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 DECEMBER 30, 2010
                       (EXCHANGEABLE FOR SHARES OF COMMON
                              STOCK OF 3M COMPANY)


<TABLE>
=============================================================================================================
<S>                     <C>                         <C>                           <C>
ORIGINAL ISSUE DATE:    INITIAL REDEMPTION          INTEREST RATE: 2% per         MATURITY DATE:
  December 26, 2003       DATE: January 1, 2005.      annum                         December 30, 2010
                          See also "Morgan
                          Stanley Call Right"
                          below.
-------------------------------------------------------------------------------------------------------------
INTEREST ACCRUAL        INITIAL REDEMPTION          INTEREST PAYMENT              OPTIONAL
  DATE: December 26,      PERCENTAGE: See             DATE(S): Each June 30         REPAYMENT
  2003                    "Morgan Stanley Call        and December 30,              DATE(S): N/A
                          Right" below.               beginning June 30, 2004
-------------------------------------------------------------------------------------------------------------
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 3M
                              Company ("3M Stock") at the Exchange Ratio (as
                              defined below) as of the close of business on
                              such Exchange Date (or, if the Issuer has
                              previously called this Note for 3M Stock, the
                              Exchange Ratio as of the close of business on the
                              Trading Day immediately preceding the Morgan
                              Stanley Notice Date (as defined below)), 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 3M 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 3M
                              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 3M
                              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


                                      A-3
<PAGE>


                              Exchange Date (or, if the Issuer has previously
                              called this Note for 3M Stock, the Exchange Ratio
                              as of the close of business on the Trading Day
                              immediately preceding the Morgan Stanley Notice
                              Date, as adjusted for corporate events, if
                              necessary) times the Market Price (as defined
                              below) of 3M Stock (or such other Exchange
                              Property) on the Exchange Date, as determined by
                              the Calculation Agent, in lieu of such 3M Stock
                              (or such other Exchange Property).

                              The Issuer shall, or shall cause the Calculation
                              Agent to, deliver such shares of 3M 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 3M 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 3M
                              Stock (or, if applicable, any other Exchange
                              Property) is to be delivered, of the number of
                              shares of 3M 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 3M Stock Stock (or of any
                              other securities included in other Exchange
                              Property, if applicable), or, if


                                      A-4
<PAGE>


                              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, unless the Notes to be exchanged
                              represent all Notes held by the exchanging
                              holder.

No Fractional Shares......... If upon any exchange or call of this Note the
                              Issuer delivers shares of 3M Stock (and, if
                              applicable, any other stock or other securities),
                              the Issuer shall pay cash in lieu of delivering
                              any fractional share of 3M Stock (and, if
                              applicable, of any other stock or securities) in
                              an amount equal to the corresponding fractional
                              Market Price of 3M 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............... The table below sets forth the Exchange Ratio in
                              effect for any Exchange Date or other day during
                              the first one year period and each of the
                              subsequent six month periods presented (except as
                              provided under "Exchange Right" above in the case
                              of an exercise of the Exchange Right following
                              the Issuer's exercise of the Morgan Stanley Call
                              Right). Each Exchange Ratio in the table below is
                              subject to adjustment for certain corporate
                              events relating to 3M Company ("3M") described
                              under "Antidilution Adjustments" below.

<TABLE>
                                                   Exchange Period                       Exchange
                                                                                           Ratio
                              ------------------------------------------------------------------------
<S>                           <C>                                                           <C>
                              From January 30, 2004 to and including December 31, 2004
                              From January 1, 2005 to and including June 30, 2005
                              From July 1, 2005 to and including December 31, 2005
                              From January 1, 2006 to and including June 30, 2006
                              From July 1, 2006 to and including December 31, 2006
                              From January 1, 2007 to and including June 30, 2007
                              From July 1, 2007 to and including December 31, 2007
                              From January 1, 2008 to and including June 30, 2008
                              From July 1, 2008 to and including December 31, 2008
                              From January 1, 2009 to and including June 30, 2009
</TABLE>


                                      A-5
<PAGE>


<TABLE>
<S>                           <C>                                                           <C>
                              From July 1, 2009 to and including December 31, 2009
                              From January 1, 2010 to and including June 30, 2010
                              From July 1, 2010 to and including December 30, 2010
</TABLE>

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 January 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 December 27, 2010 is
                              equal to or greater than $1,000 and (ii) this
                              Note has not been called on or prior to December
                              27, 2010, the Exchange Right will be
                              automatically exercised on December 27, 2010, and
                              such date or any other date on 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 December 27, 2010, 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
                              Market Price used


                                      A-6
<PAGE>


                              by the Calculation Agent to calculate Parity will
                              be determined as provided under "Market Price"
                              below.

                              Upon automatic exercise of the Exchange Right,
                              the Trustee will deliver shares of 3M 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 3M Stock (and, if applicable, any
                              other Exchange Property) or cash due in
                              connection with such Exchange Right.

Morgan Stanley Call Right ... On or after January 1, 2005 to and including the
                              Maturity Date, the Issuer may call this Note, in
                              whole but not in part, for mandatory exchange
                              into 3M Stock (and, if applicable, any other
                              Exchange Property) at the Exchange Ratio in
                              effect on the Trading Day immediately preceding
                              the Morgan Stanley Notice Date (with respect to
                              each $1,000 principal amount of this Note), or,
                              at the Issuer's subsequent election during the
                              period from and including the Morgan Stanley
                              Notice Date to and including the third scheduled
                              Trading Day prior to the Call Date, the cash
                              value of such shares of 3M Stock determined by
                              the Calculation Agent based on the Market Price
                              of 3M 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 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 or has subsequently elected to call
                              this Note for mandatory exchange into the cash
                              value of shares of 3M Stock on or after the
                              Morgan Stanley Notice Date and 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


                                      A-7
<PAGE>


                              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 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 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 3M
                              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 3M Stock (and, if applicable, of any
                              such other stock or securities)), (iv) the number
                              of shares of 3M 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


                                      A-8
<PAGE>


                              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 3M Stock for
                              this Note and subsequently elects to deliver the
                              cash value of the shares of 3M Stock on the Call
                              Date (determined as provided above under "Morgan
                              Stanley Call Right"), the Issuer shall give
                              notice of its election on 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 3M 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 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 3M 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


                                      A-9
<PAGE>


                              Exchange Ratio and consequent adjustment to the
                              number of shares of 3M 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 Call Price), the 3M
                              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 3M 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 3M Stock or cash to the
                              Trustee for delivery to the holder of this Note.

                              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 3M 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.


                                      A-10
<PAGE>


Call Date.................... The scheduled Trading Day on or after January 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 3M 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 as of the close of business
                              on such Trading Day times the Market Price (as
                              defined below) of 3M 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 January 1, 2005 to and including December 31, 2005    $1,050
                              From January 1, 2006 to and including December 31, 2006    $1,040
                              From January 1, 2007 to and including December 31, 2007    $1,030
                              From January 1, 2008 to and including December 31, 2008    $1,020
                              From January 1, 2009 to and including December 31, 2009    $1,010
                              From January 1, 2010 to and including December 30, 2010    $1,010
</TABLE>

Market Price................. If 3M Stock (or any other security for which a
                              Market Price must be determined) is listed on a
                              national securities exchange, is a security of
                              the Nasdaq National Market or is included in the
                              OTC Bulletin Board Service ("OTC Bulletin Board")
                              operated by the National Association of
                              Securities Dealers, Inc. (the "NASD"), the Market
                              Price for one share of 3M Stock (or one unit of
                              any such other security) on any Trading Day means
                              (i) 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
                              3M Stock (or any such other security) is listed
                              or admitted to trading, (ii) if 3M Stock (or any
                              such other security) is a


                                      A-11
<PAGE>


                              security of the Nasdaq National Market (so long
                              as the Nasdaq National Market is not then a
                              national securities exchange), the Nasdaq
                              Official Closing Price published by Nasdaq
                              National Market on such day or (iii) if either
                              (a) 3M Stock (or any such other security) is
                              listed or admitted to trading on any such
                              securities exchange and such last reported sale
                              price is not obtainable or (b) 3M Stock (or any
                              such other security) is not listed or admitted to
                              trading on any such securities exchange (and, if
                              applicable, a Nasdaq Official Closing Price is
                              not published for 3M Stock (or any such other
                              security)), the last reported sale price of the
                              principal trading session on the over-the-counter
                              market as reported on the Nasdaq National Market
                              or OTC Bulletin Board on such day. If the last
                              reported sale price of the principal trading
                              session is not available pursuant to clause (i),
                              (ii) or (iii) of the preceding sentence because
                              of a Market Disruption Event (as defined below)
                              or otherwise, the Market Price for any Trading
                              Day shall be the mean, as determined by the
                              Calculation Agent, of the bid prices for 3M Stock
                              (or any such other security) obtained from as
                              many dealers in such security, but not exceeding
                              three, as shall make such bid prices available to
                              the Calculation Agent. Bids of MS & Co. (as
                              defined below) 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. A "security of the
                              Nasdaq National Market" shall include a security
                              included in any successor to such system and the
                              term "OTC Bulletin Board Service" shall 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


                                      A-12
<PAGE>


                              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 3M 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 3M Stock.

                              2. If 3M Stock is subject (i) to a stock dividend
                              (issuance of additional shares of 3M Stock) that
                              is given ratably to all holders of shares of 3M
                              Stock or (ii) to a distribution of 3M Stock as a
                              result of the triggering of any provision of the
                              corporate charter of 3M, then once the dividend
                              has become effective and 3M 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 3M 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 3M 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 3M Stock of any cash
                              dividend or special dividend or distribution that
                              is identified by 3M 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 3M as an
                              extraordinary or special dividend or
                              distribution) distributed per share of 3M Stock
                              over the immediately preceding cash dividend or
                              other cash distribution, if any, per share of 3M
                              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 Market Price
                              of 3M Stock on the Trading Day preceding the
                              "ex-dividend


                                      A-13
<PAGE>


                              date" (that is, the day on and after which
                              transactions in 3M 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
                              Market Price, the "Base Market Price") and (c)
                              the full cash value of any non-cash dividend or
                              distribution per share of 3M Stock (excluding
                              Marketable Securities, as defined in paragraph 4
                              below). Subject to the following sentence, if any
                              cash dividend or distribution of such other
                              property with respect to 3M Stock includes an
                              Extraordinary Dividend, the Exchange Ratio with
                              respect to 3M 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 Market Price, and the denominator of
                              which is the amount by which the Base Market
                              Price exceeds the Extraordinary Dividend. If any
                              Extraordinary Dividend is at least 35% of the
                              Base Market 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 3M 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) 3M Stock is
                              reclassified or changed, including, without
                              limitation, as a result of the issuance of any
                              tracking stock by 3M, (ii) 3M has been subject to
                              any merger, combination or consolidation and is
                              not the surviving entity, (iii) 3M completes a
                              statutory exchange of securities with another
                              corporation (other than pursuant to clause (ii)
                              above), (iv) 3M is liquidated, (v) 3M issues


                                      A-14
<PAGE>


                              to all of its shareholders equity securities of
                              an issuer other than 3M (other than in a
                              transaction described in clause (ii), (iii) or
                              (iv) above) (a "spinoff stock") or (vi) 3M Stock
                              is the subject of a tender or exchange offer or
                              going private transaction on all of the
                              outstanding shares. If any Reorganization Event
                              occurs, in each case as a result of which the
                              holders of 3M 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 3M 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 3M Stock continues to be outstanding,
                                 3M 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 3M Stock
                                 where 3M is not the surviving entity, the
                                 number of shares of the New Stock received
                                 with respect to one share of 3M Stock
                                 multiplied by the Exchange Ratio for 3M 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


                                      A-15
<PAGE>


                                 Reorganization Event (the "Non-Stock Exchange
                                 Property"),


                                    (a) if the combined value of the amount of
                                    Non-Stock Exchange Property received per
                                    share of 3M 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 3M Stock is less
                                    than 25% of the Market Price of 3M Stock on
                                    the Trading Day immediately prior to the
                                    effective date of such Reorganization
                                    Event, a number of shares of 3M Stock, if
                                    applicable, and of any New Stock received
                                    in connection with such Reorganization
                                    Event, if applicable, in proportion to the
                                    relative Market Prices of 3M Stock and any
                                    such New Stock, and with an aggregate value
                                    equal to the Non-Stock Exchange Property
                                    Value based on such Market 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 3M 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
                                    Market Price of 3M Stock on the Trading Day
                                    immediately prior to the effective date
                                    relating to such Reorganization Event or,
                                    if 3M 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. 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


                                      A-16
<PAGE>


                                    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 3M; 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 3M. 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 Market 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
                                    3M 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 with respect to the $1,000 principal amount
                              of each Note shall be an amount equal to:

                                 (i)  if applicable, the Market Price of 3M
                                      Stock times the Exchange Ratio then in
                                      effect; and

                                 (ii) if applicable, for each New Stock, the
                                      Market Price of such New Stock times the
                                      New Stock


                                      A-17

<PAGE>


                                      Exchange Ratio then in effect for such New
                                      Stock; and

                                 (iii) if applicable, for each Reference Basket
                                       Stock, the Market 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 Market Price of
                              3M Stock, including, without limitation, a
                              partial tender or exchange offer for 3M 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 "3M Stock" under "No Fractional
                              Shares," "Market 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
                              "3M 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 3M Stock shall be deemed
                              to refer to the applicable unit or units of such


                                      A-18
<PAGE>


                              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 3M Stock
                              or if the Issuer calls this Note for 3M 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.

Market Disruption Event...... "Market Disruption Event" means, with respect to
                              3M Stock:

                                 (i) a suspension, absence or material
                                 limitation of trading of 3M Stock on the
                                 primary market for 3M 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


                                      A-19
<PAGE>


                                 systems of the primary market for 3M Stock as
                                 a result of which the reported trading prices
                                 for 3M 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 3M 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 2% Exchangeable Notes due
                                 December 30, 2010 (Exchangeable for 3M Stock).

                              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 fluctuations
                              shall constitute a suspension, absence or
                              material limitation of trading, (4) a suspension
                              of trading in options contracts on 3M 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 3M Stock and (5) a
                              suspension, absence or material limitation of
                              trading on the primary securities market on which
                              options contracts related to


                                      A-20
<PAGE>


                              3M 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 in effect on the relevant Exchange
                              Date or on the last Trading Day prior to the
                              relevant Morgan Stanley Call Notice Date, as
                              applicable, times the Market Price of 3M 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 previously elected to pay the cash value of
                              such shares of 3M Stock on the Call Date, the
                              Market Price of 3M 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 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-21
<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-22
<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-23
<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-24
<PAGE>


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

DATED: December 26, 2003                     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-25
<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-26
<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-27
<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-28
<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-29
<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-30
<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-31
<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-32
<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-33
<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-34
<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-35
<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-36
<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-37
<PAGE>


                                                                        ANNEX A

                          OFFICIAL NOTICE OF EXCHANGE

                                          Dated: [On or after January 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 December 30, 2010 (Exchangeable for
Shares of Common Stock of 3M Company) of Morgan Stanley (CUSIP No.         )
(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 January 30, 2004 and is no
later than the Trading Day prior to the earliest of (i) the fifth scheduled
Trading Day prior to December 30, 2010, (ii) the fifth scheduled Trading Day
prior to the Call Date and (iii) in the event of a call for the cash Call
Price, the Morgan Stanley Notice Date, the Exchange Right as described in
Pricing Supplement No. 20 dated December 22, 2003 (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 3M 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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