MORGAN STANLEY EMPLOYEE STOCK PURCHASE PLAN

2.1

“ Administrator ” means the Board of Directors or such officer or officers of the Company or such committee (which need not be a committee of the Board of Directors, but, if not a committee of the Board of Directors, then the committee shall be comprised solely of officers of the Company) to whom the Board of Directors delegates authority under the Plan in accordance with Section 12.1.

2.2

“ Beneficiary ” means such person, persons, or entity as are designated pursuant to Section 12.5 to receive, upon a participant’s death, all or a portion of such Participant’s Common Stock Account and Payroll Deduction Account.

2.3

“ Board of Directors ” means the Board of Directors of the Company, or any committee of such Board of Directors as the Board of Directors may determine from time to time.

2.4

“ Bonus Investment Date ” means the payroll date on which the Company pays year-end cash bonuses to its employees generally.

2.5

“ Code ” means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto.

2.6

“ Common Stock ” means common stock, par value $0.01 per share, of the Company.

2.7

“ Common Stock Account ” means the account established with, and maintained by, the Custodian for the purpose of holding Common Stock purchased pursuant to this Plan.

2.8

“ Company ” means Morgan Stanley, a Delaware corporation, and its successors and assigns.

2.9

“ Custodian ” means the agent selected by the Company to hold Common Stock purchased under the Plan.

2.10

“ Disability ” means disability as defined under any qualified, defined benefit plan sponsored by the Company or any Subsidiary in which an Eligible Employee is a participant on the date such Eligible Employee terminates employment with the Company or any Subsidiary.

2.11

“ Eligible Compensation ” means the sum of the types and amounts of compensation determined from time to time by the Administrator in its sole discretion to be eligible to be taken into account under the Plan, provided that no such determination shall include or exclude any type or amount of compensation contrary to the requirements of Section 423 of the Code and any regulations promulgated thereunder.

2.12

“ Eligible Employee ” means all employees of the Company and its Subsidiaries that have been designated as eligible to participate in the Plan pursuant to and in accordance with rules prescribed by the Administrator from time to time, which rules, however, shall neither permit nor deny participation in the Plan contrary to the requirements of the Code (including, but not limited to, Section 423(b)(3), (4), (5), and (8) thereof) and the regulations promulgated thereunder.

2.13

“ Fair Market Value ” means the volume weighted average price of the Common Stock on the date in question, reflecting composite trading between 9:30 a.m. and 4:00 p.m. EST on such date, and as reported by The Bloomberg Professional Service on the MS Equity Volume At Price page under the “VWAP” field, at 4:00 p.m. on such date (or if such information is not available from The Bloomberg Professional Service on the date in question, then the volume weighted average price of the Common Stock on such date as reported by a different third party source to which the Firm has access); or if the Common Stock shall not have been traded on such date, such volume weighted average price of the Common Stock on the immediately following day on which the Common Stock was so traded; or, if the Common Stock was not so traded, such other amount as may be determined by the Board of Directors in its sole discretion.

2.14

“ Investment Date ” means the last trading day of each month and, unless the Administrator determines otherwise, the Bonus Investment Date.

2.15

“ Offering Period ” means the period beginning on the day following an Investment Date and continuing through the following Investment Date.

2.16

“ Participant ” means an Eligible Employee who has met the requirements of Section 3 and has elected to participate in the Plan pursuant to Section 4.1.

2.18

“ Payroll Deduction Account ” means the bookkeeping entry established by the Company for each Participant pursuant to Section 4.3.

2.18

“ Plan ” means the Morgan Stanley Employee Stock Purchase Plan as set forth herein and as amended from time to time.

2.19

“ Plan Year ” means a calendar year.

2.20

“ Retirement ” means retirement as defined by any qualified or non-qualified defined benefit plan sponsored by the Company or a Subsidiary in which an Eligible Employee is a participant on the date such Eligible Employee terminates employment with the Company or any Subsidiary.

2.21

“ Subsidiary ” means any corporation designated by the Administrator which constitutes a “subsidiary” of the Company, within the meaning of Code Section 424(f).

3.1

General Rule . Subject to Section 3.3, each Eligible Employee shall be eligible to participate in the Plan beginning on the later of (i) the Eligible Employee’s date of hire by the Company or any Subsidiary and (ii) the date such employee becomes an Eligible Employee. Each Eligible Employee who is first hired by the Company or a Subsidiary on or after April 1, 2002 shall be eligible to participate in the Plan beginning on the later of (i) the first day of the month following the date the employee has completed one year of service for the Company and its Subsidiaries, provided that he is employed on such date, and (ii) the date such employee becomes an Eligible Employee. Pursuant to rules established by the Administrator, all periods of employment, whether or not consecutive, shall be aggregated in determining whether an employee has completed one year of service for the Company and its Subsidiaries. An Eligible Employee who has met the requirements of this Section 3.1 and who ceases to be an Eligible Employee shall again become eligible to participate in the Plan when he again becomes an Eligible Employee.

3.2

Leave of Absence . Unless the Administrator otherwise determines, a Participant on a paid leave of absence shall continue to be a Participant in the Plan so long as such Participant is on such paid leave of absence. Unless otherwise determined by the Administrator, a Participant on an unpaid leave of absence shall not be entitled to participate in any offering commencing after such unpaid leave has begun but shall not be deemed to have terminated employment for purposes of the Plan. A Participant who, upon failing to return to work following a leave of absence, is deemed not to be an employee, shall not be entitled to participate in any offering commencing after such termination of employment, and such Participant’s Payroll Deduction Account shall be paid out in accordance with Section 6.2.

3.3

Termination of Employment . A Participant whose employment with the Company and its Subsidiaries terminates shall cease to be an Eligible Employee as of, and no options shall be granted to such Participant pursuant to Section 5.2 following, the date of the Participant’s termination of employment. A Participant whose employment with the Company and its Subsidiaries has terminated may request a refund of any uninvested balance in such Participant’s Payroll Deduction Account, and such amount will be refunded to the Participant (rather than being applied to the purchase of shares of Common Stock) as soon as administratively practicable provided that the Company receives such request prior to the 10 ^th day immediately preceding the end of the applicable Offering Period.

3.4

Common Stock Account . As a condition to participation in this Plan, each Eligible Employee shall be required to hold shares purchased hereunder in a Common Stock Account and such employee’s decision to participate in the Plan shall constitute the appointment of the Custodian as custodial agent for the purpose of holding such shares. Such Common Stock Account will be governed by, and subject to, the terms and conditions hereof and of a written agreement between the Company and the Custodian.

4.1

Enrollment . Each Eligible Employee may elect to participate in the Plan for a Plan Year by completing a Company-specified enrollment process. Upon completing the enrollment process, an Eligible Employee shall commence participation in the Plan on the next practicable Investment Date. Each Eligible Employee shall be advised of the purchase price (expressed as a percentage of Fair Market Value) determined under Section 5.2(b) before enrolling in the Plan.

4.2

Amount of Deduction . When enrolling, the Eligible Employee shall specify a payroll deduction amount of a percentage (in whole numbers) of Eligible Compensation which shall be withheld from such Eligible Employee’s regular paychecks, including bonus paychecks, for the Plan Year, provided, however , that the Administrator may determine and specify, from time to time, (i) the range of permissible percentages of Eligible Compensation an Eligible Employee may specify to be withheld and (ii) the maximum amount, if any, of Eligible Compensation that may be deducted for an Eligible Employee in any Plan Year, and provided further, that no such determination shall be contrary to the requirements of Code Section 423 and the regulations promulgated thereunder. The Administrator, in its sole discretion, may authorize payment in respect of any option exercised hereunder by personal check.

4.3

Payroll Deduction Accounts . Each Participant’s payroll deduction shall be credited, as soon as administratively practicable following the relevant pay date, to a Payroll Deduction Account, pending the purchase of Common Stock in accordance with the provisions of the Plan. All such amounts shall be assets of the Company and may be used by the Company for any corporate purpose. No interest shall accrue or be paid on amounts credited to a Payroll Deduction Account.

4.4

Subsequent Plan Years .

(a)

Subject to Section 4.4(b), unless otherwise specified prior to the beginning of any Plan Year by completing a Company-specified process, a Participant shall be deemed to have elected to participate in each subsequent Plan Year for which the Participant is eligible to the same extent and in the same manner as at the end of the prior Plan Year.

(b)

If, as of the last trading day of any Plan Year, a Participant’s Common Stock Account is credited with fewer than five shares of Common Stock and no amounts have been credited to the Participant’s Payroll Deduction Account for the first Offering Period immediately following such Plan Year, then, notwithstanding Section 10.3 or anything else herein to the contrary, the Administrator shall sell or arrange for the sale of the shares of Common Stock credited to the Participants Common Stock Account and shall pay the proceeds of such sale to the Participant as soon as administratively practicable following such sale. A Participant to whom this Section 4.4(b) applies shall be deemed to have elected not to participate in the Plan for the subsequent Plan Year but shall be eligible to recommence participation in accordance with the other terms of the Plan.

4.5

Changes in Participation .

(a)

At any time during a Plan Year, a Participant may cease participation in the Plan by completing a Company-specified process. Such cessation will become effective on the first day of the first pay period following the completion of such process to which it may be practically applied, whereupon no further payroll deductions will be made and the Company shall pay to such Participant an amount equal to the balance in the Participant’s Payroll Deduction Account as soon as administratively practicable thereafter. To the extent then an Eligible Employee, any Participant who ceased to participate may elect to participate again by completing a Company-specified process. Such resumption of participation will become effective on the first day of the first pay period following the completion of such process to which it may be practically applied.

(b)

At any time during a Plan Year, a Participant may increase or decrease the percentage of Eligible Compensation subject to payroll deduction within the limits approved by the Administrator pursuant to Section 4.2 by completing a Company-specified process. Such increase or decrease shall become effective on the first day of the first pay period following the completion of such process to which it may be practically a