FORM OF 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.


<PAGE>


                                 MORGAN STANLEY
                   SENIOR GLOBAL MEDIUM-TERM NOTES, SERIES F
                                  (Fixed Rate)

                         STOCK PARTICIPATION ACCRETING
               REDEMPTION QUARTERLY-PAY SECURITIES(SM) ("SPARQS")

                       10% SPARQS(R) DUE JANUARY 30, 2006
                            MANDATORILY EXCHANGEABLE
                     FOR SHARES OF CLASS A COMMON STOCK OF
                            ABERCROMBIE & FITCH CO.

--------------------------------------------------------------------------------
ORIGINAL ISSUE DATE: INITIAL REDEMPTION  INTEREST RATE:     MATURITY DATE: See
                       DATE: See           per annum          "Maturity Date"
                       "Morgan Stanley     (equivalent to     below.
                       Call Right"         $  per annum
                       below.              per SPARQS)

--------------------------------------------------------------------------------
INTEREST ACCRUAL     INITIAL REDEMPTION  INTEREST PAYMENT   OPTIONAL REPAYMENT
  DATE:                PERCENTAGE: See     DATE(S): See       DATE(S):  N/A
                       "Morgan Stanley     "Interest
                       Call Right" and     Payment Dates"
                       "Call Price"        below.
                       below.
--------------------------------------------------------------------------------
SPECIFIED CURRENCY:  ANNUAL REDEMPTION   INTEREST PAYMENT   APPLICABILITY OF
  U.S. dollars         PERCENTAGE          PERIOD:            MODIFIED
                       REDUCTION: N/A      Quarterly          PAYMENT UPON
                                                              ACCELERATION OR
                                                              REDEMPTION: See
                                                              "Alternate
                                                              Exchange
                                                              Calculation in
                                                              Case of an Event
                                                              of Default"
                                                              below.
--------------------------------------------------------------------------------
IF SPECIFIED         REDEMPTION NOTICE   APPLICABILITY OF   If yes, state
  CURRENCY OTHER       PERIOD: At least    ANNUAL INTEREST    Issue Price: N/A
  THAN U.S.            10 days but no      PAYMENTS: N/A
  DOLLARS, OPTION      more than 30
  TO ELECT PAYMENT     days.  See
  IN U.S. DOLLARS:     "Morgan Stanley
  N/A                  Call Right" and
                       "Morgan Stanley
                       Notice Date"
                       below.
--------------------------------------------------------------------------------
EXCHANGE RATE        TAX REDEMPTION AND  PRICE APPLICABLE   ORIGINAL YIELD TO
  AGENT: N/A           PAYMENT OF          UPON OPTIONAL      MATURITY: N/A
                       ADDITIONAL          REPAYMENT: N/A
                       AMOUNTS: N/A
--------------------------------------------------------------------------------
OTHER PROVISIONS:    IF YES, STATE
  See below.           INITIAL OFFERING
                       DATE: N/A
--------------------------------------------------------------------------------

Issue Price.....................  $      per each $      principal amount of
                                  this SPARQS

Maturity Date...................  January 30, 2006, subject to acceleration as
                                  described below in "Price Event Acceleration"
                                  and "Alternate


                                      A-2
<PAGE>


                                  Exchange Calculation in Case of an Event of
                                  Default" and subject to extension if the Final
                                  Call Notice Date is postponed in accordance
                                  with the following paragraph.

                                  If the Final Call Notice Date is postponed
                                  because it is not a Trading Day or due to a
                                  Market Disruption Event or otherwise and the
                                  Issuer exercises the Morgan Stanley Call
                                  Right, the Maturity Date shall be postponed so
                                  that the Maturity Date will be the tenth
                                  calendar day following the Final Call Notice
                                  Date. See "Final Call Notice Date" below.

                                  In the event that the Final Call Notice Date
                                  is postponed because it is not a Trading Day
                                  or due to a Market Disruption Event or
                                  otherwise, the Issuer shall give notice of
                                  such postponement as promptly as possible, and
                                  in no case later than two Business Days
                                  following the scheduled Final Call Notice
                                  Date, (i) to the holder of this SPARQS by
                                  mailing notice of such postponement by first
                                  class mail, postage prepaid, to 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 Depository Trust Company (the
                                  "Depositary") by telephone or facsimile
                                  confirmed by mailing such notice to the
                                  Depositary by first class mail, postage
                                  prepaid. Any notice that is mailed in the
                                  manner herein provided shall be conclusively
                                  presumed to have been duly given, whether or
                                  not the holder of this SPARQS receives the
                                  notice. Notice of the date to which the
                                  Maturity Date has been rescheduled as a result
                                  of postponement of the Final Call Notice Date,
                                  if applicable, shall be included in the
                                  Issuer's notice of exercise of the Morgan
                                  Stanley Call Right.

Interest Payment Dates..........  April 30, 2005, July 30, 2005, October 30,
                                  2005 and the Maturity Date.

                                  If the scheduled Maturity Date is postponed
                                  due to a Market Disruption Event or otherwise,
                                  the Issuer shall pay interest on the Maturity
                                  Date as postponed rather than on January 30,
                                  2006, but no interest will accrue on this
                                  SPARQS or on such payment during the period
                                  from or after the scheduled Maturity Date.


                                      A-3
<PAGE>


Record Date.....................  Notwithstanding the definition of "Record
                                  Date" on page 23 hereof, the Record Date for
                                  each Interest Payment Date, including the
                                  Interest Payment Date scheduled to occur on
                                  the Maturity Date, shall be the date 5
                                  calendar days prior to such scheduled Interest
                                  Payment Date, whether or not that date is a
                                  Business Day; provided, however, that in the
                                  event that the Issuer exercises the Morgan
                                  Stanley Call Right, no Interest Payment Date
                                  shall occur after the Morgan Stanley Notice
                                  Date, except for any Interest Payment Date for
                                  which the Morgan Stanley Notice Date falls on
                                  or after the "ex-interest" date for the
                                  related interest payment, in which case the
                                  related interest payment shall be made on such
                                  Interest Payment Date; and provided, further,
                                  that accrued but unpaid interest payable on
                                  the Call Date, if any, shall be payable to the
                                  person to whom the Call Price is payable. The
                                  "ex-interest" date for any interest payment is
                                  the date on which purchase transactions in the
                                  SPARQS no longer carry the right to receive
                                  such interest payment.

                                  In the event that the Issuer exercises the
                                  Morgan Stanley Call Right and the Morgan
                                  Stanley Notice Date falls before the
                                  "ex-interest" date for an interest payment, so
                                  that as a result a scheduled Interest Payment
                                  Date will not occur, the Issuer shall cause
                                  the Calculation Agent to give notice to the
                                  Trustee and to the Depositary, in each case in
                                  the manner and at the time described in the
                                  second and third paragraphs under "Morgan
                                  Stanley Call Right" below, that no Interest
                                  Payment Date will occur after such Morgan
                                  Stanley Notice Date.

Denominations...................  $   and integral multiples thereof

Morgan Stanley Call Right.......  On any scheduled Trading Day on or after July
                                  , 2005 or on the Maturity Date (including the
                                  Maturity Date as it may be extended and
                                  regardless of whether the Maturity Date is a
                                  Trading Day), the Issuer may call the SPARQS,
                                  in whole but not in part, for mandatory
                                  exchange for the Call Price paid in cash
                                  (together with accrued but unpaid interest) on
                                  the Call Date.

                                  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 SPARQS by mailing notice of
                                  such exercise, specifying the Call


                                      A-4
<PAGE>


                                  Date on which the Issuer shall effect such
                                  exchange, by first class mail, postage
                                  prepaid, to 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 in accordance with the applicable
                                  procedures set forth in the Blanket Letter of
                                  Representations prepared by the Issuer. 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 SPARQS receives the notice.
                                  Failure to give notice by mail or any defect
                                  in the notice to the holder of any SPARQS
                                  shall not affect the validity of the
                                  proceedings for the exercise of the Morgan
                                  Stanley Call Right with respect to any other
                                  SPARQS.

                                  The notice of the Issuer's exercise of the
                                  Morgan Stanley Call Right shall specify (i)
                                  the Call Date, (ii) the Call Price payable per
                                  SPARQS, (iii) the amount of accrued but unpaid
                                  interest payable per SPARQS on the Call Date,
                                  (iv) whether any subsequently scheduled
                                  Interest Payment Date shall no longer be an
                                  Interest Payment Date as a result of the
                                  exercise of the Morgan Stanley Call Right, (v)
                                  the place or places of payment of such Call
                                  Price, (vi) that such delivery will be made
                                  upon presentation and surrender of this
                                  SPARQS, (vii) that such exchange is pursuant
                                  to the Morgan Stanley Call Right and (viii) if
                                  applicable, the date to which the Maturity
                                  Date has been extended due to a Market
                                  Disruption Event as described under "Maturity
                                  Date" above.

                                  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 this SPARQS is so called for mandatory
                                  exchange by the Issuer, then the cash Call
                                  Price and any accrued but unpaid interest on
                                  this SPARQS to be delivered to the holder of
                                  this SPARQS 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 SPARQS to
                                  the Trustee. The Issuer


                                      A-5
<PAGE>


                                  shall, or shall cause the Calculation Agent
                                  to, deliver such cash to the Trustee for
                                  delivery to the holder of this SPARQS.

                                  If this SPARQS 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 after the Call Date,
                                  except with respect to the holder's right to
                                  receive 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 10 but not more than 30 days
                                  prior to the Call Date.

Final Call Notice Date..........  January 20, 2006; provided that if January 20,
                                  2006 is not a Trading Day or if a Market
                                  Disruption Event occurs on such day, the Final
                                  Call Notice Date will be the immediately
                                  succeeding Trading Day on which no Market
                                  Disruption Event occurs.

Call Date.......................  The day specified in the Issuer's notice of
                                  mandatory exchange, on which the Issuer shall
                                  deliver cash to the holder of this SPARQS, for
                                  mandatory exchange, which day may be any
                                  scheduled Trading Day on or after July , 2005
                                  or the Maturity Date (including the Maturity
                                  Date as it may be extended and regardless of
                                  whether the Maturity Date is a scheduled
                                  Trading Day). See "Maturity Date" above.

Call Price......................  The Call Price with respect to any Call Date
                                  is an amount of cash per each $ principal
                                  amount of this SPARQS, as calculated by the
                                  Calculation Agent, such that the sum of the
                                  present values of all cash flows on each $
                                  principal amount of this SPARQS to and
                                  including the Call Date (i.e., the Call Price
                                  and all of the interest payments, including
                                  accrued and unpaid interest payable on the
                                  Call Date), discounted to the Original Issue
                                  Date from the applicable payment date at the
                                  Yield to Call rate of % per annum computed on
                                  the basis of a 360-day year of twelve 30-day
                                  months, equals the Issue Price, as determined
                                  by the Calculation Agent.

Exchange at Maturity............  At maturity, subject to a prior call of this
                                  SPARQS for cash in an amount equal to the Call
                                  Price by the Issuer


                                      A-6
<PAGE>


                                  as described under "Morgan Stanley Call Right"
                                  above or any acceleration of the SPARQS, upon
                                  delivery of this SPARQS to the Trustee, each $
                                  principal amount of this SPARQS shall be
                                  applied by the Issuer as payment for a number
                                  of shares of the Class A common stock of
                                  Abercrombie & Fitch Co. ("Abercrombie & Fitch
                                  Stock") at the Exchange Ratio, and the Issuer
                                  shall deliver with respect to each $ principal
                                  amount of this SPARQS an amount of Abercrombie
                                  & Fitch Stock equal to the Exchange Ratio.

                                  The amount of Abercrombie & Fitch Stock to be
                                  delivered at maturity shall be subject to any
                                  applicable adjustments (i) to the Exchange
                                  Ratio (including, as applicable, any New Stock
                                  Exchange Ratio or any Basket Stock Exchange
                                  Ratio, each as defined in paragraph 5 under
                                  "Antidilution Adjustments" below) and (ii) in
                                  the Exchange Property, as defined in paragraph
                                  5 under "Antidilution Adjustments" below, to
                                  be delivered instead of, or in addition to,
                                  such Abercrombie & Fitch Stock as a result of
                                  any corporate event described under
                                  "Antidilution Adjustments" below, in each
                                  case, required to be made through the close of
                                  business on the third Trading Day prior to
                                  maturity.

                                  The Issuer shall, or shall cause the
                                  Calculation Agent to, provide written notice
                                  to the Trustee at its New York Office and to
                                  the Depositary, on which notice the Trustee
                                  and Depositary may conclusively rely, on or
                                  prior to 10:30 a.m. on the Trading Day
                                  immediately prior to maturity of this SPARQS
                                  (but if such Trading Day is not a Business
                                  Day, prior to the close of business on the
                                  Business Day preceding maturity of this
                                  SPARQS), of the amount of Abercrombie & Fitch
                                  Stock (or the amount of Exchange Property) or
                                  cash to be delivered with respect to each $
                                  principal amount of this SPARQS and of the
                                  amount of any cash to be paid in lieu of any
                                  fractional share of Abercrombie & Fitch Stock
                                  (or of any other securities included in
                                  Exchange Property, if applicable); provided
                                  that if the maturity date of this SPARQS is
                                  accelerated (x) because of a Price Event
                                  Acceleration (as described under "Price Event
                                  Acceleration" below) or (y) because of an
                                  Event of Default Acceleration (as


                                      A-7
<PAGE>


                                  defined under "Alternate Exchange Calculation
                                  in Case of an Event of Default" below), the
                                  Issuer shall give notice of such acceleration
                                  as promptly as possible, and in no case later
                                  than (A) in the case of an Event of Default
                                  Acceleration, two Trading Days following such
                                  deemed maturity date or (B) in the case of a
                                  Price Event Acceleration, 10:30 a.m. on the
                                  Trading Day immediately prior to the date of
                                  acceleration (as defined under "Price Event
                                  Acceleration" below), (i) to the holder of
                                  this SPARQS by mailing notice of such
                                  acceleration by first class mail, postage
                                  prepaid, to 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. Any notice
                                  that is mailed in the manner herein provided
                                  shall be conclusively presumed to have been
                                  duly given, whether or not the holder of this
                                  SPARQS receives the notice. If the maturity of
                                  this SPARQS is accelerated, no interest on the
                                  amounts payable with respect to this SPARQS
                                  shall accrue for the period from and after
                                  such accelerated maturity date; provided that
                                  the Issuer has deposited with the Trustee the
                                  Abercrombie & Fitch Stock, the Exchange
                                  Property or any cash due with respect to such
                                  acceleration by such accelerated maturity
                                  date.

                                  The Issuer shall, or shall cause the
                                  Calculation Agent to, deliver any such shares
                                  of Abercrombie & Fitch Stock (or any Exchange
                                  Property) and cash in respect of interest and
                                  any fractional share of Abercrombie & Fitch
                                  Stock (or any Exchange Property) and cash
                                  otherwise due upon any acceleration described
                                  above to the Trustee for delivery to the
                                  holder of this Note. References to payment
                                  "per SPARQS" refer to each $ principal amount
                                  of this SPARQS.

                                  If this SPARQS is not surrendered for exchange
                                  at maturity, it shall be deemed to be no
                                  longer Outstanding under, and as defined in,
                                  the Senior Indenture, except with respect to
                                  the holder's right to receive the Abercrombie
                                  & Fitch Stock (and, if


                                      A-8
<PAGE>


                                  applicable, any Exchange Property) and any
                                  cash in respect of interest and any fractional
                                  share of Abercrombie & Fitch Stock (or any
                                  Exchange Property) and any other cash due at
                                  maturity as described in the preceding
                                  paragraph under this heading.

Price Event Acceleration........  If on any two consecutive Trading Days during
                                  the period prior to and ending on the third
                                  Business Day immediately preceding the
                                  Maturity Date, the product of the Closing
                                  Price per share of Abercrombie & Fitch Stock
                                  and the Exchange Ratio is less than $2.00, the
                                  Maturity Date of this SPARQS shall be deemed
                                  to be accelerated to the third Business Day
                                  immediately following such second Trading Day
                                  (the "date of acceleration"). Upon such
                                  acceleration, the holder of each $
                                  principal amount of this SPARQS shall receive
                                  per SPARQS on the date of acceleration:

                                      (i) a number of shares of Abercrombie &
                                      Fitch Stock at the then current Exchange
                                      Ratio;

                                      (ii) accrued but unpaid interest on each $
                                      principal amount of this SPARQS to but
                                      excluding the date of acceleration; and

                                      (iii) an amount of cash as determined by
                                      the Calculation Agent equal to the sum of
                                      the present values of the remaining
                                      scheduled payments of interest on each $
                                      principal amount of this SPARQS (excluding
                                      the amounts included in clause (ii) above)
                                      discounted to the date of acceleration.
                                      The present value of each remaining
                                      scheduled payment will be based on the
                                      comparable yield that the Issuer would pay
                                      on a non-interest bearing, senior
                                      unsecured debt obligation of the Issuer
                                      having a maturity equal to the term of
                                      each such remaining scheduled payment, as
                                      determined by the Calculation Agent.

No Fractional Shares............  Upon delivery of this SPARQS to the Trustee at
                                  maturity, the Issuer shall deliver the
                                  aggregate number of shares of Abercrombie &
                                  Fitch Stock due with respect to this SPARQS,
                                  as described above, but the Issuer shall pay
                                  cash in lieu of delivering any fractional
                                  share of Abercrombie & Fitch Stock in an
                                  amount equal to the corresponding fractional
                                  Closing Price of


                                      A-9
<PAGE>


                                  such fraction of a share of Abercrombie &
                                  Fitch Stock as determined by the Calculation
                                  Agent as of the second scheduled Trading Day
                                  prior to maturity of this SPARQS.

Exchange Ratio..................  0.25, subject to adjustment for corporate
                                  events relating to Abercrombie & Fitch Co.
                                  ("Abercrombie & Fitch") described under
                                  "Antidilution Adjustments" below.

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

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

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

                                  o   if Abercrombie & Fitch Stock (or any such
                                      other security) is neither listed or
                                      admitted to trading on any national
                                      securities exchange nor a security of the
                                      Nasdaq National Market but is included in
                                      the OTC Bulletin Board Service (the "OTC
                                      Bulletin Board") operated by the National
                                      Association of Securities Dealers, Inc.
                                      (the "NASD"), the last reported sale price
                                      of the principal trading session on the
                                      OTC Bulletin Board on such day.

                                  If Abercrombie & Fitch Stock (or any such
                                  other security) is listed or admitted to
                                  trading on any national securities exchange or
                                  is a security of the Nasdaq National Market
                                  but the last reported sale price or Nasdaq
                                  official closing price, as applicable, is not


                                      A-10
<PAGE>


                                  available pursuant to the preceding sentence,
                                  then the Closing Price for one share of
                                  Abercrombie & Fitch Stock (or one unit of any
                                  such other security) on any Trading Day will
                                  mean the last reported sale price of the
                                  principal trading session on the
                                  over-the-counter market as reported on the
                                  Nasdaq National Market or the OTC Bulletin
                                  Board on such day. If, because of a Market
                                  Disruption Event (as defined below) or
                                  otherwise, the last reported sale price or
                                  Nasdaq official closing price, as applicable,
                                  for Abercrombie & Fitch Stock (or any such
                                  other security) is not available pursuant to
                                  either of the two preceding sentences, then
                                  the Closing Price for any Trading Day will be
                                  the mean, as determined by the Calculation
                                  Agent, of the bid prices for Abercrombie &
                                  Fitch Stock (or any such other security)
                                  obtained from as many recognized dealers in
                                  such security, but not exceeding three, as
                                  will make such bid prices available to the
                                  Calculation Agent. Bids of MS & Co. or any of
                                  its affiliates may be included in the
                                  calculation of such mean, but only to the
                                  extent that any such bid is the highest of the
                                  bids obtained. The term "security of the
                                  Nasdaq National Market" will include a
                                  security included in any successor to such
                                  system, and the term OTC Bulletin Board
                                  Service will include any successor service
                                  thereto.

Trading Day.....................  A day, as determined by the Calculation Agent,
                                  on which trading is generally conducted on the
                                  New York Stock Exchange, Inc. ("NYSE"), the
                                  American Stock Exchange LLC, the Nasdaq
                                  National Market, the Chicago Mercantile
                                  Exchange and the Chicago Board of Options
                                  Exchange and in the over-the-counter market
                                  for equity securities in the United States.

Calculation Agent...............  MS & Co. and its successors.

                                  All calculations with respect to the Exchange
                                  Ratio and Call Price for the SPARQS shall be
                                  made by the Calculation Agent and shall be
                                  rounded to the nearest one hundred-thousandth,
                                  with five one-millionths rounded upward (e.g.,
                                  .876545 would be rounded to .87655); all
                                  dollar amounts related to the Call Price
                                  resulting from such calculations shall be
                                  rounded to the nearest ten-thousandth, with
                                  five one hundred-thousandths rounded upward
                                  (e.g., .76545 would be


                                      A-11
<PAGE>


                                  rounded to .7655); and all dollar amounts paid
                                  with respect to the Call Price on the
                                  aggregate number of SPARQS shall be rounded to
                                  the nearest cent, with one-half cent rounded
                                  upward.

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

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

                                  1.If Abercrombie & Fitch 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
                                  Abercrombie & Fitch Stock.

                                  2.If Abercrombie & Fitch Stock is subject (i)
                                  to a stock dividend (issuance of additional
                                  shares of Abercrombie & Fitch Stock) that is
                                  given ratably to all holders of shares of
                                  Abercrombie & Fitch Stock or (ii) to a
                                  distribution of Abercrombie & Fitch Stock as a
                                  result of the triggering of any provision of
                                  the corporate charter of Abercrombie & Fitch,
                                  then once the dividend has become effective
                                  and Abercrombie & Fitch 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 Abercrombie &
                                  Fitch Stock and (ii) the prior Exchange Ratio.

                                  3.If Abercrombie & Fitch issues rights or
                                  warrants to all holders of Abercrombie & Fitch
                                  Stock to subscribe for or purchase Abercrombie
                                  & Fitch Stock at an exercise price per share
                                  less than the Closing Price of Abercrombie &
                                  Fitch Stock on both (i) the date the exercise
                                  price of such rights or warrants is determined
                                  and (ii) the expiration date of such rights or
                                  warrants, and if the expiration date of such
                                  rights or warrants precedes the maturity of
                                  this SPARQS, then the Exchange Ratio shall be
                                  adjusted to equal the product of the prior
                                  Exchange Ratio and a fraction, the


                                      A-12
<PAGE>


                                  numerator of which shall be the number of
                                  shares of Abercrombie & Fitch Stock
                                  outstanding immediately prior to the issuance
                                  of such rights or warrants plus the number of
                                  additional shares of Abercrombie & Fitch Stock
                                  offered for subscription or purchase pursuant
                                  to such rights or warrants and the denominator
                                  of which shall be the number of shares of
                                  Abercrombie & Fitch Stock outstanding
                                  immediately prior to the issuance of such
                                  rights or warrants plus the number of
                                  additional shares of Abercrombie & Fitch Stock
                                  which the aggregate offering price of the
                                  total number of shares of Abercrombie & Fitch
                                  Stock so offered for subscription or purchase
                                  pursuant to such rights or warrants would
                                  purchase at the Closing Price on the
                                  expiration date of such rights or warrants,
                                  which shall be determined by multiplying such
                                  total number of shares offered by the exercise
                                  price of such rights or warrants and dividing
                                  the product so obtained by such Closing Price.

                                  4.There shall be no adjustments to the
                                  Exchange Ratio to reflect cash dividends or
                                  other distributions paid with respect to
                                  Abercrombie & Fitch Stock other than
                                  distributions described in paragraph 2,
                                  paragraph 3 and clauses (i), (iv) and (v) of
                                  the first sentence of paragraph 5 and
                                  Extraordinary Dividends. "Extraordinary
                                  Dividend" means each of (a) the full amount
                                  per share of Abercrombie & Fitch Stock of any
                                  cash dividend or special dividend or
                                  distribution that is identified by Abercrombie
                                  & Fitch 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
                                  Abercrombie & Fitch as an extraordinary or
                                  special dividend or distribution) distributed
                                  per share of Abercrombie & Fitch Stock over
                                  the immediately preceding cash dividend or
                                  other cash distribution, if any, per share of
                                  Abercrombie & Fitch 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 excess portion of
                                  the dividend or distribution is more than 5%
                                  of the Closing Price of Abercrombie & Fitch
                                  Stock on the Trading Day preceding the
                                  "ex-dividend date" (that is, the day on and
                                  after which transactions in Abercrombie &
                                  Fitch Stock on an organized securities


                                      A-13
<PAGE>


                                  exchange or trading system no longer carry the
                                  right to receive that cash dividend or other
                                  cash distribution) for the payment of such
                                  cash dividend or other cash distribution (such
                                  Closing Price, the "Base Closing Price") and
                                  (c) the full cash value of any non-cash
                                  dividend or distribution per share of
                                  Abercrombie & Fitch Stock (excluding
                                  Marketable Securities, as defined in paragraph
                                  5 below). Subject to the following sentence,
                                  if any cash dividend or distribution of such
                                  other property with respect to Abercrombie &
                                  Fitch Stock includes an Extraordinary
                                  Dividend, the Exchange Ratio with respect to
                                  Abercrombie & Fitch Stock shall be adjusted on
                                  the ex-dividend date so that the new Exchange
                                  Ratio shall equal the product of (i) the prior
                                  Exchange Ratio and (ii) a fraction, the
                                  numerator of which is the Base Closing Price,
                                  and the denominator of which is the amount by
                                  which the Base Closing Price exceeds the
                                  Extraordinary Dividend. If any Extraordinary
                                  Dividend is at least 35% of the Base Closing
                                  Price, then, instead of adjusting the Exchange
                                  Ratio, the amount payable upon exchange at
                                  maturity shall be determined as described in
                                  paragraph 5 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 (c)(ii) of paragraph 5
                                  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 Abercrombie & Fitch
                                  Stock described in clause (i), (iv) or (v) of
                                  the first sentence of paragraph 5 below shall
                                  cause an adjustment to the Exchange Ratio
                                  pursuant only to clause (i), (iv) or (v) of
                                  the first sentence of paragraph 5, as
                                  applicable.

                                  5.Any of the following shall constitute a
                                  Reorganization Event: (i) Abercrombie & Fitch
                                  Stock is reclassified or changed, including,
                                  without limitation, as a result of the
                                  issuance of any tracking stock by Abercrombie
                                  & Fitch, (ii) Abercrombie & Fitch has been
                                  subject to any merger, combination or
                                  consolidation and is not the surviving entity,
                                  (iii) Abercrombie & Fitch completes a
                                  statutory exchange of securities with another
                                  corporation (other than


                                      A-14
<PAGE>


                                  pursuant to clause (ii) above), (iv)
                                  Abercrombie & Fitch is liquidated, (v)
                                  Abercrombie & Fitch issues to all of its
                                  shareholders equity securities of an issuer
                                  other than Abercrombie & Fitch (other than in
                                  a transaction described in clause (ii), (iii)
                                  or (iv) above) (a "spinoff stock") or (vi)
                                  Abercrombie & Fitch 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
                                  Abercrombie & Fitch 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"), the amount
                                  payable upon exchange at maturity with respect
                                  to each $ principal amount of this SPARQS
                                  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:

                                      (a) if Abercrombie & Fitch Stock continues
                                      to be outstanding, Abercrombie & Fitch
                                      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 (c)(i) below); and

                                      (b) 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 Abercrombie & Fitch Stock, the number
                                      of shares of the New Stock received with
                                      respect to one share of Abercrombie &
                                      Fitch Stock multiplied by the Exchange
                                      Ratio for Abercrombie & Fitch 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 (c)(i) below); and


                                      A-15
<PAGE>


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

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

                                          (ii) if the Non-Stock Exchange
                                          Property Value is equal to or exceeds
                                          25% of the Closing Price of
                                          Abercrombie & Fitch Stock on the
                                          Trading Day immediately prior to the
                                          effective date relating to such
                                          Reorganization Event or, if
                                          Abercrombie & Fitch Stock is
                                          surrendered exclusively for Non-Stock
                                          Exchange Property


                                      A-16
<PAGE>


                                          (in each case, a "Reference Basket
                                          Event"), an initially equal-dollar
                                          weighted basket of three Reference
                                          Basket Stocks (as defined below) with
                                          an aggregate value on the effective
                                          date of such Reorganization Event
                                          equal to the Non-Stock Exchange
                                          Property Value multiplied by the
                                          Exchange Ratio in effect for
                                          Abercrombie & Fitch Stock on the
                                          Trading Day immediately prior to the
                                          effective date of such Reorganization
                                          Event. The "Reference Basket Stocks"
                                          shall be the three stocks with the
                                          largest market capitalization among
                                          the stocks that then comprise the S&P
                                          500 Index (or, if publication of such
                                          index is discontinued, any successor
                                          or substitute index selected by the
                                          Calculation Agent in its sole
                                          discretion) with the same primary
                                          Standard Industrial Classification
                                          Code ("SIC Code") as Abercrombie &
                                          Fitch; 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 SPARQS 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 Abercrombie &
                                          Fitch. Each Reference Basket Stock
                                          shall be assigned a Basket Stock
                                          Exchange Ratio equal to the number of
                                          shares of such Reference Basket Stock
                                          with a Closing Price on the effective
                                          date of such Reorganization Event
                                          equal to the product of (a) the
                                          Non-Stock Exchange Property Value, (b)
                                          the Exchange Ratio in effect for
                                          Abercrombie & Fitch Stock on the
                                          Trading Day


                                      A-17
<PAGE>


                                          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 4 above or any Reorganization
                                  Event described in this paragraph 5, the
                                  amount payable upon exchange at maturity with
                                  respect to each $ principal amount of this
                                  SPARQS shall be the sum of:

                                      (x) if applicable, Abercrombie & Fitch
                                          Stock at the Exchange Ratio then in
                                          effect; and

                                      (y) if applicable, for each New Stock,
                                          such New Stock at the New Stock
                                          Exchange Ratio then in effect for such
                                          New Stock; and

                                      (z) if applicable, for each Reference
                                          Basket Stock, such Reference Basket
                                          Stock at 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 by the Calculation Agent
                                  on the third Trading Day prior to the
                                  scheduled Maturity Date.

                                  For purposes of paragraph 5 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 4 or 5 above,
                                  (i) references to "Abercrombie & Fitch Stock"
                                  under "No Fractional


                                      A-18
<PAGE>


                                  Shares," "Closing Price" and "Market
                                  Disruption Event" shall be deemed to also
                                  refer to any New Stock or Reference Basket
                                  Stock, and (ii) all other references in this
                                  SPARQS to "Abercrombie & Fitch Stock" shall be
                                  deemed to refer to the Exchange Property into
                                  which this SPARQS is thereafter exchangeable
                                  and references to a "share" or "shares" of
                                  Abercrombie & Fitch Stock shall be deemed to
                                  refer to the applicable unit or units of such
                                  Exchange Property, including any New Stock or
                                  Reference Basket Stock, unless the context
                                  otherwise requires. The New Stock Exchange
                                  Ratio(s) or Basket Stock Exchange Ratios
                                  resulting from any Reorganization Event
                                  described in paragraph 5 above or similar
                                  adjustment under paragraph 4 above shall be
                                  subject to the adjustments set forth in
                                  paragraphs 1 through 5 hereof.

                                  If a Reference Basket Event occurs, the Issuer
                                  shall, or shall cause the Calculation Agent
                                  to, provide written notice to the Trustee at
                                  its New York office, on which notice the
                                  Trustee may conclusively rely, and to DTC of
                                  the occurrence of such Reference Basket Event
                                  and of the three Reference Basket Stocks
                                  selected as promptly as possible and in no
                                  event later than five Business Days after the
                                  date of the Reference Basket Event.

                                  No adjustment to any Exchange Ratio (including
                                  for this purpose, any New Stock Exchange Ratio
                                  or Basket Stock Exchange Ratio) shall be
                                  required unless such adjustment would require
                                  a change of at least 0.1% in the Exchange
                                  Ratio then in effect. The Exchange Ratio
                                  resulting from any of the adjustments
                                  specified above will be rounded to the nearest
                                  one hundred-thousandth, with five
                                  one-millionths rounded upward. Adjustments to
                                  the Exchange Ratios will be made up to the
                                  close of business on the third Trading Day
                                  prior to the Maturity Date.

                                  No adjustments to the Exchange Ratio or method
                                  of calculating the Exchange Ratio shall be
                                  made other than those specified above.

                                  The Calculation Agent shall be solely
                                  responsible for the determination and
                                  calculation of any adjustments to the Exchange
                                  Ratio, any New Stock Exchange Ratio or Basket
                                  Stock Exchange Ratio or method of calculating


                                      A-19
<PAGE>


                                  the Exchange Property Value 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 1
                                  through 5 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, or to the method of
                                  calculating the amount payable upon exchange
                                  at maturity of the SPARQS made pursuant to
                                  paragraph 5 above, upon written request by the
                                  holder of this SPARQS.

Market Disruption Event.........  "Market Disruption Event" means, with respect
                                  to Abercrombie & Fitch Stock:

                                      (i) a suspension, absence or material
                                      limitation of trading of Abercrombie &
                                      Fitch Stock on the primary market for
                                      Abercrombie & Fitch Stock for more than
                                      two hours of trading or during the
                                      one-half hour period preceding the close
                                      of the principal trading session in such
                                      market; or a breakdown or failure in the
                                      price and trade reporting systems of the
                                      primary market for Abercrombie & Fitch
                                      Stock as a result of which the reported
                                      trading prices for Abercrombie & Fitch
                                      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 Abercrombie &
                                      Fitch 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 SPARQS
                                      due January 30, 2006, Mandatorily


                                      A-20
<PAGE>


                                      Exchangeable for Shares of Class A Common
                                      Stock of Abercrombie & Fitch Co.

                                  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
                                  Abercrombie & Fitch 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 Abercrombie &
                                  Fitch Stock and (5) a suspension, absence or
                                  material limitation of trading on the primary
                                  securities market on which options contracts
                                  related to Abercrombie & Fitch 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
                                  the SPARQS shall have occurred and be
                                  continuing, the amount declared due and
                                  payable per each $ principal amount of this
                                  SPARQS upon any acceleration of this SPARQS
                                  (an "Event of Default Acceleration") shall be
                                  determined by the Calculation Agent and shall
                                  be an amount in cash equal to the lesser of
                                  (i) the product of (x) the Closing Price of
                                  Abercrombie & Fitch Stock (and/or the value of
                                  any Exchange Property) as of the date of such
                                  acceleration and (y) the then current


                                      A-21
<PAGE>


                                  Exchange Ratio and (ii) the Call Price
                                  calculated as though the date of acceleration
                                  were the Call Date (but in no event less than
                                  the Call Price for the first Call Date), in
                                  each case plus accrued but unpaid interest to
                                  but excluding the date of acceleration;
                                  provided that if the Issuer has called the
                                  SPARQS in accordance with the Morgan Stanley
                                  Call Right, the amount declared due and
                                  payable upon any such acceleration shall be an
                                  amount in cash for each $ principal amount of
                                  this SPARQS equal to the Call Price for the
                                  Call Date specified in the Issuer's notice of
                                  mandatory exchange, plus accrued but unpaid
                                  interest to but excluding the date of
                                  acceleration.

Treatment of SPARQS for
 United States Federal
 Income Tax Purposes............  The Issuer, by its sale of this SPARQS, and
                                  the holder of this SPARQS (and any successor
                                  holder of, or holder of a beneficial interest
                                  in, this SPARQS), by its respective purchase
                                  hereof, agree (in the absence of an
                                  administrative determination or judicial
                                  ruling to the contrary) to characterize each $
                                  principal amount of this SPARQS for all tax
                                  purposes as an investment unit consisting of
                                  (A) a terminable contract (the "Terminable
                                  Forward Contract") that (i) requires the
                                  holder of this SPARQS (subject to the Morgan
                                  Stanley Call Right) to purchase, and the
                                  Issuer to sell, for an amount equal to $
                                  (the "Forward Price"), Abercrombie & Fitch
                                  Stock at maturity and (ii) allows the Issuer,
                                  upon exercise of the Morgan Stanley Call
                                  Right, to terminate the Terminable Forward
                                  Contract by returning to such holder the
                                  Deposit (as defined below) and paying to such
                                  holder an amount of cash equal to the
                                  difference between the Deposit and the Call
                                  Price and (B) a deposit with the Issuer of a
                                  fixed amount of cash, equal to the Issue Price
                                  per each $ principal amount of this SPARQS, to
                                  secure the holder's obligation to purchase
                                  Abercrombie & Fitch Stock pursuant to the
                                  Terminable Forward Contract (the "Deposit"),
                                  which Deposit bears a quarterly compounded
                                  yield of    % per annum.


                                      A-22
<PAGE>


     Morgan Stanley, 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 amount of Abercrombie & Fitch Stock (or other
Exchange Property), as determined in accordance with the provisions set forth
under "Exchange at Maturity" above, due with respect to 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 at maturity (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 will
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 will 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 will, 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) will 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, will 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, will be made
by U.S. dollar check mailed to the address of the


                                      A-23
<PAGE>


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 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 will 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
will 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) will 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) will convert such payments into U.S. dollars. In
the event of such an election, payment in respect of this Note will 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
the Specified Currency for 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


                                      A-24
<PAGE>


and at which the applicable dealer commits to execute a contract. If such bid
quotations are not available, such payment will be made in the Specified
Currency. All currency exchange costs will be borne by the holder of this Note
by deductions from such payments.

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

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


                                      A-25
<PAGE>


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

DATED:                               MORGAN STANLEY


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


TRUSTEE'S CERTIFICATE OF
  AUTHENTICATION

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

JPMORGAN CHASE BANK, N.A., as
  Trustee


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


                                      A-26
<PAGE>


                              REVERSE OF SECURITY

     This Note is one of a duly authorized issue of Senior Global Medium-Term
Notes, Series F, having maturities more than nine months from the date of issue
(the "Notes") of the Issuer. The Notes are issuable under a Senior Indenture,
dated as of November 1, 2004, between the Issuer and JPMorgan Chase Bank, N.A.
(formerly known as JPMorgan Chase 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, N.A. 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 will 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, will not be
redeemable or subject to repayment at the option of the holder prior to
maturity.

     If so indicated on the face 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 will 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 this Note, this Note will 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 will 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
accrued and unpaid hereon to the date of repayment, provided that


                                      A-27
<PAGE>


if 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, will 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 will 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 will 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 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


                                      A-28
<PAGE>


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
will 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 will
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 will 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 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


                                      A-29
<PAGE>


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 or 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 or of any political subdivision or taxing authority thereof or
therein affecting taxation, or any change in official position regarding the
application or


                                      A-30
<PAGE>


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 will 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 will 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 will 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 will, 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, will not be less than the amount provided for in this Note to be then
due and payable. The Issuer will not, however, 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 of 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 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


                                      A-31
<PAGE>


     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 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


                                      A-32
<PAGE>


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 will 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 will 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 will 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.

     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 will 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


                                      A-33
<PAGE>


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, 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


                                      A-34
<PAGE>


more of the members of which is, for United States federal income tax purposes,
a nonresident alien individual, a foreign corporation or a nonresident alien
fiduciary of a foreign estate or trust.

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


                                      A-35
<PAGE>


                                 ABBREVIATIONS

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



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


      UNIF GIFT MIN ACT -                       Custodian
                          _____________________           ______________________
                                  (Minor)                         (Cust)

      Under Uniform Gifts to Minors Act
                                        __________________________
                                                 (State)

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

                               __________________


                                      A-36
<PAGE>


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


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

________________________________________________________________________________

________________________________________________________________________________

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

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



Dated:_________________________________

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


                                      A-37
<PAGE>


                           OPTION TO ELECT REPAYMENT

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


________________________________________________________________________________

________________________________________________________________________________

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


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


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


                                      A-38