Exhibit 10.2

    
       

      WARRANT TO PURCHASE
COMMON STOCK

      


      THE SECURITIES REPRESENTED BY THIS
INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR
OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT
AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT OR SUCH LAWS. THIS INSTRUMENT IS ISSUED SUBJECT TO
THE RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS OF A SECURITIES PURCHASE AGREEMENT BETWEEN THE ISSUER OF
THESE SECURITIES AND THE INVESTOR REFERRED TO THEREIN, A COPY OF WHICH IS ON
FILE WITH THE ISSUER. THE SECURITIES REPRESENTED BY THIS INSTRUMENT MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH SAID AGREEMENT. ANY SALE OR OTHER TRANSFER NOT IN COMPLIANCE
WITH SAID AGREEMENT WILL BE VOID.

      


      


       

      WARRANT

      to purchase

      65,245,759

      Shares of Common
Stock

      of MORGAN STANLEY

      


      


      Issue Date: October 28,
2008

      


      1.           Definitions. Unless the context otherwise requires,
when used herein the following terms shall have the meanings
indicated.

      


      “Affiliate” has the meaning ascribed to it in the
Purchase Agreement.

      


      “Appraisal
Procedure” means a procedure whereby two
independent appraisers, one
chosen by the Company and one by the Original Warrantholder, shall mutually
agree upon the determinations then the subject of appraisal. Each party shall
deliver a notice to the other appointing its appraiser within 15 days after the
Appraisal Procedure is invoked. If within 30 days
after appointment of the two appraisers they are unable to agree upon the amount
in question, a third independent appraiser shall be chosen within 10 days
thereafter by the mutual consent of such first two appraisers. The decision of the third appraiser so
appointed and chosen shall be given within 30 days after the selection of such
third appraiser. If three appraisers shall be appointed and the determination of
one appraiser is disparate from the middle determination by more than twice the amount by which
the other determination is disparate from the middle determination, then the
determination of such appraiser shall be excluded, the remaining two
determinations shall be averaged and such average shall be binding and
conclusive upon the Company and the
Original Warrantholder; otherwise, the average of all three
determinations

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      shall be binding upon the Company and
the Original Warrantholder. The costs of conducting any Appraisal Procedure
shall be borne by the
Company.

      


      “Board of
Directors” means the board of directors of the
Company, including any duly authorized committee thereof.

      


      “Business
Combination” means a merger, consolidation,
statutory share exchange or similar transaction that requires the approval of
the Company’s stockholders.

      


      “business
day” means any day except Saturday, Sunday
and any day on which banking institutions in the State of New York generally are authorized or required by
law or other governmental actions to close.

      


      “Capital
Stock” means (A) with respect to any Person
that is a corporation or company, any and all shares, interests, participations
or other equivalents (however designated) of capital or capital stock of
such Person and (B) with respect to any Person that is not a corporation or
company, any and all partnership or other equity interests of such
Person.

      


      “Charter” means, with respect to any Person, its
certificate or articles of
incorporation, articles of association, or similar organizational
document.

      


      “Common
Stock” has the meaning ascribed to it in the
Purchase Agreement.

      


      “Company” means the Person whose name, corporate
or other organizational form and jurisdiction of organization is set forth in
Item 1 of Schedule A hereto.

      


      “conversion” has the meaning set forth in Section
13(B).

      


      “convertible
securities” has the meaning set forth in Section 13(B).

      


      “CPP” has the meaning ascribed to it in the
Purchase Agreement.

      


      “Exchange
Act” means the Securities Exchange Act of
1934, as amended, or any successor statute, and the rules and regulations
promulgated thereunder.

      


      “Exercise
Price” means the amount set forth in Item 2 of
Schedule A hereto.

      


      “Expiration
Time” has the meaning set forth in Section
3.

      


      “Fair Market
Value” means, with respect to any security or
other property, the fair market value of such security or other property as
determined by the Board of Directors, acting in good faith or, with respect to
Section 14, as determined by the Original Warrantholder acting in good faith. For so long as the
Original Warrantholder holds this Warrant or any portion thereof, it may object
in writing to the Board of Director’s calculation of fair market value
within 10 days of receipt of written notice thereof. If the Original Warrantholder and the Company are unable
to agree on fair market value during the 10-day period following the delivery of
the Original Warrantholder’s objection, the Appraisal Procedure may
be invoked by either party to

       

      
        
          
          

        

        
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      determine Fair Market
Value by delivering written notification thereof not later than the
30th day after delivery of the Original
Warrantholder’s objection.

      


      “Governmental
Entities” has the meaning ascribed to it in the
Purchase
Agreement.

      


      “Initial
Number” has the meaning set forth in Section
13(B).

      


      “Issue
Date” means the date set forth in Item 3 of
Schedule A hereto.

      


      “Market
Price” means, with respect to a particular
security, on any given day, the last reported sale price regular way or, in case no such reported
sale takes place on such day, the average of the last closing bid and ask prices
regular way, in either case on the principal national securities exchange on
which the applicable securities are listed or admitted to trading, or if not listed or admitted to
trading on any national securities exchange, the average of the closing bid and
ask prices as furnished by two members of the Financial Industry Regulatory
Authority, Inc. selected from time to time by the Company for that purpose. “Market Price” shall be determined without reference
to after hours or extended hours trading. If such security is not listed and
traded in a manner that the quotations referred to above are available for the
period required hereunder, the Market Price per share of Common Stock
shall be deemed to be (i) in the event that any portion of the Warrant is held
by the Original Warrantholder, the fair market value per share of such security
as determined in good faith by the Original Warrantholder or (ii) in all other circumstances, the
fair market value per share of such security as determined in good faith by the
Board of Directors in reliance on an opinion of a nationally recognized
independent investment banking corporation retained by the Company for this purpose and certified in a
resolution to the Warrantholder. For the purposes of determining the Market
Price of the Common Stock on the "trading day" preceding, on or following the
occurrence of an event, (i) that trading day shall be deemed to commence immediately after the regular
scheduled closing time of trading on the New York Stock Exchange or, if trading
is closed at an earlier time, such earlier time and (ii) that trading day shall
end at the next regular scheduled closing time, or if trading is closed at an earlier time,
such earlier time (for the avoidance of doubt, and as an example, if the Market
Price is to be determined as of the last trading day preceding a specified event
and the closing time of trading on a particular day is 4:00 p.m. and the specified event occurs at
5:00 p.m. on that day, the Market Price would be determined by reference to such
4:00 p.m. closing price).

      


      “Ordinary Cash
Dividends” means a regular quarterly cash dividend on shares of Common
Stock out of surplus or net profits legally available therefor (determined in
accordance with generally accepted accounting principles in effect from time to
time), provided that Ordinary Cash Dividends shall not
include any cash dividends
paid subsequent to the Issue Date to the extent the aggregate per share
dividends paid on the outstanding Common Stock in any quarter exceed the amount
set forth in Item 4 of Schedule A hereto, as adjusted for any stock split, stock
dividend, reverse stock split,
reclassification or similar transaction.

      


      “Original
Warrantholder” means the United States Department of
the Treasury. Any actions specified to be taken by the Original Warrantholder
hereunder may only be taken by such Person and not by any other
Warrantholder.

      


      
        
          
          

        

        
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      “Permitted
Transactions” has the meaning set forth in Section
13(B).

      


      “Person” has the meaning given to it in Section
3(a)(9) of the Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange
Act.

      


      “Per Share Fair
Market Value” has the meaning set forth in Section
13(C).

      


      “Preferred
Shares” means the perpetual preferred stock
issued to the Original Warrantholder on the Issue Date pursuant
to the Purchase Agreement.

      


      “Pro Rata
Repurchases” means any purchase of shares of Common
Stock by the Company or any Affiliate thereof pursuant to (A) any tender offer
or exchange offer subject to Section 13(e) or 14(e) of the Exchange Act or Regulation
14E promulgated thereunder or (B) any other offer available to substantially all
holders of Common Stock, in the case of both (A) or (B), whether for cash,
shares of Capital Stock of the Company, other securities of the Company, evidences of indebtedness
of the Company or any other Person or any other property (including, without
limitation, shares of Capital Stock, other securities or evidences of
indebtedness of a subsidiary), or any combination thereof, effected
while this Warrant is outstanding. The
“Effective
Date” of a Pro Rata Repurchase shall mean the
date of acceptance of shares for purchase or exchange by the Company under any
tender or exchange offer which is a Pro Rata Repurchase or the date of purchase
with respect to any Pro
Rata Repurchase that is not a tender or exchange offer.

      


      “Purchase
Agreement” means the Securities Purchase Agreement
– Standard Terms incorporated into the
Letter Agreement, dated as of the date set forth in Item 5 of Schedule A
hereto, as amended from
time to time, between the Company and the United States Department of the
Treasury (the “Letter
Agreement”), including all annexes and schedules
thereto.

      


      “Qualified Equity
Offering” has the meaning ascribed to it in the
Purchase Agreement.

      


      “Regulatory
Approvals” with respect to the Warrantholder,
means, to the extent applicable and required to permit the Warrantholder to
exercise this Warrant for shares of Common Stock and to own such Common Stock
without the Warrantholder being in violation of applicable law, rule or regulation, the receipt of any
necessary approvals and authorizations of, filings and registrations with,
notifications to, or expiration or termination of any applicable waiting period
under, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and
regulations thereunder.

      


      “SEC” means the U.S. Securities and Exchange
Commission.

      


      “Securities
Act” means the Securities Act of 1933, as
amended, or any successor statute, and the rules and regulations promulgated
thereunder.

      


      “Shares” has the meaning set forth in Section
2.

      


      “trading
day” means (A) if the shares of Common Stock
are not traded on any national or regional securities exchange or
association or over-the-counter market, a business day or (B) if the shares of
Common Stock are traded on
any national or regional securities exchange or

       

      
        
          
          

        

        
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      association or over-the-counter market,
a business day on which such relevant exchange or quotation system is scheduled
to be open for business and
on which the shares of Common Stock (i) are not suspended from trading on any
national or regional securities exchange or association or over-the-counter
market for any period or periods aggregating one half hour or longer; and (ii)
have traded at least once on the national or
regional securities exchange or association or over-the-counter market that is
the primary market for the trading of the shares of Common
Stock.

      


      “U.S. GAAP” means United States generally accepted accounting
principles.

      


      “Warrantholder” has the meaning set forth in Section
2.

      


      “Warrant” means this Warrant, issued pursuant to
the Purchase Agreement.

      


      2.           Number of
Shares; Exercise Price.
This certifies that, for value received, the United States Department of the Treasury
or its permitted assigns
(the “Warrantholder”) is entitled, upon the terms and
subject to the conditions hereinafter set forth, to acquire from the Company, in
whole or in part, after the receipt of all applicable Regulatory Approvals, if
any, up to an aggregate of
the number of fully paid and nonassessable shares of Common Stock set forth in
Item 6 of Schedule A hereto, at a purchase price per share of Common Stock equal
to the Exercise Price. The number of shares of Common Stock (the “Shares”) and the Exercise Price are subject to adjustment as
provided herein, and all references to “Common Stock,” “Shares” and “Exercise Price” herein shall be deemed to include any
such adjustment or series of adjustments.

      


      3.           Exercise of
Warrant; Term. Subject to
Section 2, to the extent
permitted by applicable laws and regulations, the
right to purchase the Shares represented by this Warrant is exercisable, in
whole or in part by the Warrantholder, at any time or from time to time after
the execution and delivery of this Warrant by the Company on the date
hereof, but in no event later than 5:00 p.m., New York City time on the tenth
anniversary of the Issue Date (the “Expiration Time”), by (A) the surrender of this Warrant
and Notice of Exercise annexed hereto, duly completed and executed on behalf of the
Warrantholder, at the principal executive office of the Company located at the
address set forth in Item 7 of Schedule A hereto (or such other office or agency
of the Company in the United States as it may designate by notice in writing to the Warrantholder at
the address of the Warrantholder appearing on the books of the Company), and
(B) payment of the Exercise Price for the
Shares thereby purchased:

      


      (i) by having the Company withhold, from
the shares of Common Stock
that would otherwise be delivered to the Warrantholder upon such exercise,
shares of Common stock issuable upon exercise of the Warrant equal in value to
the aggregate Exercise Price as to which this Warrant is so exercised based on
the Market Price of the Common Stock on the
trading day on which this Warrant is exercised and the Notice of Exercise is
delivered to the Company pursuant to this Section 3, or

      


      (ii) with the consent of both the
Company and the Warrantholder, by tendering in cash, by certified or cashier’s check payable to the order of the
Company, or by wire transfer of immediately available funds to an account
designated by the Company.

      


      
        
          
          

        

        
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      If the Warrantholder does not exercise
this Warrant in its
entirety, the Warrantholder will be entitled to receive from the Company within
a reasonable time, and in any event not exceeding three business days, a new
warrant in substantially identical form for the purchase of that number of
Shares equal to the difference between the number
of Shares subject to this Warrant and the number of Shares as to which this
Warrant is so exercised. Notwithstanding anything in this Warrant to the
contrary, the Warrantholder hereby acknowledges and agrees that its exercise of this Warrant for Shares is
subject to the condition that the Warrantholder will have first received any
applicable Regulatory Approvals.

      


      4.           Issuance of
Shares; Authorization; Listing. Certificates for Shares issued upon
exercise of this
Warrant will be issued in
such name or names as the Warrantholder may designate and will be delivered to
such named Person or Persons within a reasonable time, not to exceed three
business days after the date on which this Warrant has been duly exercised in
accordance with the terms of this Warrant.
The Company hereby represents and warrants that any Shares issued upon the
exercise of this Warrant in accordance with the provisions of Section
3 will be duly and validly authorized and
issued, fully paid and nonassessable and free from all taxes, liens and charges
(other than liens or charges created by the Warrantholder, income and franchise
taxes incurred in connection with the exercise of the Warrant or taxes in respect of any
transfer occurring contemporaneously therewith). The Company agrees that the
Shares so issued will be deemed to have been issued to the Warrantholder as of
the close of business on the date on which this Warrant and payment of the Exercise Price are delivered to
the Company in accordance with the terms of this Warrant, notwithstanding that
the stock transfer books of the Company may then be closed or certificates
representing such Shares may not be actually delivered on such date. The Company will at all times
reserve and keep available, out of its authorized but unissued Common Stock,
solely for the purpose of providing for the exercise of this Warrant, the
aggregate number of shares of Common Stock then issuable upon exercise of this Warrant at any time. The
Company will (A) procure, at its sole expense, the listing of the Shares
issuable upon exercise of this Warrant at any time, subject to issuance or
notice of issuance, on all principal stock exchanges on which the
Common Stock is then listed or traded and (B)
maintain such listings of such Shares at all times after issuance. The Company
will use reasonable best efforts to ensure that the Shares may be issued without
violation of any applicable law or regulation or of any requirement of any securities exchange
on which the Shares are listed or traded.

      


      5.           No
Fractional Shares or Scrip.
No fractional Shares or scrip representing fractional Shares shall be issued upon
any exercise of this Warrant. In lieu of any fractional Share to which the Warrantholder would
otherwise be entitled, the Warrantholder shall be entitled to receive a cash
payment equal to the Market Price of the Common Stock on the last trading day
preceding the date of exercise less the pro-rated Exercise Price for such fractional
share.

      


      6.           No Rights as
Stockholders; Transfer Books. This Warrant does not entitle the
Warrantholder to any
voting rights or other
rights as a stockholder of the Company prior to the date of exercise hereof. The
Company will at no time close its transfer books against transfer of this
Warrant in any manner which interferes with the timely exercise of this
Warrant.

       

      
        
          
          

        

        
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      7.           Charges,
Taxes and Expenses.
Issuance of certificates for Shares to the Warrantholder upon the exercise of this
Warrant shall be made without charge to the Warrantholder for any issue
or transfer tax or other
incidental expense in respect of the issuance of such certificates, all of which
taxes and expenses shall be paid by the Company.

      


      
        	
                 
      

              	
                8.

              	
                Transfer/Assignment.

              


      

      


      (A)           Subject to compliance with clause (B) of
this Section 8, this Warrant and all rights hereunder are
transferable, in whole or in part, upon the books of the Company by the
registered holder hereof in person or by duly authorized attorney, and a new
warrant shall be made and delivered by the Company, of the same tenor and
date as this Warrant but registered in
the name of one or more transferees, upon surrender of this Warrant, duly
endorsed, to the office or agency of the Company described in Section 3. All
expenses (other than stock transfer taxes) and other charges payable in connection with the preparation,
execution and delivery of the new warrants pursuant to this Section 8 shall be
paid by the Company.

      


      (B)           The transfer of the Warrant and the
Shares issued upon exercise of the Warrant are subject to the restrictions
set forth in Section 4.4 of
the Purchase Agreement. If and for so long as required by the Purchase
Agreement, this Warrant shall contain the legends as set forth in Sections
4.2(a) and 4.2(b) of the Purchase Agreement.

      


      9.           Exchange and
Registry of Warrant. This
Warrant is exchangeable, upon the surrender hereof by the Warrantholder to
the Company, for a new warrant or warrants of like tenor and representing the
right to purchase the same aggregate number of Shares. The Company shall maintain a registry showing the
name and address of the Warrantholder as the registered holder of this Warrant.
This Warrant may be surrendered for exchange or exercise in accordance with its
terms, at the office of the Company, and the Company shall be entitled to rely in all respects,
prior to written notice to the contrary, upon such registry.

      


      10.           Loss, Theft,
Destruction or Mutilation of Warrant. Upon receipt by the Company
of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and
in the case of any such loss, theft or destruction, upon receipt of a bond,
indemnity or security reasonably satisfactory to the Company, or, in the case of
any such mutilation, upon surrender and cancellation of this Warrant, the Company shall make and
deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant, a new
Warrant of like tenor and representing the right to purchase the same aggregate
number of Shares as provided for in such lost, stolen, destroyed or mutilated
Warrant.

      


      11.           Saturdays,
Sundays, Holidays, etc. If
the last or appointed day for the taking of any action or the expiration of any
right required or granted herein shall not be a business day, then such action
may be taken or such right
may be exercised on the next succeeding day that is a business day.

      


      12.           Rule 144
Information. The Company
covenants that it will use its reasonable best efforts to timely file all reports and
other documents required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations promulgated by the SEC thereunder
(or, if the Company is not required to file such reports, it will, upon the request of
any

       

      
        
          
          

        

        
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      Warrantholder, make
publicly available such information as necessary to permit sales pursuant to
Rule 144 under the Securities Act), and it will use reasonable best efforts to
take such further action as
any Warrantholder may reasonably request, in each case to the extent required
from time to time to enable such holder to, if permitted by the terms of this
Warrant and the Purchase Agreement, sell this Warrant without
registration under the Securities Act within the
limitation of the exemptions provided by (A) Rule 144 under the Securities Act,
as such rule may be amended from time to time, or (B) any successor rule or
regulation hereafter adopted by the SEC. Upon the written request of any Warrantholder, the Company
will deliver to such Warrantholder a written statement that it has complied with
such requirements.

      


      13. Adjustments
and Other Rights. The
Exercise Price and the number of Shares issuable upon exercise of this Warrant
shall be subject to
adjustment from time to time as follows; provided, that if more than one subsection of
this Section 13 is applicable to a single event, the subsection shall be applied
that produces the largest adjustment and no single event shall cause
an adjustment under more
than one subsection of this Section 13 so as to result in
duplication:

      


      (A)           Stock
Splits, Subdivisions, Reclassifications or Combinations. If the Company shall (i) declare and pay a dividend or
make a distribution on its Common Stock in shares of Common Stock, (ii)
subdivide or reclassify the outstanding shares of Common Stock into a greater
number of shares, or (iii) combine or reclassify the outstanding shares of
Common Stock into a smaller number of shares, the number of Shares issuable upon exercise of this Warrant
at the time of the record date for such dividend or distribution or the
effective date of such subdivision, combination or reclassification shall be
proportionately adjusted so that the Warrantholder after such date shall be entitled to purchase the number
of shares of Common Stock which such holder would have owned or been entitled to
receive in respect of the shares of Common Stock subject to this Warrant after
such date had this Warrant been exercised immediately prior to such date. In such event, the
Exercise Price in effect at the time of the record date for such dividend or
distribution or the effective date of such subdivision, combination or
reclassification shall be adjusted to the number obtained by dividing
(x) the product of (1) the number of
Shares issuable upon the exercise of this Warrant before such adjustment and (2)
the Exercise Price in effect immediately prior to the record or effective date,
as the case may be, for the dividend, distribution, subdivision, combination or reclassification
giving rise to this adjustment by (y) the new number of Shares issuable upon
exercise of the Warrant determined pursuant to the immediately preceding
sentence.

      


      (B)           Certain
Issuances of Common Shares or Convertible Securities. Until the earlier of (i) the date on which the Original
Warrantholder no longer holds this Warrant or any portion thereof and (ii) the
third anniversary of the Issue Date, if the Company shall issue shares of Common Stock (or rights
or warrants or other securities exercisable or convertible into or exchangeable
(collectively, a “conversion”) for shares of Common Stock)
(collectively, “convertible
securities”) (other than in Permitted
Transactions (as defined
below) or a transaction to which subsection (A) of this Section 13 is
applicable) without consideration or at a consideration per share (or having a
conversion price per share) that is less than 90% of the Market Price on the
last trading day preceding the date of the agreement on
pricing such shares (or such convertible securities) then, in such
event:

      


      
        
          
          

        

        
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      (A)           the number of Shares issuable upon the
exercise of this Warrant immediately prior to the date of the agreement on pricing of
such shares (or of such convertible securities) (the “Initial
Number”) shall be increased to the number
obtained by multiplying the Initial Number by a fraction (A) the numerator of
which shall be the sum of (x) the number of shares of Common Stock of the
Company outstanding on such date and (y) the number of additional shares of
Common Stock issued (or into which convertible securities may be exercised or
convert) and (B) the denominator of which shall be the sum of (I) the number of shares of Common Stock
outstanding on such date and (II) the number of shares of Common Stock which the
aggregate consideration receivable by the Company for the total number of shares
of Common Stock so issued (or into which convertible securities may be exercised or convert)
would purchase at the Market Price on the last trading day preceding the date of
the agreement on pricing such shares (or such convertible securities);
and

      


      (B)           the Exercise Price payable upon exercise
of the Warrant shall be
adjusted by multiplying such Exercise Price in effect immediately prior to the
date of the agreement on pricing of such shares (or of such convertible
securities) by a fraction, the numerator of which shall be the number of shares
of Common Stock issuable upon exercise of this Warrant
prior to such date and the denominator of which shall be the number of shares of
Common Stock issuable upon exercise of this Warrant immediately after the
adjustment described in clause (A) above.

      


      For purposes of the foregoing, the
aggregate consideration receivable by the Company in connection with the
issuance of such shares of Common Stock or convertible securities shall be
deemed to be equal to the sum of the net offering price (including the
Fair Market Value of any non-cash
consideration and after deduction of any related expenses payable to third
parties) of all such securities plus the minimum aggregate amount, if any,
payable upon exercise or conversion of any such convertible securities
into shares of Common Stock; and
“Permitted
Transactions” shall mean issuances (i) as
consideration for or to fund the acquisition of businesses and/or related
assets, (ii) in connection with employee benefit plans and compensation related
arrangements in the
ordinary course and consistent with past practice approved by the Board of
Directors, (iii) in connection with a public or broadly marketed offering and
sale of Common Stock or convertible securities for cash conducted by the Company
or its affiliates pursuant to registration under the
Securities Act or Rule 144A thereunder on a basis consistent with capital
raising transactions by comparable financial institutions and (iv) in connection
with the exercise of preemptive rights on terms existing as of the Issue Date. Any adjustment made pursuant
to this Section 13(B) shall become effective immediately upon the date of such
issuance.

      


      (C) Other
Distributions. In case the
Company shall fix a record date for the making of a distribution to all holders
of shares of its Common
Stock of securities, evidences of indebtedness, assets, cash, rights or warrants
(excluding Ordinary Cash Dividends, dividends of its Common Stock and other
dividends or distributions referred to in Section 13(A)), in each such case, the
Exercise Price in effect prior to such
record date shall be reduced immediately thereafter to the price determined by
multiplying the Exercise Price in effect immediately prior to the reduction by
the quotient of (x) the Market Price of the Common Stock on the last trading day preceding the first
date on which the Common Stock trades regular way on the
principal

       

      
        
          
          

        

        
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      national securities
exchange on which the Common Stock is listed or admitted to trading without
the right to receive such
distribution, minus the amount of cash and/or the Fair Market Value of the
securities, evidences of indebtedness, assets, rights or warrants to be so
distributed in respect of one share of Common Stock (such amount and/or Fair
Market Value, the “Per Share
Fair Market
Value”) divided by (y) such Market Price on
such date specified in clause (x); such adjustment shall be made successively
whenever such a record date is fixed. In such event, the number of Shares
issuable upon the exercise
of this Warrant shall be increased to the number obtained by dividing (x) the
product of (1) the number of Shares issuable upon the exercise of this Warrant
before such adjustment, and (2) the Exercise Price in effect immediately prior
to the distribution giving rise to this adjustment by (y)
the new Exercise Price determined in accordance with the immediately preceding
sentence. In the case of adjustment for a cash dividend that is, or is
coincident with, a regular quarterly cash dividend, the Per Share Fair Market Value would be reduced by
the per share amount of the portion of the cash dividend that would constitute
an Ordinary Cash Dividend. In the event that such distribution is not so made,
the Exercise Price and the number of Shares issuable upon exercise of this Warrant then in effect
shall be readjusted, effective as of the date when the Board of Directors
determines not to distribute such shares, evidences of indebtedness, assets,
rights, cash or warrants, as the case may be, to the Exercise Price that would then be in effect and the
number of Shares that would then be issuable upon exercise of this Warrant if
such record date had not been fixed.

      


      (D)           Certain
Repurchases of Common Stock. In case the Company effects a Pro Rata
Repurchase of Common
Stock, then the Exercise
Price shall be reduced to the price determined by multiplying the Exercise Price
in effect immediately prior to the Effective Date of such Pro Rata Repurchase by
a fraction of which the numerator shall be (i) the product of (x) the number of shares of Common Stock
outstanding immediately before such Pro Rata Repurchase and (y) the Market Price
of a share of Common Stock on the trading day immediately preceding the first
public announcement by the Company or any of its Affiliates of the intent to effect such Pro Rata
Repurchase, minus (ii) the aggregate purchase price of the Pro Rata Repurchase,
and of which the denominator shall be the product of (i) the number of shares of
Common Stock outstanding immediately prior to such Pro Rata Repurchase minus the number of shares of
Common Stock so repurchased and (ii) the Market Price per share of Common Stock
on the trading day immediately preceding the first public announcement by the
Company or any of its Affiliates of the intent to effect such Pro Rata Repurchase. In such event,
the number of shares of Common Stock issuable upon the exercise of this Warrant
shall be increased to the number obtained by dividing (x) the product of (1) the
number of Shares issuable upon the exercise of this Warrant before such adjustment, and (2)
the Exercise Price in effect immediately prior to the Pro Rata Repurchase giving
rise to this adjustment by (y) the new Exercise Price determined in accordance
with the immediately preceding sentence. For the avoidance of doubt, no increase to the Exercise
Price or decrease in the number of Shares issuable upon exercise of this Warrant
shall be made pursuant to this Section 13(D).

      


      (E)           Business
Combinations. In case of
any Business Combination or reclassification of Common Stock (other than a
reclassification of Common Stock referred to in Section 13(A)), the
Warrantholder’s right to receive Shares upon exercise
of this Warrant shall be converted into the right to exercise this Warrant to
acquire the number of shares of stock or other securities or
property (including cash) which the Common Stock issuable (at the time of such
Business Combination or reclassification) upon exercise of this Warrant
immediately prior to such

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      Business Combination
or reclassification would have been entitled to receive upon consummation of
such Business Combination or reclassification; and in any such case, if
necessary, the provisions set forth herein with respect to the rights and
interests thereafter of the
Warrantholder shall be appropriately adjusted so as to be applicable, as nearly
as may reasonably be, to the Warrantholder’s right to exercise this Warrant in
exchange for any shares of stock or other securities or property
pursuant to this paragraph. In determining the
kind and amount of stock, securities or the property receivable upon exercise of
this Warrant following the consummation of such Business Combination, if the
holders of Common Stock have the right to elect the kind or amount of consideration receivable
upon consummation of such Business Combination, then the consideration that the
Warrantholder shall be entitled to receive upon exercise shall be deemed to be
the types and amounts of consideration received by the majority of all holders of the shares of
common stock that affirmatively make an election (or of all such holders if none
make an election).

      


      (F)           Rounding of
Calculations; Minimum Adjustments. All calculations under this
Section 13 shall be made to
the nearest one-tenth
(1/10th) of a cent or to the nearest one- hundredth (1/100th) of a share, as the
case may be. Any provision of this Section 13 to the contrary notwithstanding,
no adjustment in the Exercise Price or the number of Shares into which this
Warrant is exercisable shall be made if the
amount of such adjustment would be less than $0.01 or one-tenth (1/10th) of a
share of Common Stock, but any such amount shall be carried forward and an
adjustment with respect thereto shall be made at the time of and together with any subsequent adjustment
which, together with such amount and any other amount or amounts so carried
forward, shall aggregate $0.01 or 1/10th of a share of Common Stock, or
more.

      


      (G)           Timing of
Issuance of Additional Common Stock Upon Certain Adjustments. In any case in which the provisions of this
Section 13 shall require that an adjustment shall become effective immediately
after a record date for an event, the Company may defer until the occurrence of such event (i)
issuing to the Warrantholder of this Warrant exercised after such record date
and before the occurrence of such event the additional shares of Common Stock
issuable upon such exercise by reason of the adjustment required by such event over and above the shares
of Common Stock issuable upon such exercise before giving effect to such
adjustment and (ii) paying to such Warrantholder any amount of cash in lieu of a
fractional share of Common Stock; provided, however, that the Company upon request shall deliver to
such Warrantholder a due bill or other appropriate instrument evidencing such
Warrantholder’s right to receive such additional
shares, and such cash, upon the occurrence of the event requiring such
adjustment.

      


      (H)           Completion of
Qualified Equity Offering.
In the event the Company (or any successor by Business Combination)
completes one or more Qualified Equity Offerings on or prior to December 31,
2009 that result in the Company (or any such successor ) receiving
aggregate gross proceeds of
not less than 100% of the aggregate liquidation preference of the Preferred
Shares (and any preferred stock issued by any such successor to the Original
Warrantholder under the CPP), the number of shares of Common Stock underlying
the portion of this Warrant then held by
the Original Warrantholder shall be thereafter reduced by a number of shares of
Common Stock equal to the product of (i) 0.5 and (ii) the number of shares
underlying

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      the Warrant on the
Issue Date (adjusted to take into account all other theretofore made adjustments
pursuant to this Section 13).

      


      (I)           Other
Events. For so long as the
Original Warrantholder holds this Warrant or any portion thereof, if any event
occurs as to which the
provisions of this Section 13 are not strictly applicable or, if strictly
applicable, would not, in the good faith judgment of the Board of Directors of
the Company, fairly and adequately protect the purchase rights of the Warrants
in accordance with the essential intent and
principles of such provisions, then the Board of Directors shall make such
adjustments in the application of such provisions, in accordance with such
essential intent and principles, as shall be reasonably necessary, in the good faith opinion of the Board
of Directors, to protect such purchase rights as aforesaid. The Exercise Price
or the number of Shares into which this Warrant is exercisable shall not be
adjusted in the event of a change in the par value of the Common Stock or a change in the jurisdiction
of incorporation of the Company.

      


      (J)           Statement
Regarding Adjustments.
Whenever the Exercise Price or the number of Shares into which this Warrant is
exercisable shall be adjusted as provided in Section 13, the Company shall
forthwith file at the principal office of the Company a statement showing in
reasonable detail the facts requiring such adjustment and the
Exercise Price that shall be in effect and the
number of Shares into which this Warrant shall be exercisable after such
adjustment, and the Company shall also cause a copy of such statement to be sent
by mail, first class postage prepaid, to each Warrantholder at the address appearing in the
Company’s records.

      


      (K)           Notice of
Adjustment Event. In the
event that the Company shall propose to take any action of the type described in this
Section 13 (but only if the action of the type described in this Section 13
would result in an
adjustment in the Exercise Price or the number of Shares into which this Warrant
is exercisable or a change in the type of securities or property to be delivered
upon exercise of this Warrant), the Company shall give notice to the
Warrantholder, in the manner set forth in Section
13(J), which notice shall specify the record date, if any, with respect to any
such action and the approximate date on which such action is to take place. Such
notice shall also set forth the facts with respect thereto as shall be reasonably necessary to
indicate the effect on the Exercise Price and the number, kind or class of
shares or other securities or property which shall be deliverable upon exercise
of this Warrant. In the case of any action which would require the fixing of a record date, such
notice shall be given at least 10 days prior to the date so fixed, and in case
of all other action, such notice shall be given at least 15 days prior to the
taking of such proposed action. Failure to give such notice, or any defect therein, shall not affect the
legality or validity of any such action.

      


      (L)           Proceedings
Prior to Any Action Requiring Adjustment. As a condition precedent to the taking of any action which would
require an adjustment pursuant to this Section 13, the Company shall take any action
which may be necessary, including obtaining regulatory, New York Stock Exchange
or stockholder approvals or exemptions, in order that the Company may thereafter
validly and legally issue as fully paid and nonassessable all shares of Common Stock that the
Warrantholder is entitled to receive upon exercise of this Warrant pursuant to
this Section 13.

      


      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      (M)         Adjustment
Rules. Any adjustments
pursuant to this Section 13 shall be made successively whenever an event
referred to herein shall occur. If an adjustment in Exercise Price made
hereunder would reduce the Exercise Price to an amount below par value of the
Common Stock, then such adjustment in Exercise Price
made hereunder shall reduce the Exercise Price to the par value of the Common
Stock.

      


      14.           Exchange. At any time following the date on
which the shares of Common Stock of the Company are no longer listed or
admitted to trading on a
national securities exchange (other than in connection with any Business
Combination), the Original Warrantholder may cause the Company to exchange all
or a portion of this Warrant for an economic interest (to be determined by the
Original Warrantholder after consultation with the
Company) of the Company classified as permanent equity under U.S. GAAP having a
value equal to the Fair Market Value of the portion of the Warrant so exchanged.
The Original Warrantholder shall calculate any Fair Market Value required to be calculated
pursuant to this Section 14, which shall not be subject to the Appraisal
Procedure.

      


      15.           No
Impairment. The Company
will not, by amendment of its Charter or through any reorganization, transfer of assets,
consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the Company, but will at all times in good faith
assist in the carrying out of all the provisions of
this Warrant and in taking of all such action as may be necessary or appropriate
in order to protect the rights of the Warrantholder.

       

      16.           Governing
Law. This Warrant will be
governed by and construed in accordance with the federal law of the United
States if and to the extent such law is applicable, and otherwise in accordance
with the laws of the State of New York applicable to contracts made and to be
performed entirely within such State. Each of the Company and the Warrantholder agrees (a) to
submit to the exclusive jurisdiction and venue of the United States District
Court for the District of Columbia for any action, suit or proceeding arising
out of or relating to this Warrant or the transactions contemplated hereby, and (b) that notice may be
served upon the Company at the address in Section 20 below and upon the
Warrantholder at the address for the Warrantholder set forth in the registry
maintained by the Company pursuant to Section 9 hereof. To the extent permitted by applicable law, each of
the Company and the Warrantholder hereby unconditionally waives trial by jury in
any legal action or proceeding relating to the Warrant or the transactions
contemplated hereby or thereby.

       

      17.           Binding
Effect.   This Warrant shall be
binding upon any successors or assigns of the Company.

      


      18.           Amendments. This Warrant may be amended and the
observance of any term of this Warrant may be waived only with the
written consent of the Company and the Warrantholder.

      


      19.           Prohibited
Actions. The Company agrees
that it will not take any action which would entitle the Warrantholder to an
adjustment of the Exercise Price if the total number of shares of Common Stock
issuable after such action upon exercise of this Warrant, together
with

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      all shares of Common
Stock then outstanding and all shares of Common Stock then issuable upon the
exercise of all outstanding options, warrants, conversion and other rights,
would exceed the total number of shares of Common Stock then authorized by its
Charter.

      


      20.           Notices. Any notice, request, instruction or
other document to be given hereunder by any party to the other will be in
writing and will be deemed to have been duly given (a) on the date of delivery
if delivered personally, or by facsimile, upon confirmation of receipt, or (b) on the
second business day following the date of dispatch if delivered by a recognized
next day courier service. All notices hereunder shall be delivered as set forth
in Item 8 of Schedule A hereto, or pursuant to such other instructions as may be designated in
writing by the party to receive such notice.

      


      21.           Entire
Agreement. This Warrant,
the forms attached hereto and Schedule A hereto (the terms of which are
incorporated by reference herein), and the Letter Agreement (including all documents incorporated
therein), contain the entire agreement between the parties with respect to the
subject matter hereof and supersede all prior and contemporaneous arrangements
or undertakings with respect thereto.

      


      [Remainder of page intentionally left
blank]

       

       

       

       

       

       

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

      [Form of Notice of
Exercise]

      


      


      Date:  _________

      


      
        	
                TO: 

              	
                Morgan
    Stanley

              


      

      


      
        	
                RE:

              	
                Election to Purchase Common
      Stock

              


      

      


      The undersigned, pursuant to the
provisions set forth in the attached Warrant, hereby agrees to subscribe for and
purchase the number of shares of the Common Stock set forth below covered by
such Warrant. The undersigned, in accordance with Section 3 of the Warrant, hereby agrees to pay the
aggregate Exercise Price for such shares of Common Stock in the manner set forth
below. A new warrant evidencing the remaining shares of Common Stock covered by
such Warrant, but not yet subscribed for and purchased, if any, should be issued in the name set
forth below.

      


      Number of Shares of Common Stock
___________________________

      


      Method of Payment of Exercise Price
(note if cashless exercise pursuant to Section 3(i) of the Warrant or cash
exercise pursuant to Section 3(ii) of the Warrant, with consent of the Company
and the Warrantholder)  ___________________________

      


      Aggregate Exercise Price:    ___________________________

       

      
        
          	 
    	
                  Holder:  
      

                	 
    	 	 
	 
    	
                  By:

                	 
    	 	 
	 
    	
                  Name:

                	 
    	 	 
	 
    	
                  Title:

                	 
    	 	 


        

      

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      IN WITNESS WHEREOF,
the Company has caused this Warrant to be duly executed by a duly authorized
officer.

      


      Dated:   October 28,
2008

       

      
        
          	 
    	
                  MORGAN
    STANLEY

                	 
	 
    	 
    	 	 	 
	 
    	 
    	 	 	 
	 
    	
                  By:  
      

                	/s/
      Colm Kelleher	 
	 
    	
                   

                	
                  Name:  
      

                	Colm
      Kelleher	 
	 
    	
                   

                	
                  Title:

                	Executive
      Vice President and Chief Financial Officer	 


        

         

         

        
          	 
    	
                  Attest:

                	 
	 
    	 
    	 	 	 
	 
    	 
    	 	 	 
	 
    	
                  By:  
      

                	/s/
      David K. Wong	 
	 
    	
                   

                	
                  Name:  
      

                	David
      K. Wong	 
	 
    	
                   

                	
                  Title:

                	Treasurer	 


        

         

        [Signature Page to
Warrant]

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

      

      SCHEDULE
A

       

      Item
1

      Name: Morgan Stanley

      Corporate or other organizational form:
Corporation

      Jurisdiction of organization:
Delaware

      


      Item
2


      Exercise
Price:  $22.99

      


      Item
3


      Issue Date:   October 28,
2008

      


      Item
4


      Amount of last dividend declared prior
to the Issue Date:   $0.27

      


      Item
5


      Date of Letter Agreement between the
Company and the United States Department of the Treasury: October 26,
2008

      


      Item
6


      Number of shares of Common
Stock:   65,245,759

      


      Item
7

      Company’s address:

      
        
          	 
    	
                  
                    Morgan Stanley


                    1585 Broadway 

                    New York, New York 10036

                  

                
	 
    	
                  Attention: 

                	
                  Chief
      Financial Officer: Colm Kelleher

                  Chief
      Legal Officer: Gary G. Lynch

                  Treasurer:
      David K. Wong 

                  Principal
      Accounting
      Officer: Paul C. Wirth

                
	 
    	 
    	 
    
	
                  Item 8
      

                  Notice
      information:

                
	 
    	 
    	 
    
	
                  If to the
      Company:

                
	 
    	 
    	 
    
	
                   
      

                	
                  Morgan
    Stanley

                
	 
    	
                  1585
    Broadway

                
	 
    	
                  New York, NY 10036

                
	 
    	
                  Attention:   
      

                	
                  Chief Financial Officer: Colm
      Kelleher

                
	 
    	 
    	
                  Chief Legal Officer: Gary G.
      Lynch

                
	 	 	
                  Treasurer: David K. Wong

                  Principal Accounting Officer: Paul C.
      Wirth

                


        

      

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        
          
            	 	
                    with a copy
    to:

                  
	 	 
	 
    	
                    
                      Davis Polk &
      Wardwell

                      
                        450 Lexington
      Avenue

                        New York, NY
      10017

                      

                    

                  
	 
    	
                    Attention: 

                  	
                    Jeffrey Small

                    John Brandow

                  
	 
    	 
    	 
    
	
                    If to the
      Warrantholder:

                  
	 
    	 
    	 
    
	
                     
      

                  	
                    
                      United States Department of the
      Treasury

                      1500 Pennsylvania Avenue, NW, Room
      2312

                      Washington, D.C.
      20220

                    

                  
	 
    	
                    Attention:   
      

                  	
                    Assistant General Counsel (Banking
      and Finance) 

                  
	 	Facsimile:
      	(202)
      622-1974


          

        

        
 

        2