of
                             the corporate charter of Procter & Gamble, then
                             once the dividend has become effective and Procter
                             & Gamble Stock is trading ex-dividend, the
                             Exchange Ratio shall be adjusted so that the new
                             Exchange Ratio shall equal the prior Exchange
                             Ratio plus the product of (i) the number of shares
                             issued with respect to one share of Procter &
                             Gamble Stock and (ii) the prior Exchange Ratio.

                             3. There shall be no adjustments to the Exchange
                             Ratio to reflect cash dividends or other
                             distributions paid with respect to Procter &
                             Gamble Stock other than distributions described in
                             paragraph 2 and clauses (i), (iv) and (v) of the
                             first sentence of paragraph 4 and Extraordinary
                             Dividends. "Extraordinary Dividend" means each of
                             (a) the full amount per share of Procter & Gamble
                             Stock of any cash dividend or special dividend or
                             distribution that is identified by Procter &
                             Gamble as an extraordinary or special dividend or
                             distribution, (b) the excess of any cash dividend
                             or other cash distribution (that is not otherwise
                             identified by Procter & Gamble as an extraordinary
                             or special dividend or distribution) distributed
                             per share of Procter & Gamble Stock over the
                             immediately preceding cash dividend or other cash
                             distribution, if any, per share of Procter &
                             Gamble Stock that did not include an Extraordinary
                             Dividend (as adjusted for any subsequent corporate
                             event requiring an adjustment hereunder, such as a
                             stock split or reverse stock split) if such
                             distribution or excess portion of the dividend is
                             more than 5% of the Closing Price of Procter &
                             Gamble Stock on the Trading Day preceding the
                             "ex-dividend date" (that is, the day on and after
                             which transactions in Procter & Gamble Stock on an
                             organized securities exchange or trading system no
                             longer carry the right to receive that cash
                             dividend or other cash distribution) for the
                             payment of such cash dividend or other cash
                             distribution (such Closing Price, the "Base
                             Closing Price") and (c) the full cash value of any
                             non-cash dividend or distribution per share of
                             Procter & Gamble Stock (excluding Marketable
                             Securities, as defined in


                                      A-13
<PAGE>


                             paragraph 4 below). Subject to the following
                             sentence, if any cash dividend or distribution of
                             such other property with respect to Procter &
                             Gamble Stock includes an Extraordinary Dividend,
                             the Exchange Ratio with respect to Procter &
                             Gamble Stock shall be adjusted on the ex- dividend
                             date so that the new Exchange Ratio shall equal
                             the product of (i) the prior Exchange Ratio and
                             (ii) a fraction, the numerator of which is the
                             Base Closing Price, and the denominator of which
                             is the amount by which the Base Closing Price
                             exceeds the Extraordinary Dividend. If any
                             Extraordinary Dividend is at least 35% of the Base
                             Closing Price, then, instead of adjusting the
                             Exchange Ratio, upon any exchange or, if we call
                             this Note and Parity exceeds the principal amount
                             per Note, upon our call of this Note, the payment,
                             upon such exchange or call of this Note, shall be
                             determined as described in paragraph 4 below, and
                             the Extraordinary Dividend shall be allocated to
                             Reference Basket Stocks in accordance with the
                             procedures for a Reference Basket Event as
                             described in clause 3(b) of paragraph 4 below. The
                             value of the non-cash component of an
                             Extraordinary Dividend shall be determined on the
                             ex-dividend date for such distribution by the
                             Calculation Agent, whose determination shall be
                             conclusive in the absence of manifest error. A
                             distribution on Procter & Gamble Stock described
                             in clause (i), (iv) or (v) of the first sentence
                             of paragraph 4 below shall cause an adjustment to
                             the Exchange Ratio pursuant only to clause (i),
                             (iv) or (v) of the first sentence of paragraph 4,
                             as applicable.

                             4. Any of the following shall constitute a
                             Reorganization Event: (i) Procter & Gamble Stock
                             is reclassified or changed, including, without
                             limitation, as a result of the issuance of any
                             tracking stock by Procter & Gamble, (ii) Procter &
                             Gamble has been subject to any merger, combination
                             or consolidation and is not the surviving entity,
                             (iii) Procter & Gamble completes a statutory
                             exchange of securities with another corporation
                             (other than pursuant to clause (ii) above), (iv)
                             Procter & Gamble is liquidated, (v) Procter &
                             Gamble issues to all of its shareholders equity
                             securities of an issuer other than Procter &
                             Gamble (other than in a transaction described in
                             clause (ii), (iii) or (iv) above) (a "spinoff
                             stock") or (vi) Procter & Gamble Stock is the
                             subject of a tender or exchange offer or going
                             private transaction on all of the


                                      A-14
<PAGE>


                             outstanding shares. If any Reorganization Event
                             occurs, in each case as a result of which the
                             holders of Procter & Gamble Stock receive any
                             equity security listed on a national securities
                             exchange or traded on The Nasdaq National Market
                             (a "Marketable Security"), other securities or
                             other property, assets or cash (collectively
                             "Exchange Property"), upon any exchange or upon
                             our call of this Note for shares of Procter &
                             Gamble Stock, the payment with respect to the
                             $1,000 principal amount of each Note following the
                             effective date for such Reorganization Event (or,
                             if applicable, in the case of spinoff stock, the
                             ex-dividend date for the distribution of such
                             spinoff stock) shall be determined in accordance
                             with the following:

                                (1) if Procter & Gamble Stock continues to be
                                outstanding, Procter & Gamble Stock (if
                                applicable, as reclassified upon the issuance
                                of any tracking stock) at the Exchange Ratio in
                                effect on the third Trading Day prior to the
                                scheduled Maturity Date (taking into account
                                any adjustments for any distributions described
                                under clause (3)(a) below); and

                                (2) for each Marketable Security received in
                                such Reorganization Event (each a "New Stock"),
                                including the issuance of any tracking stock or
                                spinoff stock or the receipt of any stock
                                received in exchange for Procter & Gamble Stock
                                where Procter & Gamble is not the surviving
                                entity, the number of shares of the New Stock
                                received with respect to one share of Procter &
                                Gamble Stock multiplied by the Exchange Ratio
                                for Procter & Gamble Stock on the Trading Day
                                immediately prior to the effective date of the
                                Reorganization Event (the "New Stock Exchange
                                Ratio"), as adjusted to the third Trading Day
                                prior to the scheduled Maturity Date (taking
                                into account any adjustments for distributions
                                described under clause (3)(a) below); and

                                (3) for any cash and any other property or
                                securities other than Marketable Securities
                                received in such Reorganization Event (the
                                "Non-Stock Exchange Property"),


                                      A-15
<PAGE>


                                   (a) if the combined value of the amount of
                                   Non-Stock Exchange Property received per
                                   share of Procter & Gamble Stock, as
                                   determined by the Calculation Agent in its
                                   sole discretion on the effective date of
                                   such Reorganization Event (the "Non-Stock
                                   Exchange Property Value"), by holders of
                                   Procter & Gamble Stock is less than 25% of
                                   the Closing Price of Procter & Gamble Stock
                                   on the Trading Day immediately prior to the
                                   effective date of such Reorganization Event,
                                   a number of shares of Procter & Gamble
                                   Stock, if applicable, and of any New Stock
                                   received in connection with such
                                   Reorganization Event, if applicable, in
                                   proportion to the relative Closing Prices of
                                   Procter & Gamble Stock and any such New
                                   Stock, and with an aggregate value equal to
                                   the Non-Stock Exchange Property Value
                                   multiplied by the Exchange Ratio in effect
                                   for Procter & Gamble Stock on the Trading
                                   Day immediately prior to the effective date
                                   of the Reorganization Event, based on such
                                   Closing Prices, in each case as determined
                                   by the Calculation Agent in its sole
                                   discretion on the effective date of such
                                   Reorganization Event; and the number of such
                                   shares of Procter & Gamble Stock or any New
                                   Stock determined in accordance with this
                                   clause (3)(a) shall be added at the time of
                                   such adjustment to the Exchange Ratio in
                                   subparagraph (1) above and/or the New Stock
                                   Exchange Ratio in subparagraph (2) above, as
                                   applicable, or

                                   (b) if the Non-Stock Exchange Property Value
                                   is equal to or exceeds 25% of the Closing
                                   Price of Procter & Gamble Stock on the
                                   Trading Day immediately prior to the
                                   effective date relating to such
                                   Reorganization Event or, if Procter & Gamble
                                   Stock is surrendered exclusively for Non-
                                   Stock Exchange Property (in each case, a
                                   "Reference Basket Event"), an initially
                                   equal-dollar weighted basket of three
                                   Reference Basket Stocks (as defined below)
                                   with an aggregate value on the effective
                                   date of such Reorganization Event equal to
                                   the Non-Stock Exchange Property Value
                                   multiplied by the Exchange Ratio in effect
                                   for


                                      A-16
<PAGE>


                                   Procter & Gamble Stock on the Trading Day
                                   immediately prior to the effective date of
                                   the Reorganization Event. The "Reference
                                   Basket Stocks" shall be the three stocks
                                   with the largest market capitalization among
                                   the stocks that then comprise the S&P 500
                                   Index (or, if publication of such index is
                                   discontinued, any successor or substitute
                                   index selected by the Calculation Agent in
                                   its sole discretion) with the same primary
                                   Standard Industrial Classification Code
                                   ("SIC Code") as Procter & Gamble; provided,
                                   however, that a Reference Basket Stock shall
                                   not include any stock that is subject to a
                                   trading restriction under the trading
                                   restriction policies of Morgan Stanley or
                                   any of its affiliates that would materially
                                   limit the ability of Morgan Stanley or any
                                   of its affiliates to hedge the Notes with
                                   respect to such stock (a "Hedging
                                   Restriction"); provided further that if
                                   three Reference Basket Stocks cannot be
                                   identified from the S&P 500 Index by primary
                                   SIC Code for which a Hedging Restriction
                                   does not exist, the remaining Reference
                                   Basket Stock(s) shall be selected by the
                                   Calculation Agent from the largest market
                                   capitalization stock(s) within the same
                                   Division and Major Group classification (as
                                   defined by the Office of Management and
                                   Budget) as the primary SIC Code for Procter
                                   & Gamble. Each Reference Basket Stock shall
                                   be assigned a Basket Stock Exchange Ratio
                                   equal to the number of shares of such
                                   Reference Basket Stock with a Closing Price
                                   on the effective date of such Reorganization
                                   Event equal to the product of (a) the
                                   Non-Stock Exchange Property Value, (b) the
                                   Exchange Ratio in effect for Procter &
                                   Gamble Stock on the Trading Day immediately
                                   prior to the effective date of such
                                   Reorganization Event and (c) 0.3333333.

                             Following the allocation of any Extraordinary
                             Dividend to Reference Basket Stocks pursuant to
                             paragraph 3 above or any Reorganization Event
                             described in this paragraph 4, Parity on any
                             Trading Day determined by the Calculation Agent
                             upon any exchange, call or at maturity of this
                             Note


                                      A-17
<PAGE>


                             with respect to the $1,000 principal amount of
                             each Note shall be an amount equal to:

                                (i)   if applicable, the Closing Price of
                                      Procter & Gamble Stock times the Exchange
                                      Ratio then in effect; and

                                (ii)  if applicable, for each New Stock, the
                                      Closing Price of such New Stock times the
                                      New Stock Exchange Ratio then in effect
                                      for such New Stock; and

                                (iii) if applicable, for each Reference Basket
                                      Stock, the Closing Price of such
                                      Reference Basket Stock times the Basket
                                      Stock Exchange Ratio then in effect for
                                      such Reference Basket Stock.

                             In each case, the applicable Exchange Ratio
                             (including for this purpose, any New Stock
                             Exchange Ratio or Basket Stock Exchange Ratio)
                             shall be determined, as applicable, upon any
                             exchange, call or at maturity of this Note.

                             5. No adjustments to the Exchange Ratio shall be
                             required other than those specified above. The
                             adjustments specified above do not cover all of
                             the events that could affect the Closing Price of
                             Procter & Gamble Stock, including, without
                             limitation, a partial tender or exchange offer for
                             Procter & Gamble Stock.

                             For purposes of paragraph 4 above, in the case of
                             a consummated tender or exchange offer or
                             going-private transaction involving Exchange
                             Property of a particular type, Exchange Property
                             shall be deemed to include the amount of cash or
                             other property paid by the offeror in the tender
                             or exchange offer with respect to such Exchange
                             Property (in an amount determined on the basis of
                             the rate of exchange in such tender or exchange
                             offer or going- private transaction). In the event
                             of a tender or exchange offer or a going-private
                             transaction with respect to Exchange Property in
                             which an offeree may elect to receive cash or
                             other property, Exchange Property shall be deemed
                             to include the kind and amount of cash and other
                             property received by offerees who elect to receive
                             cash.

                             Following the occurrence of any Reorganization
                             Event referred to in paragraphs 3 or 4 above, (i)
                             references to


                                      A-18
<PAGE>


                             "Procter & Gamble Stock" under "No Fractional
                             Shares," "Closing Price" and "Market Disruption
                             Event" shall be deemed to also refer to any New
                             Stock or Reference Basket Stock, and (ii) all
                             other references in this pricing supplement to
                             "Procter & Gamble Stock" shall be deemed to refer
                             to the Exchange Property into which this Note is
                             thereafter exchangeable and references to a
                             "share" or "shares" of Procter & Gamble Stock
                             shall be deemed to refer to the applicable unit or
                             units of such Exchange Property, including any New
                             Stock or Reference Basket Stock, unless the
                             context otherwise requires. The New Stock Exchange
                             Ratio(s) or Basket Stock Exchange Ratios resulting
                             from any Reorganization Event described in
                             paragraph 4 above or similar adjustment under
                             paragraph 3 above shall be subject to the
                             adjustments set forth in paragraphs 1 through 4
                             hereof.

                             No adjustment to the Exchange Ratio shall be
                             required unless such adjustment would require a
                             change of at least .1% in the Exchange Ratio then
                             in effect. The Exchange Ratio resulting from any
                             of the adjustments specified above shall be
                             rounded to the nearest ten-thousandth, with five
                             one hundred-thousandths rounded upward.

                             The Calculation Agent shall be solely responsible
                             for the determination and calculation of any
                             adjustments to the Exchange Ratio and of any
                             related determinations and calculations with
                             respect to any distributions of stock, other
                             securities or other property or assets (including
                             cash) in connection with any corporate event
                             described in paragraphs 3 or 4 above, and its
                             determinations and calculations with respect
                             thereto shall be conclusive in the absence of
                             manifest error.

                             The Calculation Agent shall provide information as
                             to any adjustments to the Exchange Ratio upon
                             written request by the holder of this Note.

                             If the holder of this Note exercises the Exchange
                             Right and the Issuer elects to deliver Procter &
                             Gamble Stock or if the Issuer calls this Note for
                             Procter & Gamble Stock, the Calculation Agent
                             shall continue to make such adjustments until, but
                             not beyond, the close of business on the Exchange
                             Date or the third Trading Day prior to the Call
                             Date, as applicable.


                                      A-19
<PAGE>


Market Disruption Event....  "Market Disruption Event" means, with respect to
                             Procter & Gamble Stock:

                                (i) a suspension, absence or material
                                limitation of trading of Procter & Gamble Stock
                                on the primary market for Procter & Gamble
                                Stock for more than two hours of trading or
                                during the one-half hour period preceding the
                                close of the principal trading session in such
                                market; or a breakdown or failure in the price
                                and trade reporting systems of the primary
                                market for Procter & Gamble Stock as a result
                                of which the reported trading prices for
                                Procter & Gamble Stock during the last one-half
                                hour preceding the close of the principal
                                trading session in such market are materially
                                inaccurate; or the suspension, absence or
                                material limitation of trading on the primary
                                market for trading in options contracts related
                                to Procter & Gamble Stock, if available, during
                                the one-half hour period preceding the close of
                                the principal trading session in the applicable
                                market, in each case as determined by the
                                Calculation Agent in its sole discretion; and

                                (ii) a determination by the Calculation Agent
                                in its sole discretion that any event described
                                in clause (i) above materially interfered with
                                the ability of the Issuer or any of its
                                affiliates to unwind or adjust all or a
                                material portion of the hedge with respect to
                                the % Exchangeable Notes due April 30, 2011
                                (Exchangeable for Shares of Common Stock of The
                                Procter & Gamble Company).

                             For purposes of determining whether a Market
                             Disruption Event has occurred: (1) a limitation on
                             the hours or number of days of trading shall not
                             constitute a Market Disruption Event if it results
                             from an announced change in the regular business
                             hours of the relevant exchange, (2) a decision to
                             permanently discontinue trading in the relevant
                             options contract shall not constitute a Market
                             Disruption Event, (3) limitations pursuant to NYSE
                             Rule 80A (or any applicable rule or regulation
                             enacted or promulgated by the NYSE, any other
                             self-regulatory organization or the Securities and
                             Exchange Commission of scope similar to NYSE Rule
                             80A as determined by the Calculation Agent) on
                             trading during significant market


                                      A-20
<PAGE>


                             fluctuations shall constitute a suspension,
                             absence or material limitation of trading, (4) a
                             suspension of trading in options contracts on
                             Procter & Gamble Stock by the primary securities
                             market trading in such options, if available, by
                             reason of (x) a price change exceeding limits set
                             by such securities exchange or market, (y) an
                             imbalance of orders relating to such contracts or
                             (z) a disparity in bid and ask quotes relating to
                             such contracts shall constitute a suspension,
                             absence or material limitation of trading in
                             options contracts related to Procter & Gamble
                             Stock and (5) a suspension, absence or material
                             limitation of trading on the primary securities
                             market on which options contracts related to
                             Procter & Gamble Stock are traded shall not
                             include any time when such securities market is
                             itself closed for trading under ordinary
                             circumstances.

Alternate Exchange
Calculation in Case of
an Event of Default........  In case an Event of Default with respect to this
                             Note shall have occurred and be continuing, the
                             amount declared due and payable per each $1,000
                             principal amount of this Note upon any
                             acceleration of this Note shall be determined by
                             MS & Co., as Calculation Agent, and shall be equal
                             to the principal amount of this Note plus any
                             accrued and unpaid interest at the Interest Rate
                             to but not including the date of acceleration;
                             provided that if (x) the holder of this Note has
                             submitted an Official Notice of Exchange to the
                             Issuer in accordance with the Exchange Right or
                             (y) the Issuer has called this Note, other than a
                             call for the applicable cash Call Price, in
                             accordance with the Morgan Stanley Call Right, the
                             amount declared due and payable upon any such
                             acceleration with respect to each $1,000 principal
                             amount of this Note (i) for which such Official
                             Notice of Exchange has been duly submitted or (ii)
                             that has been called (other than a call for the
                             applicable cash Call Price) shall be an amount in
                             cash equal to the Exchange Ratio times the Closing
                             Price of Procter & Gamble Stock (and any other
                             Exchange Property), determined by the Calculation
                             Agent as of the Exchange Date or as of the date of
                             acceleration (or if the Issuer has elected to pay
                             the cash value of such shares of Procter & Gamble
                             Stock on the Call Date, the Closing Price of
                             Procter & Gamble Stock (and any other Exchange
                             Property) as of the third scheduled Trading Day
                             prior to the Call Date), respectively, and shall
                             not include any accrued and unpaid


                                      A-21
<PAGE>


                             interest thereon; provided further that if the
                             Issuer has called this Note for the applicable
                             Call Price in cash, in accordance with the Morgan
                             Stanley Call Right, the amount declared due and
                             payable upon any such acceleration shall be an
                             amount in cash per each $1,000 principal amount of
                             this Note equal to such Call Price and shall not
                             include any accrued and unpaid interest thereon.


                                      A-22
<PAGE>


     Morgan Stanley (formerly known as Morgan Stanley Dean Witter & Co.), a
Delaware corporation (together with its successors and assigns, the "Issuer"),
for value received, hereby promises to pay to CEDE & Co., or registered
assignees, the principal sum of U.S.$       (UNITED STATES DOLLARS            ),
on the Maturity Date specified above (except to the extent redeemed or repaid
prior to maturity) and to pay interest thereon at the Interest Rate per annum
specified above, from and including the Interest Accrual Date specified above
until the principal hereof is paid or duly made available for payment weekly,
monthly, quarterly, semiannually or annually in arrears as specified above as
the Interest Payment Period on each Interest Payment Date (as specified above),
commencing on the Interest Payment Date next succeeding the Interest Accrual
Date specified above, and on the Maturity Date (or on any redemption or
repayment date); provided, however, that if the Interest Accrual Date occurs
between a Record Date, as defined below, and the next succeeding Interest
Payment Date, interest payments shall commence on the second Interest Payment
Date succeeding the Interest Accrual Date to the registered holder of this Note
on the Record Date with respect to such second Interest Payment Date; and
provided, further, that if this Note is subject to "Annual Interest Payments,"
interest payments shall be made annually in arrears and the term "Interest
Payment Date" shall be deemed to mean the first day of March in each year.

     Interest on this Note shall accrue from and including the most recent date
to which interest has been paid or duly provided for, or, if no interest has
been paid or duly provided for, from and including the Interest Accrual Date,
until but excluding the date the principal hereof has been paid or duly made
available for payment. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date shall, subject to certain exceptions
described herein, be paid to the person in whose name this Note (or one or more
predecessor Notes) is registered at the close of business on the date 15
calendar days prior to such Interest Payment Date (whether or not a Business
Day (as defined below)) (each such date, a "Record Date"); provided, however,
that interest payable at maturity (or any redemption or repayment date) shall
be payable to the person to whom the principal hereof shall be payable. As used
herein, "Business Day" means any day, other than a Saturday or Sunday, (a) that
is neither a legal holiday nor a day on which banking institutions are
authorized or required by law or regulation to close (x) in The City of New
York or (y) if this Note is denominated in a Specified Currency other than U.S.
dollars, euro or Australian dollars, in the principal financial center of the
country of the Specified Currency, or (z) if this Note is denominated in
Australian dollars, in Sydney and (b) if this Note is denominated in euro, that
is also a day on which the Trans-European Automated Real-time Gross Settlement
Express Transfer System ("TARGET") is operating (a "TARGET Settlement Day").

     Payment of the principal of this Note, any premium and the interest due at
maturity (or any redemption or repayment date), unless this Note is denominated
in a Specified Currency other than U.S. dollars and is to be paid in whole or
in part in such Specified Currency, shall be made in immediately available
funds upon surrender of this Note at the office or agency of the Paying Agent,
as defined on the reverse hereof, maintained for that purpose in the Borough of
Manhattan, The City of New York, or at such other paying agency as the Issuer
may determine, in U.S. dollars. U.S. dollar payments of interest, other than
interest due at maturity or on any date of redemption or repayment, shall be
made by U.S. dollar check mailed to the address of the person entitled thereto
as such address shall appear in the Note register. A holder of U.S. $10,000,000
(or the equivalent in a Specified Currency) or more in aggregate principal
amount of Notes having the same Interest


                                      A-23
<PAGE>


Payment Date, the interest on which is payable in U.S. dollars, shall be
entitled to receive payments of interest, other than interest due at maturity
or on any date of redemption or repayment, by wire transfer of immediately
available funds if appropriate wire transfer instructions have been received by
the Paying Agent in writing not less than 15 calendar days prior to the
applicable Interest Payment Date.

     If this Note is denominated in a Specified Currency other than U.S.
dollars, and the holder does not elect (in whole or in part) to receive payment
in U.S. dollars pursuant to the next succeeding paragraph, payments of
interest, principal or any premium with regard to this Note shall be made by
wire transfer of immediately available funds to an account maintained by the
holder hereof with a bank located outside the United States if appropriate wire
transfer instructions have been received by the Paying Agent in writing, with
respect to payments of interest, on or prior to the fifth Business Day after
the applicable Record Date and, with respect to payments of principal or any
premium, at least ten Business Days prior to the Maturity Date or any
redemption or repayment date, as the case may be; provided that, if payment of
interest, principal or any premium with regard to this Note is payable in euro,
the account must be a euro account in a country for which the euro is the
lawful currency, provided, further, that if such wire transfer instructions are
not received, such payments shall be made by check payable in such Specified
Currency mailed to the address of the person entitled thereto as such address
shall appear in the Note register; and provided, further, that payment of the
principal of this Note, any premium and the interest due at maturity (or on any
redemption or repayment date) shall be made upon surrender of this Note at the
office or agency referred to in the preceding paragraph.

     If so indicated on the face hereof, the holder of this Note, if
denominated in a Specified Currency other than U.S. dollars, may elect to
receive all or a portion of payments on this Note in U.S. dollars by
transmitting a written request to the Paying Agent, on or prior to the fifth
Business Day after such Record Date or at least ten Business Days prior to the
Maturity Date or any redemption or repayment date, as the case may be. Such
election shall remain in effect unless such request is revoked by written
notice to the Paying Agent as to all or a portion of payments on this Note at
least five Business Days prior to such Record Date, for payments of interest,
or at least ten calendar days prior to the Maturity Date or any redemption or
repayment date, for payments of principal, as the case may be.

     If the holder elects to receive all or a portion of payments of principal
of, premium, if any, and interest on this Note, if denominated in a Specified
Currency other than U.S. dollars, in U.S. dollars, the Exchange Rate Agent (as
defined on the reverse hereof) shall convert such payments into U.S. dollars.
In the event of such an election, payment in respect of this Note shall be
based upon the exchange rate as determined by the Exchange Rate Agent based on
the highest bid quotation in The City of New York received by such Exchange
Rate Agent at approximately 11:00 a.m., New York City time, on the second
Business Day preceding the applicable payment date from three recognized
foreign exchange dealers (one of which may be the Exchange Rate Agent unless
such Exchange Rate Agent is an affiliate of the Issuer) for the purchase by the
quoting dealer of U.S. dollars for the Specified Currency of U.S. dollars for
settlement on such payment date in the amount of the Specified Currency payable
in the absence of such an election to such holder and at which the applicable
dealer commits to execute a contract. If such bid quotations are not available,
such


                                      A-24
<PAGE>


payment shall be made in the Specified Currency. All currency exchange costs
shall be borne by the holder of this Note by deductions from such payments.

     Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.

     Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Note shall
not be entitled to any benefit under the Senior Indenture, as defined on the
reverse hereof, or be valid or obligatory for any purpose.


                                      A-25
<PAGE>


     IN WITNESS WHEREOF, the Issuer has caused this Note to be duly executed.

DATED:                                         MORGAN STANLEY


                                               By:
                                                  ------------------------------
                                                  Name:
                                                  Title:

TRUSTEE'S CERTIFICATE
   OF AUTHENTICATION

This is one of the Notes referred
    to in the within-mentioned Senior
    Indenture.

JPMORGAN CHASE BANK,
    as Trustee


By:
   --------------------------------------
   Authorized Officer


                                      A-26
<PAGE>


                              REVERSE OF SECURITY

     This Note is one of a duly authorized issue of Senior Global Medium-Term
Notes, Series C, having maturities more than nine months from the date of issue
(the "Notes") of the Issuer. The Notes are issuable under an Amended and
Restated Senior Indenture, dated as of May 1, 1999, between the Issuer and
JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), as Trustee
(the "Trustee," which term includes any successor trustee under the Senior
Indenture) (as may be amended or supplemented from time to time, the "Senior
Indenture"), to which Senior Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities of the Issuer, the Trustee and holders of the
Notes and the terms upon which the Notes are, and are to be, authenticated and
delivered. The Issuer has appointed JPMorgan Chase Bank at its corporate trust
office in The City of New York as the paying agent (the "Paying Agent," which
term includes any additional or successor Paying Agent appointed by the Issuer)
with respect to the Notes. The terms of individual Notes may vary with respect
to interest rates, interest rate formulas, issue dates, maturity dates, or
otherwise, all as provided in the Senior Indenture. To the extent not
inconsistent herewith, the terms of the Senior Indenture are hereby
incorporated by reference herein.

     Unless otherwise indicated on the face hereof, this Note shall not be
subject to any sinking fund and, unless otherwise provided on the face hereof
in accordance with the provisions of the following two paragraphs, shall not be
redeemable or subject to repayment at the option of the holder prior to
maturity.

     If so indicated on the face of hereof, this Note may be redeemed in whole
or in part at the option of the Issuer on or after the Initial Redemption Date
specified on the face hereof on the terms set forth on the face hereof,
together with interest accrued and unpaid hereon to the date of redemption. If
this Note is subject to "Annual Redemption Percentage Reduction," the Initial
Redemption Percentage indicated on the face hereof shall be reduced on each
anniversary of the Initial Redemption Date by the Annual Redemption Percentage
Reduction specified on the face hereof until the redemption price of this Note
is 100% of the principal amount hereof, together with interest accrued and
unpaid hereon to the date of redemption. Notice of redemption shall be mailed
to the registered holders of the Notes designated for redemption at their
addresses as the same shall appear on the Note register not less than 30 nor
more than 60 calendar days prior to the date fixed for redemption or within the
Redemption Notice Period specified on the face hereof, subject to all the
conditions and provisions of the Senior Indenture. In the event of redemption
of this Note in part only, a new Note or Notes for the amount of the unredeemed
portion hereof shall be issued in the name of the holder hereof upon the
cancellation hereof.

     If so indicated on the face of hereof, this Note shall be subject to
repayment at the option of the holder on the Optional Repayment Date or Dates
specified on the face hereof on the terms set forth herein. On any Optional
Repayment Date, this Note shall be repayable in whole or in part in increments
of $1,000 or, if this Note is denominated in a Specified Currency other than
U.S. dollars, in increments of 1,000 units of such Specified Currency (provided
that any remaining principal amount hereof shall not be less than the minimum
authorized denomination hereof) at the option of the holder hereof at a price
equal to 100% of the principal amount to be repaid, together with interest


                                      A-27
<PAGE>


accrued and unpaid hereon to the date of repayment, provided that this Note is
issued with original issue discount, this Note will be repayable on the
applicable Optional Repayment Date or Dates at the price(s) specified on the
face hereof. For this Note to be repaid at the option of the holder hereof, the
Paying Agent must receive at its corporate trust office in the Borough of
Manhattan, The City of New York, at least 15 but not more than 30 calendar days
prior to the date of repayment, (i) this Note with the form entitled "Option to
Elect Repayment" below duly completed or (ii) a telegram, telex, facsimile
transmission or a letter from a member of a national securities exchange or the
National Association of Securities Dealers, Inc. or a commercial bank or a
trust company in the United States setting forth the name of the holder of this
Note, the principal amount hereof, the certificate number of this Note or a
description of this Note's tenor and terms, the principal amount hereof to be
repaid, a statement that the option to elect repayment is being exercised
thereby and a guarantee that this Note, together with the form entitled "Option
to Elect Repayment" duly completed, shall be received by the Paying Agent not
later than the fifth Business Day after the date of such telegram, telex,
facsimile transmission or letter; provided, that such telegram, telex,
facsimile transmission or letter shall only be effective if this Note and form
duly completed are received by the Paying Agent by such fifth Business Day.
Exercise of such repayment option by the holder hereof shall be irrevocable. In
the event of repayment of this Note in part only, a new Note or Notes for the
amount of the unpaid portion hereof shall be issued in the name of the holder
hereof upon the cancellation hereof.

     Interest payments on this Note shall include interest accrued to but
excluding the Interest Payment Dates or the Maturity Date (or any earlier
redemption or repayment date), as the case may be. Unless otherwise provided on
the face hereof, interest payments for this Note shall be computed and paid on
the basis of a 360 day year of twelve 30 day months.

     In the case where the Interest Payment Date or the Maturity Date (or any
redemption or repayment date) does not fall on a Business Day, payment of
interest, premium, if any, or principal otherwise payable on such date need not
be made on such date, but may be made on the next succeeding Business Day with
the same force and effect as if made on the Interest Payment Date or on the
Maturity Date (or any redemption or repayment date), and no interest on such
payment shall accrue for the period from and after the Interest Payment Date or
the Maturity Date (or any redemption or repayment date) to such next succeeding
Business Day.

     This Note and all the obligations of the Issuer hereunder are direct,
unsecured obligations of the Issuer and rank without preference or priority
among themselves and pari passu with all other existing and future unsecured
and unsubordinated indebtedness of the Issuer, subject to certain statutory
exceptions in the event of liquidation upon insolvency.

     This Note, and any Note or Notes issued upon transfer or exchange hereof,
is issuable only in fully registered form, without coupons, and, if denominated
in U.S. dollars, unless otherwise stated above, is issuable only in
denominations of U.S. $1,000 and any integral multiple of U.S. $1,000 in excess
thereof. If this Note is denominated in a Specified Currency other than U.S.
dollars, then, unless a higher minimum denomination is required by applicable
law, it is issuable only in denominations of the equivalent of U.S. $1,000
(rounded to an integral multiple of 1,000 units of such Specified Currency), or
any amount in excess thereof which is an integral multiple of 1,000


                                      A-28
<PAGE>


units of such Specified Currency, as determined by reference to the noon dollar
buying rate in The City of New York for cable transfers of such Specified
Currency published by the Federal Reserve Bank of New York (the "Market
Exchange Rate") on the Business Day immediately preceding the date of issuance.

     The Trustee has been appointed registrar for the Notes, and the Trustee
shall maintain at its office in The City of New York a register for the
registration and transfer of Notes. This Note may be transferred at the
aforesaid office of the Trustee by surrendering this Note for cancellation,
accompanied by a written instrument of transfer in form satisfactory to the
Issuer and the Trustee and duly executed by the registered holder hereof in
person or by the holder's attorney duly authorized in writing, and thereupon
the Trustee shall issue in the name of the transferee or transferees, in
exchange herefor, a new Note or Notes having identical terms and provisions and
having a like aggregate principal amount in authorized denominations, subject
to the terms and conditions set forth herein; provided, however, that the
Trustee shall not be required (i) to register the transfer of or exchange any
Note that has been called for redemption in whole or in part, except the
unredeemed portion of Notes being redeemed in part, (ii) to register the
transfer of or exchange any Note if the holder thereof has exercised his right,
if any, to require the Issuer to repurchase such Note in whole or in part,
except the portion of such Note not required to be repurchased, or (iii) to
register the transfer of or exchange Notes to the extent and during the period
so provided in the Senior Indenture with respect to the redemption of Notes.
Notes are exchangeable at said office for other Notes of other authorized
denominations of equal aggregate principal amount having identical terms and
provisions. All such exchanges and transfers of Notes shall be free of charge,
but the Issuer may require payment of a sum sufficient to cover any tax or
other governmental charge in connection therewith. All Notes surrendered for
exchange shall be accompanied by a written instrument of transfer in form
satisfactory to the Issuer and the Trustee and executed by the registered
holder in person or by the holder's attorney duly authorized in writing. The
date of registration of any Note delivered upon any exchange or transfer of
Notes shall be such that no gain or loss of interest results from such exchange
or transfer.

     In case this Note shall at any time become mutilated, defaced or be
destroyed, lost or stolen and this Note or evidence of the loss, theft or
destruction thereof (together with the indemnity hereinafter referred to and
such other documents or proof as may be required in the premises) shall be
delivered to the Trustee, the Issuer in its discretion may execute a new Note
of like tenor in exchange for this Note, but, if this Note is destroyed, lost
or stolen, only upon receipt of evidence satisfactory to the Trustee and the
Issuer that this Note was destroyed or lost or stolen and, if required, upon
receipt also of indemnity satisfactory to each of them. All expenses and
reasonable charges associated with procuring such indemnity and with the
preparation, authentication and delivery of a new Note shall be borne by the
owner of the Note mutilated, defaced, destroyed, lost or stolen.

     The Senior Indenture provides that (a) if an Event of Default (as defined
in the Senior Indenture) due to the default in payment of principal of,
premium, if any, or interest on, any series of debt securities issued under the
Senior Indenture, including the series of Senior Medium-Term Notes of which
this Note forms a part, or due to the default in the performance or breach of
any other covenant or warranty of the Issuer applicable to the debt securities
of such series but not applicable


                                      A-29
<PAGE>


to all outstanding debt securities issued under the Senior Indenture shall have
occurred and be continuing, either the Trustee or the holders of not less than
25% in aggregate principal amount of the outstanding debt securities of each
affected series, voting as one class, by notice in writing to the Issuer and to
the Trustee, if given by the securityholders, may then declare the principal of
all debt securities of all such series and interest accrued thereon to be due
and payable immediately and (b) if an Event of Default due to a default in the
performance of any other of the covenants or agreements in the Senior Indenture
applicable to all outstanding debt securities issued thereunder, including this
Note, or due to certain events of bankruptcy, insolvency or reorganization of
the Issuer, shall have occurred and be continuing, either the Trustee or the
holders of not less than 25% in aggregate principal amount of all outstanding
debt securities issued under the Senior Indenture, voting as one class, by
notice in writing to the Issuer and to the Trustee, if given by the
securityholders, may declare the principal of all such debt securities and
interest accrued thereon to be due and payable immediately, but upon certain
conditions such declarations may be annulled and past defaults may be waived
(except a continuing default in payment of principal or premium, if any, or
interest on such debt securities) by the holders of a majority in aggregate
principal amount of the debt securities of all affected series then
outstanding.

     If the face hereof indicates that this Note is subject to "Modified
Payment upon Acceleration and Redemption," then (i) if the principal hereof is
declared to be due and payable as described in the preceding paragraph, the
amount of principal due and payable with respect to this Note shall be limited
to the aggregate principal amount hereof multiplied by the sum of the Issue
Price specified on the face hereof (expressed as a percentage of the aggregate
principal amount) plus the original issue discount amortized from the Interest
Accrual Date to the date of declaration, which amortization shall be calculated
using the "interest method" (computed in accordance with generally accepted
accounting principles in effect on the date of declaration), (ii) for the
purpose of any vote of securityholders taken pursuant to the Senior Indenture
prior to the acceleration of payment of this Note, the principal amount hereof
shall equal the amount that would be due and payable hereon, calculated as set
forth in clause (i) above, if this Note were declared to be due and payable on
the date of any such vote and (iii) for the purpose of any vote of
securityholders taken pursuant to the Senior Indenture following the
acceleration of payment of this Note, the principal amount hereof shall equal
the amount of principal due and payable with respect to this Note, calculated
as set forth in clause (i) above.

     If the face hereof indicates that this Note is subject to "Tax Redemption
and Payment of Additional Amounts," this Note may be redeemed, as a whole, at
the option of the Issuer at any time prior to maturity, upon the giving of a
notice of redemption as described below, at a redemption price equal to 100% of
the principal amount hereof, together with accrued interest to the date fixed
for redemption (except that if this Note is subject to "Modified Payment upon
Acceleration or Redemption," such redemption price would be limited to the
aggregate principal amount hereof multiplied by the sum of the Issue Price
specified on the face hereof (expressed as a percentage of the aggregate
principal amount) plus the original issue discount amortized from the Interest
Accrual Date to the date of redemption, which amortization shall be calculated
using the "interest method" (computed in accordance with generally accepted
accounting principles in effect on the date of redemption) (the "Amortized
Amount")), if the Issuer determines that, as a result of any change in or
amendment to the laws, or any regulations or rulings promulgated thereunder, of
the United States


                                      A-30
<PAGE>


or of any political subdivision or taxing authority thereof or therein
affecting taxation, or any change in official position regarding the
application or interpretation of such laws, regulations or rulings, which
change or amendment becomes effective on or after the Initial Offering Date
hereof, the Issuer has or shall become obligated to pay Additional Amounts, as
defined below, with respect to this Note as described below. Prior to the
giving of any notice of redemption pursuant to this paragraph, the Issuer shall
deliver to the Trustee (i) a certificate stating that the Issuer is entitled to
effect such redemption and setting forth a statement of facts showing that the
conditions precedent to the right of the Issuer to so redeem have occurred, and
(ii) an opinion of independent legal counsel satisfactory to the Trustee to
such effect based on such statement of facts; provided that no such notice of
redemption shall be given earlier than 60 calendar days prior to the earliest
date on which the Issuer would be obligated to pay such Additional Amounts if a
payment in respect of this Note were then due.

     Notice of redemption shall be given not less than 30 nor more than 60
calendar days prior to the date fixed for redemption or within the Redemption
Notice Period specified on the face hereof, which date and the applicable
redemption price shall be specified in the notice.

     If the face hereof indicates that this Note is subject to "Tax Redemption
and Payment of Additional Amounts," the Issuer shall, subject to certain
exceptions and limitations set forth below, pay such additional amounts (the
"Additional Amounts") to the holder of this Note who is a United States Alien
as may be necessary in order that every net payment of the principal of and
interest on this Note and any other amounts payable on this Note, after
withholding or deduction for or on account of any present or future tax,
assessment or governmental charge imposed upon or as a result of such payment
by the United States, or any political subdivision or taxing authority thereof
or therein, shall not be less than the amount provided for in this Note to be
then due and payable. The Issuer shall not, however, be required to make any
payment of Additional Amounts to any such holder who is a United States Alien
for or on account of:

          (a) any present or future tax, assessment or other governmental
     charge that would not have been so imposed but for (i) the existence of
     any present or former connection between such holder, or between a
     fiduciary, settlor, beneficiary, member or shareholder of such holder, if
     such holder is an estate, a trust, a partnership or a corporation for
     United States federal income tax purposes, and the United States,
     including, without limitation, such holder, or such fiduciary, settlor,
     beneficiary, member or shareholder, being or having been a citizen or
     resident thereof or being or having been engaged in a trade or business or
     present therein or having, or having had, a permanent establishment
     therein or (ii) the presentation by or on behalf the holder of this Note
     for payment on a date more than 15 calendar days after the date on which
     such payment became due and payable or the date on which payment thereof
     is duly provided for, whichever occurs later;

          (b) any estate, inheritance, gift, sales, transfer, excise or
     personal property tax or any similar tax, assessment or governmental
     charge;

          (c) any tax, assessment or other governmental charge imposed by
     reason of such holder's past or present status as a personal holding
     company or foreign personal holding


                                      A-31
<PAGE>


     company or controlled foreign corporation or passive foreign investment
     company with respect to the United States or as a corporation which
     accumulates earnings to avoid United States federal income tax or as a
     private foundation or other tax exempt organization or a bank receiving
     interest under Section 881(c)(3)(A) of the Internal Revenue Code of 1986,
     as amended;

          (d) any tax, assessment or other governmental charge that is payable
     otherwise than by withholding or deduction from payments on or in respect
     of this Note;

          (e) any tax, assessment or other governmental charge required to be
     withheld by any Paying Agent from any payment of principal of, or interest
     on, this Note, if such payment can be made without such withholding by any
     other Paying Agent in a city in Western Europe;

          (f) any tax, assessment or other governmental charge that would not
     have been imposed but for the failure to comply with certification,
     information or other reporting requirements concerning the nationality,
     residence or identity of the holder or beneficial owner of this Note, if
     such compliance is required by statute or by regulation of the United
     States or of any political subdivision or taxing authority thereof or
     therein as a precondition to relief or exemption from such tax, assessment
     or other governmental charge;

          (g) any tax, assessment or other governmental charge imposed by
     reason of such holder's past or present status as the actual or
     constructive owner of 10% or more of the total combined voting power of
     all classes of stock entitled to vote of the Issuer or as a direct or
     indirect subsidiary of the Issuer; or

          (h) any combination of items (a), (b), (c), (d), (e), (f) or (g).

In addition, the Issuer shall not be required to make any payment of Additional
Amounts (i) to any such holder where such withholding or deduction is imposed
on a payment to an individual and is required to be made pursuant to any law
implementing or complying with, or introduced in order to conform to, any
European Union Directive on the taxation of savings; or (ii) by or on behalf of
a holder who would have been able to avoid such withholding or deduction by
presenting this Note or the relevant coupon to another Paying Agent in a member
state of the European Union. Nor shall the Issuer pay Additional Amounts with
respect to any payment on this Note to a United States Alien who is a fiduciary
or partnership or other than the sole beneficial owner of such payment to the
extent such payment would be required by the laws of the United States (or any
political subdivision thereof) to be included in the income, for tax purposes,
of a beneficiary or settlor with respect to such fiduciary or a member of such
partnership or a beneficial owner who would not have been entitled to the
Additional Amounts had such beneficiary, settlor, member or beneficial owner
been the holder of this Note.

     The Senior Indenture permits the Issuer and the Trustee, with the consent
of the holders of not less than a majority in aggregate principal amount of the
debt securities of all series issued under the Senior Indenture then
outstanding and affected (voting as one class), to execute supplemental


                                      A-32
<PAGE>


indentures adding any provisions to or changing in any manner the rights of the
holders of each series so affected; provided that the Issuer and the Trustee
may not, without the consent of the holder of each outstanding debt security
affected thereby, (a) extend the final maturity of any such debt security, or
reduce the principal amount thereof, or reduce the rate or extend the time of
payment of interest thereon, or reduce any amount payable on redemption
thereof, or change the currency of payment thereof, or modify or amend the
provisions for conversion of any currency into any other currency, or modify or
amend the provisions for conversion or exchange of the debt security for
securities of the Issuer or other entities or for other property or the cash
value of the property (other than as provided in the antidilution provisions or
other similar adjustment provisions of the debt securities or otherwise in
accordance with the terms thereof), or impair or affect the rights of any
holder to institute suit for the payment thereof or (b) reduce the aforesaid
percentage in principal amount of debt securities the consent of the holders of
which is required for any such supplemental indenture.

     Except as set forth below, if the principal of, premium, if any, or
interest on this Note is payable in a Specified Currency other than U.S.
dollars and such Specified Currency is not available to the Issuer for making
payments hereon due to the imposition of exchange controls or other
circumstances beyond the control of the Issuer or is no longer used by the
government of the country issuing such currency or for the settlement of
transactions by public institutions within the international banking community,
then the Issuer shall be entitled to satisfy its obligations to the holder of
this Note by making such payments in U.S. dollars on the basis of the Market
Exchange Rate on the date of such payment or, if the Market Exchange Rate is
not available on such date, as of the most recent practicable date; provided,
however, that if the euro has been substituted for such Specified Currency, the
Issuer may at its option (or shall, if so required by applicable law) without
the consent of the holder of this Note effect the payment of principal of,
premium, if any, or interest on any Note denominated in such Specified Currency
in euro in lieu of such Specified Currency in conformity with legally
applicable measures taken pursuant to, or by virtue of, the Treaty establishing
the European Community, as amended. Any payment made under such circumstances
in U.S. dollars or euro where the required payment is in an unavailable
Specified Currency shall not constitute an Event of Default. If such Market
Exchange Rate is not then available to the Issuer or is not published for a
particular Specified Currency, the Market Exchange Rate shall be based on the
highest bid quotation in The City of New York received by the Exchange Rate
Agent at approximately 11:00 a.m., New York City time, on the second Business
Day preceding the date of such payment from three recognized foreign exchange
dealers (the "Exchange Dealers") for the purchase by the quoting Exchange
Dealer of the Specified Currency for U.S. dollars for settlement on the payment
date, in the aggregate amount of the Specified Currency payable to those
holders or beneficial owners of Notes and at which the applicable Exchange
Dealer commits to execute a contract. One of the Exchange Dealers providing
quotations may be the Exchange Rate Agent unless the Exchange Rate Agent is an
affiliate of the Issuer. If those bid quotations are not available, the
Exchange Rate Agent shall determine the market exchange rate at its sole
discretion.

     The "Exchange Rate Agent" shall be Morgan Stanley & Co. Incorporated,
unless otherwise indicated on the face hereof.


                                      A-33
<PAGE>


     All determinations referred to above made by, or on behalf of, the Issuer
or by, or on behalf of, the Exchange Rate Agent shall be at such entity's sole
discretion and shall, in the absence of manifest error, be conclusive for all
purposes and binding on holders of Notes and coupons.

     So long as this Note shall be outstanding, the Issuer shall cause to be
maintained an office or agency for the payment of the principal of and premium,
if any, and interest on this Note as herein provided in the Borough of
Manhattan, The City of New York, and an office or agency in said Borough of
Manhattan for the registration, transfer and exchange as aforesaid of the
Notes. The Issuer may designate other agencies for the payment of said
principal, premium and interest at such place or places (subject to applicable
laws and regulations) as the Issuer may decide. So long as there shall be such
an agency, the Issuer shall keep the Trustee advised of the names and locations
of such agencies, if any are so designated. If any European Union Directive on
the taxation of savings comes into force, the Issuer will, to the extent
possible as a matter of law, maintain a Paying Agent in a member state of the
European Union that will not be obligated to withhold or deduct tax pursuant to
any such Directive or any law implementing or complying with, or introduced in
order to conform to, such Directive.

     With respect to moneys paid by the Issuer and held by the Trustee or any
Paying Agent for payment of the principal of or interest or premium, if any, on
any Notes that remain unclaimed at the end of two years after such principal,
interest or premium shall have become due and payable (whether at maturity or
upon call for redemption or otherwise), (i) the Trustee or such Paying Agent
shall notify the holders of such Notes that such moneys shall be repaid to the
Issuer and any person claiming such moneys shall thereafter look only to the
Issuer for payment thereof and (ii) such moneys shall be so repaid to the
Issuer. Upon such repayment all liability of the Trustee or such Paying Agent
with respect to such moneys shall thereupon cease, without, however, limiting
in any way any obligation that the Issuer may have to pay the principal of or
interest or premium, if any, on this Note as the same shall become due.

     No provision of this Note or of the Senior Indenture shall alter or impair
the obligation of the Issuer, which is absolute and unconditional, to pay the
principal of, premium, if any, and interest on this Note at the time, place,
and rate, and in the coin or currency, herein prescribed unless otherwise
agreed between the Issuer and the registered holder of this Note.

     Prior to due presentment of this Note for registration of transfer, the
Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the
holder in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and none of the Issuer, the
Trustee or any such agent shall be affected by notice to the contrary.

     No recourse shall be had for the payment of the principal of, premium, if
any, or the interest on this Note, for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Senior Indenture or any
indenture supplemental thereto, against any incorporator, shareholder, officer
or director, as such, past, present or future, of the Issuer or of any
successor corporation, either directly or through the Issuer or any successor
corporation, whether by virtue of any constitution, statute or rule of law or
by the enforcement of any assessment or penalty or otherwise,


                                      A-34
<PAGE>


all such liability being, by the acceptance hereof and as part of the
consideration for the issue hereof, expressly waived and released.

     This Note shall for all purposes be governed by, and construed in
accordance with, the laws of the State of New York.

     As used herein, the term "United States Alien" means any person who is,
for United States federal income tax purposes, (i) a nonresident alien
individual, (ii) a foreign corporation, (iii) a nonresident alien fiduciary of
a foreign estate or trust or (iv) a foreign partnership one or more of the
members of which is, for United States federal income tax purposes, a
nonresident alien individual, a foreign corporation or a nonresident alien
fiduciary of a foreign estate or trust.

     All terms used in this Note which are defined in the Senior Indenture and
not otherwise defined herein shall have the meanings assigned to them in the
Senior Indenture.


                                      A-35
<PAGE>


                                 ABBREVIATIONS

     The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

          TEN COM - as tenants in common
          TEN ENT - as tenants by the entireties
          JT TEN  - as joint tenants with right of survivorship and not as
                    tenants in common

     UNIF GIFT MIN ACT - _______________________ Custodian ____________________
                                (Minor)                          (Cust)

     Under Uniform Gifts to Minors Act ________________________
                                               (State)

     Additional abbreviations may also be used though not in the above list.

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


                                      A-36
<PAGE>


     FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto


________________________________________
[PLEASE INSERT SOCIAL SECURITY OR OTHER
   IDENTIFYING NUMBER OF ASSIGNEE]


_______________________________________________________________________________

_______________________________________________________________________________

_______________________________________________________________________________
[PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE]

the within Note and all rights thereunder, hereby irrevocably constituting and
appointing such person attorney to transfer such note on the books of the
Issuer, with full power of substitution in the premises.


Dated:______________________


NOTICE:   The signature to this assignment must correspond with the name as
          written upon the face of the within Note in every particular without
          alteration or enlargement or any change whatsoever.


                                      A-37
<PAGE>


                           OPTION TO ELECT REPAYMENT

     The undersigned hereby irrevocably requests and instructs the Issuer to
repay the within Note (or portion thereof specified below) pursuant to its
terms at a price equal to the principal amount thereof, together with interest
to the Optional Repayment Date, to the undersigned at

_______________________________________________________________________________

_______________________________________________________________________________

_______________________________________________________________________________
        (Please print or typewrite name and address of the undersigned)


     If less than the entire principal amount of the within Note is to be
repaid, specify the portion thereof which the holder elects to have repaid:
___________; and specify the denomination or denominations (which shall not be
less than the minimum authorized denomination) of the Notes to be issued to the
holder for the portion of the within Note not being repaid (in the absence of
any such specification, one such Note shall be issued for the portion not being
repaid): ___________.


Dated: ____________________________________  __________________________________
                                             NOTICE: The signature on this
                                             Option to Elect Repayment must
                                             correspond with the name as
                                             written upon the face of the
                                             within instrument in every
                                             particular without alteration
                                             or enlargement.


                                      A-38
<PAGE>


                                                                        ANNEX A

                          OFFICIAL NOTICE OF EXCHANGE

                                            Dated: [On or after March 30, 2004]

Morgan Stanley                            Morgan Stanley & Co. Incorporated, as
1585 Broadway                               Calculation Agent
New York, New York 10036                  1585 Broadway
                                          New York, New York 10036
                                          Fax No.: (212) 761-0674
                                          (Attn: Meghan Maloney)

Dear Sirs:

     The undersigned holder of the Global Medium-Term Notes, Series C, Senior
Fixed Rate Notes, 2% Exchangeable Notes due April 30, 2011 (Exchangeable for
Shares of Common Stock of The Procter & Gamble Company) of Morgan Stanley
(CUSIP No. 617446MH9) (the "Notes") hereby irrevocably elects to exercise with
respect to the principal amount of the Notes indicated below, as of the date
hereof (or, if this letter is received after 11:00 a.m. on any Trading Day, as
of the next Trading Day), provided that such day is on or after March 30, 2004
and is no later than the Trading Day prior to the earliest of (i) the fifth
scheduled Trading Day prior to April 30, 2011, (ii) the fifth scheduled Trading
Day prior to the Call Date and (iii) in the event of a call for the applicable
cash Call Price, the Morgan Stanley Notice Date, the Exchange Right as
described in Pricing Supplement No. 36 dated February 20, 2004 (the "Pricing
Supplement") to the Prospectus Supplement dated August 26, 2003 and the
Prospectus dated August 26, 2003 related to Registration Statement No.
333-106789. Terms not defined herein have the meanings given to such terms in
the Pricing Supplement. Please date and acknowledge receipt of this notice in
the place provided below on the date of receipt, and fax a copy to the fax
number indicated, whereupon Morgan Stanley will deliver, at its sole option,
shares of common stock of The Procter & Gamble Company or cash on the third
business day after the Exchange Date in accordance with the terms of the Notes,
as described in the Pricing Supplement.

     The undersigned certifies to you that (i) it is, or is duly authorized to
act for, the beneficial owner of the principal amount of the Notes indicated
below its signature (and attaches evidence of such ownership as provided by the
undersigned's position services department or the position services department
of the entity through which the undersigned holds its Notes), (ii) it will
cause the principal amount of Notes to be exchanged to be transferred to the
Trustee on the Exchange Settlement Date and (iii) the principal amount of Notes
to be exchanged pursuant to this notice is equal to or greater than $25,000,
unless the Notes identified for exchange hereby constitute the undersigned's
entire holding of Notes.

     If the Exchange Settlement Date for this exchange falls after a Record
Date and prior to the succeeding Interest Payment Date, the undersigned will
deliver to the Trustee on the Exchange Settlement Date an amount of cash equal
to the interest payable on the succeeding Interest Payment Date with respect to
the principal amount of Notes to be exchanged. The amount of any such cash
payment will be determined by the Calculation Agent and indicated in its
acknowledgment of this Official Notice of Exchange.

                                              Very truly yours,


                                              _________________________________
                                              [Name of Holder]

                                              By:______________________________
                                                 [Title]

                                              _________________________________
                                              [Fax No.]

                                              $________________________________
Receipt of the above Official                 Principal Amount of Notes to be
Notice of Exchange is hereby acknowledged     surrendered for exchange
MORGAN STANLEY, as Issuer
MORGAN STANLEY & CO. INCORPORATED, as Calculation Agent
By MORGAN STANLEY & CO. INCORPORATED, as Calculation Agent

By: ________________________________
    Title:

Date and time of acknowledgment _________________
Accrued interest, if any, due upon surrender of the Notes for exchange: $______


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