Exhibit 4.1

                        FORM OF FIXED RATE SENIOR NOTE

REGISTERED                                                            REGISTERED
No. FXR-1                                                             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 NOTE, SERIES F
                                 (Fixed Rate)

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

                        % SPARQS(R) DUE APRIL 20, 2007
                           MANDATORILY EXCHANGEABLE
                         FOR SHARES OF COMMON STOCK OF
                                 SUNOCO, INC.

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


Stated Principal Amount........  $     per SPARQS


                                       2
<PAGE>


Underlying Company.............  Sunoco, Inc. ("Sunoco")

Underlying Stock...............  The common stock of Sunoco

Pricing Date...................

Issue Price....................  $        per each Stated Principal Amount of
                                 this SPARQS

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

Acceleration Trigger Price.....  $

Exchange Ratio.................       , subject to adjustment for corporate
                                 events relating to the Underlying Stock
                                 described under "Antidilution Adjustments"
                                 below.

Yield to Call..................        % per annum

First Call Date................  October 20, 2006

Maturity Date..................  April 20, 2007, subject to acceleration as
                                 described below in "Price Event Acceleration"
                                 and "Alternate 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 definition thereof. 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
                                 scheduled 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


                                       3
<PAGE>


                                 (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.........  July 20, 2006, October 20, 2006, January 20,
                                 2007 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 April 20,
                                 2007, but no interest will accrue on this
                                 SPARQS or on such payment during the period
                                 from or after the scheduled Maturity Date.

Record Date....................  Notwithstanding the definition of "Record
                                 Date" on page 24 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


                                       4
<PAGE>


                                 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.

Morgan Stanley Call Right......  On any scheduled Trading Day on or after the
                                 First Call Date 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 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


                                       5
<PAGE>


                                 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 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
                                 calendar days prior to the Call Date.

Final Call Notice Date.........  April 10, 2007; provided that if such date 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


                                       6
<PAGE>


                                 holder of this SPARQS, for mandatory exchange,
                                 which day may be any scheduled Trading Day on
                                 or after the First Call Date 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 Stated 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
                                 Stated 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 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 as described under "Morgan
                                 Stanley Call Right" above or any acceleration
                                 of the SPARQS, upon delivery of this SPARQS to
                                 the Trustee, each Stated Principal Amount of
                                 this SPARQS shall be applied by the Issuer as
                                 payment for a number of shares of the
                                 Underlying Stock at the Exchange Ratio, and
                                 the Issuer shall deliver with respect to each
                                 Stated Principal Amount of this SPARQS an
                                 amount of the Underlying Stock equal to the
                                 Exchange Ratio.

                                 The amount of Underlying 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 Underlying 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


                                       7
<PAGE>


                                 the third Trading Day prior to the scheduled
                                 Maturity Date.

                                 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 the maturity of this
                                 SPARQS), of the amount of Underlying Stock (or
                                 the amount of Exchange Property) or cash to be
                                 delivered with respect to each Stated
                                 Principal Amount of this SPARQS and of the
                                 amount of any cash to be paid in lieu of any
                                 fractional share of the Underlying 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 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


                                       8
<PAGE>


                                 accelerated maturity date; provided that the
                                 Issuer has deposited with the Trustee the
                                 Underlying 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 the Underlying Stock (or any Exchange
                                 Property) and cash in respect of interest and
                                 any fractional share of the Underlying 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 Stated 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 Underlying Stock
                                 (and, if applicable, any Exchange Property)
                                 and any cash in respect of interest and any
                                 fractional share of the Underlying 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 of the Underlying Stock and the Exchange
                                 Ratio is less than the Acceleration Trigger
                                 Price, 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 Stated
                                 Principal Amount of this SPARQS shall receive
                                 per SPARQS on the date of acceleration:

                                     (i) a number of shares of the Underlying
                                     Stock at the then current Exchange Ratio;

                                     (ii) accrued but unpaid interest on each
                                     Stated Principal Amount of this SPARQS to
                                     but excluding the date of acceleration;
                                     and


                                       9
<PAGE>


                                     (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
                                     Stated 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 the Underlying
                                 Stock due with respect to this SPARQS, as
                                 described above, but the Issuer shall pay cash
                                 in lieu of delivering any fractional share of
                                 the Underlying Stock in an amount equal to the
                                 corresponding fractional Closing Price of such
                                 fraction of a share of the Underlying Stock as
                                 determined by the Calculation Agent as of the
                                 second scheduled Trading Day prior to maturity
                                 of this SPARQS.

Closing Price..................  The Closing Price for one share of the
                                 Underlying 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 the Underlying 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 the Underlying
                                     Stock (or any such other security) is
                                     listed or admitted to trading,

                                 o   if the Underlying 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


                                      10
<PAGE>


                                 o   if the Underlying 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 the Underlying Stock (or any such other
                                 security) is listed or admitted to trading on
                                 any national securities exchange or is a
                                 security of the Nasdaq National Market but the
                                 last reported sale price or Nasdaq official
                                 closing price, as applicable, is not available
                                 pursuant to the preceding sentence, then the
                                 Closing Price for one share of the Underlying
                                 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 the Underlying 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 the Underlying 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


                                      11
<PAGE>


                                 of Options Exchange and in the
                                 over-the-counter market for equity securities
                                 in the United States.

Calculation Agent..............  Morgan Stanley & Co. Incorporated ("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 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 the Underlying 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 the
                                 Underlying Stock.

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


                                      12
<PAGE>


                                 Exchange Ratio plus the product of (i) the
                                 number of shares issued with respect to one
                                 share of the Underlying Stock and (ii) the
                                 prior Exchange Ratio.

                                 3. If the Underlying Company issues rights or
                                 warrants to all holders of the Underlying
                                 Stock to subscribe for or purchase Underlying
                                 Stock at an exercise price per share less than
                                 the Closing Price of the Underlying 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 numerator of which shall
                                 be the number of shares of the Underlying
                                 Stock outstanding immediately prior to the
                                 issuance of such rights or warrants plus the
                                 number of additional shares of Underlying
                                 Stock offered for subscription or purchase
                                 pursuant to such rights or warrants and the
                                 denominator of which shall be the number of
                                 shares of Underlying Stock outstanding
                                 immediately prior to the issuance of such
                                 rights or warrants plus the number of
                                 additional shares of Underlying Stock which
                                 the aggregate offering price of the total
                                 number of shares of Underlying 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 the
                                 Underlying 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 Underlying
                                 Stock of any cash dividend or special dividend
                                 or distribution that is identified by the
                                 Underlying Company 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 the


                                      13
<PAGE>


                                 Underlying Company as an extraordinary or
                                 special dividend or distribution) distributed
                                 per share of Underlying Stock over the
                                 immediately preceding cash dividend or other
                                 cash distribution, if any, per share of
                                 Underlying 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 the Underlying Stock
                                 on the Trading Day preceding the "ex-dividend
                                 date" (that is, the day on and after which
                                 transactions in the Underlying Stock on an
                                 organized securities exchange or trading
                                 system no longer carry the right to receive
                                 that cash dividend or other cash distribution)
                                 for the payment of such cash dividend or other
                                 cash distribution (such Closing Price, the
                                 "Base Closing Price") and (c) the full cash
                                 value of any non-cash dividend or distribution
                                 per share of Underlying 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 the Underlying
                                 Stock includes an Extraordinary Dividend, the
                                 Exchange Ratio with respect to the Underlying
                                 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 the Underlying Stock
                                 described in clause (i), (iv) or (v) of the
                                 first sentence of paragraph 5 below shall
                                 cause an adjustment to the


                                      14
<PAGE>


                                 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) the Underlying Stock
                                 is reclassified or changed, including, without
                                 limitation, as a result of the issuance of any
                                 tracking stock by the Underlying Company, (ii)
                                 the Underlying Company has been subject to any
                                 merger, combination or consolidation and is
                                 not the surviving entity, (iii) the Underlying
                                 Company completes a statutory exchange of
                                 securities with another corporation (other
                                 than pursuant to clause (ii) above), (iv) the
                                 Underlying Company is liquidated, (v) the
                                 Underlying Company issues to all of its
                                 shareholders equity securities of an issuer
                                 other than the Underlying Company (other than
                                 in a transaction described in clause (ii),
                                 (iii) or (iv) above) (a "spinoff stock") or
                                 (vi) the Underlying 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 the
                                 Underlying 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
                                 Stated 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) and any required adjustment to the
                                 Exchange Ratio shall be determined in
                                 accordance with the following:

                                     (a) if the Underlying Stock continues to
                                     be outstanding, the Underlying 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"),


                                      15
<PAGE>


                                     including the issuance of any tracking
                                     stock or spinoff stock or the receipt of
                                     any stock received in exchange for the
                                     Underlying Stock, the number of shares of
                                     the New Stock received with respect to one
                                     share of Underlying Stock multiplied by
                                     the Exchange Ratio for Underlying 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

                                     (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 Underlying
                                         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 the Underlying Stock is
                                         less than 25% of the Closing Price of
                                         the Underlying Stock on the Trading
                                         Day immediately prior to the effective
                                         date of such Reorganization Event, a
                                         number of shares of the Underlying
                                         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 the Underlying 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 the
                                         Underlying 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 Underlying Stock or any New Stock
                                         determined in accordance with this
                                         clause (c)(i) shall be added at the
                                         time of such adjustment to


                                      16
<PAGE>


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


                                      17
<PAGE>


                                         primary SIC Code for the Underlying
                                         Company. 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 the
                                         Underlying Stock on the Trading Day
                                         immediately prior to the effective
                                         date of such Reorganization Event and
                                         (c) 0.3333333.

                                 Following the allocation of any Extraordinary
                                 Dividend to Reference Basket Stocks pursuant
                                 to paragraph 4 above or any Reorganization
                                 Event described in this paragraph 5, the
                                 amount payable upon exchange at maturity with
                                 respect to each Stated Principal Amount of
                                 this SPARQS shall be the sum of:

                                     (x) if applicable, the Underlying 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
                                 consideration of particular types, Exchange
                                 Property shall be deemed to include the amount
                                 of cash or other property delivered by the
                                 offeror in the tender or exchange offer (in an
                                 amount determined on the basis of the rate of
                                 exchange in such tender or exchange offer or
                                 going-private


                                      18
<PAGE>


                                 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 "Underlying Stock" under "No
                                 Fractional Shares," "Closing Price" and
                                 "Market Disruption Event" shall be deemed to
                                 also refer to any New Stock or Reference
                                 Basket Stock, and (ii) all other references in
                                 this SPARQS to "Underlying 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
                                 Underlying 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.


                                      19
<PAGE>


                                 Adjustments to the Exchange Ratios will be
                                 made up to the close of business on the third
                                 Trading Day prior to the scheduled 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
                                 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
                                 the Underlying Stock:

                                     (i) a suspension, absence or material
                                     limitation of trading of the Underlying
                                     Stock on the primary market for the
                                     Underlying 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 the Underlying Stock as a
                                     result of which the reported trading
                                     prices for the Underlying 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
                                     the Underlying Stock,


                                      20
<PAGE>


                                     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 this issuance
                                     of SPARQS.

                                 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
                                 the Underlying 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 the Underlying Stock and (5) a
                                 suspension, absence or material limitation of
                                 trading on the primary securities market on
                                 which options contracts related to the
                                 Underlying Stock are traded shall not include
                                 any time when such securities market is itself
                                 closed for trading under ordinary
                                 circumstances.


                                      21
<PAGE>


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 Stated 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 the Underlying Stock (and/or the
                                 value of any Exchange Property) as of the date
                                 of such acceleration and (y) the then current
                                 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 Stated 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
                                 Stated Principal Amount of this SPARQS for all
                                 tax purposes as a 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"), the Underlying 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


                                      22
<PAGE>


                                 cash, equal to the Issue Price per each Stated
                                 Principal Amount of this SPARQS, to secure the
                                 holder's obligation to purchase the Underlying
                                 Stock pursuant to the Terminable Forward
                                 Contract (the "Deposit"), which Deposit bears
                                 a quarterly compounded yield of %  per
                                 annum, provided, however, that any interest
                                 payments on this SPARQS made to non-U.S.
                                 investors will generally be withheld upon at a
                                 rate of 30%.


                                      23
<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 Underlying 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


                                      24
<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


                                      25
<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.


                                      26
<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


                                      27
<PAGE>


                          FORM OF 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. If the face hereof indicates that this
Note is subject to "Modified Payment upon Acceleration or Redemption", the
amount of principal payable upon redemption will 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 accrued from the Interest Accrual Date to the
date of redemption (expressed as a percentage of the aggregate principal
amount), with the amount of original issue discount accrued being calculated
using a constant yield method (as described below). 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.


                                      28
<PAGE>


     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 if the face
hereof indicates that this Note is subject to "Modified Payment upon
Acceleration or Redemption", the amount of principal payable upon repayment
will 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 accrued from
the Interest Accrual Date to the date of repayment (expressed as a percentage
of the aggregate principal amount), with the amount of original issue discount
accrued being calculated using a constant yield method (as described below).
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.


                                      29
<PAGE>


     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
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.


                                      30
<PAGE>


     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 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 accrued from the Interest
Accrual Date to the date of declaration (expressed as a percentage of the
aggregate principal amount), with the amount of original issue discount accrued
being calculated using a constant yield method (as described in the next
paragraph), (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)


                                      31
<PAGE>


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.

     The constant yield shall be calculated using a 30-day month, 360-day year
convention, a computing period that, except for the initial period (as defined
below), corresponds to the shortest period between Interest Payment Dates (with
ratable accruals within a compounding period), and an assumption that the
maturity will not be accelerated. If the period from the Original Issue Date to
the first Interest Payment Date (the "initial period") is shorter than the
compounding period for this Note, a proportionate amount of the yield for an
entire compounding period will be accrued. If the initial period is longer than
the compounding period, then the period will be divided into a regular
compounding period and a short period with the short period being treated as
provided in the preceding sentence.

     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," the amount of principal so payable will 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 accrued from the Interest
Accrual Date to the date of redemption (expressed as a percentage of the
aggregate principal amount), with the amount of original issue discount accrued
being calculated using a constant yield method (as described above)), if the
Issuer determines that, as a result of any change in or amendment to the laws
(including a holding, judgment or as ordered by a court of competent
jurisdiction), 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 interpretation of such laws, regulations or rulings, which
change or amendment occurs, becomes effective or, in the case of a change in
official position, is announced 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.


                                      32
<PAGE>


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

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

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

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


                                      33
<PAGE>


     (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 U.S. 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 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


                                      34
<PAGE>


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 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


                                      35
<PAGE>


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


                                      36
<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.

                            _______________________


                                      37
<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.


                                      38
<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 will 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.


                                      39