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>

<TABLE>
                                                 MORGAN STANLEY
                                    SENIOR GLOBAL MEDIUM-TERM NOTE, SERIES F
                                                  (Fixed Rate)

                                         HIGH INCOME TRIGGER SECURITIES

                                            % HITS DUE APRIL 20, 2007
                                            MANDATORILY EXCHANGEABLE
                                         FOR SHARES OF COMMON STOCK OF
                                 XM SATELLITE RADIO HOLDINGS INC. (the "HITS")
<S>                              <C>                            <C>                          <C>
-----------------------------------------------------------------------------------------------------------------------
ORIGINAL ISSUE DATE:             INITIAL REDEMPTION DATE: N/A   INTEREST RATE:    % per      MATURITY DATE: See
                                                                   annum                        "Maturity Date" below.
-----------------------------------------------------------------------------------------------------------------------
INTEREST ACCRUAL DATE:           INITIAL REDEMPTION             INTEREST PAYMENT DATE(S):    OPTIONAL REPAYMENT
                                    PERCENTAGE: N/A                See "Interest Payment        DATE(S):  N/A
                                                                   Dates" below.
-----------------------------------------------------------------------------------------------------------------------
SPECIFIED CURRENCY: U.S.         ANNUAL REDEMPTION              INTEREST PAYMENT PERIOD:     APPLICABILITY OF MODIFIED
   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        N/A                            INTEREST PAYMENTS: N/A       N/A
   TO ELECT PAYMENT IN U.S.
   DOLLARS: N/A
-----------------------------------------------------------------------------------------------------------------------
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 HITS

Underlying Company...........    XM Satellite Radio Holdings Inc. ("XM
                                 Satellite")

Underlying Stock.............    The common stock of XM Satellite

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

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

Initial Share Price..........    $

Trigger Level................         % of the Initial Share Price

Trigger Price................    $

Acceleration Trigger Price...    $

Exchange Ratio...............         ,  which is equal to the Stated
                                 Principal Amount divided by the Initial Share
                                 Price

Exchange Factor..............         ,  subject to adjustment  upon the
                                 occurrence of certain extraordinary dividends
                                 and corporate events affecting the Underlying
                                 Stock through and including the Determination
                                 Date, as described under "Antidilution
                                 Adjustments" below.

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 the scheduled
                                 Maturity Date, but no interest shall accrue on
                                 this HITS or on such payment during the period
                                 from or after the scheduled Maturity Date.

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 Determination Date is postponed in
                                 accordance with the following paragraph.

                                 If the Determination Date is postponed due to a
                                 Market Disruption Event or otherwise, the
                                 Maturity Date shall be postponed so that the
                                 Maturity Date shall be the second Trading Day
                                 following the Determination Date.

Determination Date...........    April 18, 2007; provided that if such date is
                                 not a Trading Day or if a Market Disruption
                                 Event occurs on such day, the Determination
                                 Date shall be the immediately succeeding
                                 Trading Day on which no Market Disruption Event
                                 occurs.

                                 In the event that the Determination Date and
                                 Maturity Date are postponed as described in the
                                 two immediately preceding paragraphs, the
                                 Issuer shall, or

                                       3


<PAGE>


                                 shall cause the Calculation Agent to, give
                                 notice of such postponement and, once it has
                                 been determined, of the date to which the
                                 Maturity Date has been rescheduled, as promptly
                                 as possible, and in no case later than 10:30
                                 a.m. on the Trading Day immediately prior to
                                 the Maturity Date (but if such Trading Day is
                                 not a Business Day, prior to the close of
                                 business on the Business Day preceding the
                                 Maturity Date) (i) to the holder of this HITS
                                 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 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 HITS receives the
                                 notice.

Record Date..................    Notwithstanding the definition of "Record Date"
                                 on page 20 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.

Payment at Maturity..........    Unless the maturity of the HITS has been
                                 accelerated, on the Maturity Date, upon
                                 delivery of this HITS to the Trustee, each
                                 Stated Principal Amount of this HITS shall be
                                 applied by the Issuer as payment for, and the
                                 Issuer shall deliver, either:

                                 (i) if the Trading Price of the Underlying
                                 Stock has not decreased to or below the Trigger
                                 Price at any time on any Trading Day from and
                                 including the Pricing Date to and including the
                                 Determination Date, an amount in cash equal to
                                 the Stated Principal Amount per HITS, or

                                 (ii) if the Trading Price of the Underlying
                                 Stock has decreased to or below the Trigger
                                 Price at any time on any Trading Day from and
                                 including the Pricing Date to and including the
                                 Determination Date, a number of


                                       4
<PAGE>


                                 shares of the Underlying Stock equal to the
                                 product of the Exchange Ratio and the Exchange
                                 Factor, each determined as of the Determination
                                 Date by the Calculation Agent. See "Exchange
                                 Factor" above and "Antidilution Adjustments"
                                 below.

                                 The number of any shares of the Underlying
                                 Stock to be delivered at maturity shall be
                                 subject to any applicable adjustments (i) to
                                 the Exchange Factor 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 up to the close of business on the
                                 Determination 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 the Maturity Date (but if such Trading
                                 Day is not a Business Day, prior to the close
                                 of business on the Business Day preceding the
                                 Maturity Date), of the amount of cash or
                                 Underlying Stock (or the amount of Exchange
                                 Property), as applicable, to be delivered with
                                 respect to each Stated Principal Amount of this
                                 HITS and, in the event of a delivery of the
                                 Underlying Stock, 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
                                 HITS is accelerated because of a Price Event
                                 Acceleration (as defined below) or because of
                                 an Event of Default Acceleration (as defined in
                                 "Alternate Exchange Calculation in Case of an
                                 Event of Default" below), the Issuer shall, or
                                 shall cause the Calculation Agent to, give
                                 notice of such acceleration and of the amount
                                 of cash or Underlying Stock (or any Exchange
                                 Property) payable in connection therewith as
                                 promptly as possible and in no event later than
                                 (A) in the case of an Event of Default
                                 Acceleration, two Trading Days after the date
                                 of such acceleration (but if such second
                                 Trading Day is not a Business Day, prior to the
                                 close of business on the Business Day preceding
                                 such


                                       5
<PAGE>


                                 second Trading Day) and (B) in the case of a
                                 Price Event Acceleration, 10:30 a.m. on the
                                 Trading Day immediately prior to the date of
                                 acceleration (but if such Trading Day is not a
                                 Business Day, prior to the close of business on
                                 the Business Day preceding the date of
                                 acceleration), (i) to the holder of this HITS
                                 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, and (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 HITS receives the
                                 notice. If the maturity of this HITS is
                                 accelerated in the manner described above, no
                                 interest on the amounts payable with respect to
                                 this HITS shall accrue for the period from and
                                 after such 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 cash or
                                 shares of Underlying Stock (or any Exchange
                                 Property), as applicable, and cash in respect
                                 of interest and any fractional shares of
                                 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 HITS. The Calculation Agent
                                 shall determine the Exchange Factor applicable
                                 at the maturity of this HITS.

                                 If this HITS is not surrendered for exchange at
                                 maturity or upon acceleration, it shall be
                                 deemed to be no longer Outstanding under, and
                                 as defined in, the Senior Indenture, except
                                 with respect to the holder's right to receive
                                 the Underlying Stock (and, if applicable, any
                                 Exchange Property) and any cash in respect of
                                 interest and any fractional shares of
                                 Underlying Stock (or any Exchange Property) and
                                 any other cash due at maturity as described in
                                 the preceding paragraph under this heading.



                                       6
<PAGE>


                                 References to payment "per HITS" refer to each
                                 Stated Principal Amount of this HITS.

Price Event Acceleration.....    If on any two consecutive Trading Days during
                                 the period prior to and ending on the third
                                 Business Day immediately preceding the Maturity
                                 Date, the product of the Closing Price per
                                 share of Underlying Stock, as determined by the
                                 Calculation Agent, and the Exchange Factor is
                                 less than the Acceleration Trigger Price, the
                                 Maturity Date of this HITS 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 this HITS shall
                                 receive per Stated Principal Amount of this
                                 HITS on the date of acceleration:

                                     (i) a number of shares of Underlying Stock
                                     equal to the product of the Exchange Ratio
                                     and the Exchange Factor, as of such date of
                                     acceleration; and

                                     (ii) accrued but unpaid interest to but
                                     excluding the date of acceleration plus 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 this HITS
                                     (excluding any portion of such payments of
                                     interest accrued to the date of
                                     acceleration) discounted to the date of
                                     acceleration 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.

                                 The holder of this HITS shall not be entitled
                                 to receive the return of each Stated Principal
                                 Amount of this HITS upon a Price Event
                                 Acceleration.

No Fractional Shares.........    Upon delivery of this HITS to the Trustee at
                                 maturity (including as a result of acceleration
                                 other than an acceleration resulting from an
                                 Event of Default), and if applicable, the
                                 Issuer shall deliver the aggregate number of
                                 shares of Underlying Stock due with respect to
                                 this HITS, as described above, but the Issuer
                                 shall pay cash in lieu of delivering any
                                 fractional share of


                                       7
<PAGE>


                                 Underlying Stock in an amount equal to the
                                 corresponding fractional Closing Price of such
                                 fraction of a share of Underlying Stock as
                                 determined by the Calculation Agent as of the
                                 Determination Date.

Closing Price................    The Closing Price for one share of 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:

                                     (i) 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,

                                     (ii) 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

                                     (iii) 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 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 Underlying Stock
                                 (or one unit of any such other security) on any
                                 Trading Day shall mean the last reported sale
                                 price of the principal


                                       8
<PAGE>


                                 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 shall be the
                                 mean, as determined by the Calculation Agent,
                                 of the bid prices for the Underlying Stock (or
                                 any such other security) for such Trading Day
                                 obtained from as many recognized dealers in
                                 such security, but not exceeding three, as
                                 shall 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" shall include a security
                                 included in any successor to such system, and
                                 the term "OTC Bulletin Board Service" shall
                                 include any successor service thereto.

Intraday Price...............    The Intraday Price for one share of the
                                 Underlying Stock (or one unit of any other
                                 security for which an Intraday Price must be
                                 determined) at any time during any Trading Day
                                 (including at the close) means:

                                     (i) if the Underlying Stock (or any such
                                     other security) is listed or admitted to
                                     trading on a national securities exchange,
                                     the most recently reported sale price,
                                     regular way, at such time during the
                                     principal trading session on such day on
                                     the principal United States securities
                                     exchange registered under the Exchange Act
                                     on which the Underlying Stock (or any such
                                     other security) is listed or admitted to
                                     trading,

                                     (ii) 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 most
                                     recently reported sale price at such time
                                     quoted by The Nasdaq Stock Market, Inc. on
                                     such day, or


                                       9
<PAGE>

                                     (iii) 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, the most recently
                                     reported sale price at such time during the
                                     principal trading session on the OTC
                                     Bulletin Board on such day.

Trading Price................    Trading Price means the product of (i) the
                                 Intraday Price of one share of the Underlying
                                 Stock and (ii) the Exchange Factor, each as
                                 determined by the Calculation Agent at any time
                                 on any Trading Day.

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

Calculation Agent............    Morgan Stanley & Co. Incorporated ("MS & Co.")
                                 and its successors.

                                 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 HITS, the
                                 Trustee and the Issuer.

                                 All calculations with respect to the Exchange
                                 Ratio and the Exchange Factor for this HITS
                                 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), and all dollar amounts paid to the
                                 holder of this HITS in the aggregate related to
                                 interest payments or the payment at maturity
                                 resulting from such calculations shall be
                                 rounded to the nearest cent with one-half cent
                                 rounded upward.

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


                                       10
<PAGE>


                                 1. If the Underlying Stock is subject to a
                                 stock split or reverse stock split, then once
                                 such split has become effective, the Exchange
                                 Factor shall be adjusted to equal the product
                                 of the prior Exchange Factor 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 Factor
                                 shall be adjusted so that the new Exchange
                                 Factor shall equal the prior Exchange Factor
                                 plus the product of (i) the number of shares
                                 issued with respect to one share of the
                                 Underlying Stock and (ii) the prior Exchange
                                 Factor.

                                 3. If the Underlying Company issues rights or
                                 warrants to all holders of the Underlying Stock
                                 to subscribe for or purchase the 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 HITS,
                                 then the Exchange Factor shall be adjusted to
                                 equal the product of the prior Exchange Factor
                                 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 the 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 the
                                 Underlying Stock outstanding immediately prior
                                 to the issuance of such rights or warrants plus
                                 the number of additional shares of the
                                 Underlying Stock which the aggregate offering
                                 price of the total number of shares of the
                                 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


                                       11
<PAGE>


                                 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 Factor 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 paragraph 5 below
                                 and Extraordinary Dividends as described below.
                                 A cash dividend or other distribution with
                                 respect to the Underlying Stock shall be deemed
                                 to be an "Extraordinary Dividend" if such cash
                                 dividend or distribution (a) is defined by the
                                 Underlying Company as an extraordinary or
                                 special dividend or distribution, or (b)
                                 exceeds the immediately preceding
                                 non-Extraordinary Dividend for the Underlying
                                 Stock by an amount equal to at least 5% of the
                                 Closing Price of the Underlying Stock (as
                                 adjusted for any subsequent corporate event
                                 requiring an adjustment hereunder, such as a
                                 stock split or reverse stock split) on the
                                 Trading Day preceding the ex-dividend date
                                 (that is, the day on and after which
                                 transactions in the Underlying Stock on the
                                 primary U.S. organized securities exchange or
                                 trading system on which the Underlying Stock is
                                 traded or trading system no longer carry the
                                 right to receive that cash dividend or that
                                 cash distribution) for the payment of such
                                 Extraordinary Dividend. If an Extraordinary
                                 Dividend occurs with respect to the Underlying
                                 Stock, the Exchange Factor with respect to the
                                 Underlying Stock shall be adjusted on the
                                 ex-dividend date with respect to such
                                 Extraordinary Dividend so that the new Exchange
                                 Factor shall equal the product of (i) the then
                                 current Exchange Factor and (ii) a fraction,
                                 the numerator of which is the Closing Price on
                                 the Trading Day preceding the ex-dividend date,
                                 and the denominator of which is the amount by
                                 which the Closing Price on the Trading Day
                                 preceding the ex-dividend date exceeds the
                                 Extraordinary Dividend Amount. The
                                 "Extraordinary Dividend Amount" with respect to
                                 an Extraordinary Dividend for the Underlying
                                 Stock shall equal (i) in the case of cash
                                 dividends or other distributions that
                                 constitute regular dividends, the amount per
                                 share of such Extraordinary


                                       12
<PAGE>


                                 Dividend minus the amount per share of the
                                 immediately preceding non-Extraordinary
                                 Dividend for the Underlying Stock or (ii) in
                                 the case of cash dividends or other
                                 distributions that do not constitute regular
                                 dividends, the amount per share of such
                                 Extraordinary Dividend. To the extent an
                                 Extraordinary Dividend is not paid in cash, the
                                 value of the non-cash component shall be
                                 determined by the Calculation Agent, whose
                                 determination shall be conclusive. A
                                 distribution on the Underlying Stock described
                                 in clause (i), (iv) or (v) of paragraph 5 below
                                 that also constitutes an Extraordinary Dividend
                                 shall cause an adjustment to the Exchange
                                 Factor pursuant only to clause (i), (iv) or (v)
                                 of paragraph 5, as applicable.

                                 5. If (i) there occurs any reclassification or
                                 change of the Underlying Stock, including,
                                 without limitation, as a result of the issuance
                                 of any tracking stock by the Underlying
                                 Company, (ii) the Underlying Company or any
                                 surviving entity or subsequent surviving entity
                                 of the Underlying Company (an "Underlying
                                 Company Successor") has been subject to a
                                 merger, combination or consolidation and is not
                                 the surviving entity, (iii) any statutory
                                 exchange of securities of the Underlying
                                 Company or any Underlying Company Successor
                                 with another corporation occurs (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 "Spin-off Event") or
                                 (vi) a tender or exchange offer or
                                 going-private transaction is consummated for
                                 all the outstanding shares of the Underlying
                                 Stock (any such event in clauses (i) through
                                 (vi), a "Reorganization Event"), the method of
                                 determining the amount payable upon exchange at
                                 maturity for each HITS shall be adjusted to
                                 provide that holders shall be entitled to
                                 receive at maturity, in respect of the stated
                                 principal amount of each HITS either:

                                     (a) if (x) the trading price of the
                                     Underlying Stock at any time on any Trading
                                     Day from and including the Pricing Date to
                                     and including the effective date of the
                                     Reorganization Event, or (y) the Exchange


                                       13
<PAGE>


                                     Property Value (as defined below) at any
                                     time on any Trading Day from and including
                                     the effective date of the Reorganization
                                     Event to and including the Determination
                                     Date has not decreased to or below the
                                     Trigger Price, and amount of cash equal to
                                     the stated principal amount of each HITS,
                                     or

                                     (b) if (x) the trading price of the
                                     Underlying Stock at any time on any Trading
                                     Day from and including the Pricing Date to
                                     and including the effective date of the
                                     Reorganization Event, or (y) the Exchange
                                     Property Value (as defined below) at any
                                     time on any Trading Day from and including
                                     the effective date of the Reorganization
                                     Event to and including the Determination
                                     Date has decreased to or below the Trigger
                                     Price, securities, cash or any other assets
                                     distributed to holders of the Underlying
                                     Stock in or as a result of any such
                                     Reorganization Event, including (A) in the
                                     case of the issuance of tracking stock, the
                                     reclassified share of the Underlying Stock,
                                     (B) in the case of a Spin-off Event, the
                                     share of the Underlying Stock with respect
                                     to which the spun-off security was issued,
                                     and (C) in the case of any other
                                     Reorganization Event where the Underlying
                                     Stock continues to be held by the holders
                                     receiving such distribution, the Underlying
                                     Stock (collectively, the "Exchange
                                     Property"), in an amount equal to the
                                     amount of Exchange Property delivered with
                                     respect to a number of shares of the
                                     Underlying Stock equal to the Exchange
                                     Ratio times the Exchange Factor each
                                     determined at the time of the
                                     Reorganization Event.

                                 If Exchange Property consists of more than one
                                 type of property, the Issuer shall deliver to
                                 the Depositary, as holder of the HITS, at
                                 maturity a pro rata share of each such type of
                                 Exchange Property. If Exchange Property
                                 includes a cash component, holders shall not
                                 receive any interest accrued on such cash
                                 component. In the event Exchange Property
                                 consists of securities, such securities shall,
                                 in turn, be subject to the antidilution
                                 adjustments set forth in paragraphs 1 through
                                 5.


                                       14
<PAGE>


                                 For purposes of determining whether or not the
                                 Exchange Property Value has decreased to or
                                 below the Trigger Level at any time on any
                                 Trading Day from and including the time of the
                                 Reorganization Event to and including the
                                 Determination Date, "Exchange Property Value"
                                 means (i) for any cash received in any
                                 Reorganization Event, the value, as determined
                                 by the Calculation Agent, as of the date of
                                 receipt, of such cash received for one share of
                                 the Underlying Stock, as adjusted by the
                                 Exchange Factor as the time of such
                                 Reorganization Event, (ii) for any property
                                 other than cash or securities received in any
                                 such Reorganization Event, the market value, as
                                 determined by the Calculation Agent in its sole
                                 discretion, as of the date of receipt, of such
                                 Exchange Property received for one share of the
                                 Underlying Stock, as adjusted by the Exchange
                                 Factor at the time of such Reorganization Event
                                 and (iii) for any security received in any such
                                 Reorganization Event, an amount equal to the
                                 Intraday Price, as of the time at which the
                                 Exchange Property Value is determined, per
                                 share of such security multiplied by the
                                 quantity of such security received for each
                                 share of the Underlying Stock, as adjusted by
                                 the Exchange Factor at the time of such
                                 Reorganization Event.

                                 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 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 paragraph 5 above, (i)
                                 references to the "Underlying Stock" under "No
                                 Fractional Shares," "Price Event Acceleration"
                                 and "Alternate Exchange


                                       15
<PAGE>


                                 Calculation in Case of an Event of Default"
                                 shall be deemed to also refer to any other
                                 security received by holders of the Underlying
                                 Stock in any such Reorganization Event, and
                                 (ii) all other references in this HITS to
                                 "Underlying Stock" shall be deemed to refer to
                                 the Exchange Property into which this HITS is
                                 thereafter exchangeable and references to a
                                 "share" or "shares" of the Underlying Stock
                                 shall be deemed to refer to the applicable unit
                                 or units of such Exchange Property, unless the
                                 context otherwise requires.

                                 No adjustment to the Exchange Factor shall be
                                 required unless such adjustment would require a
                                 change of at least 0.1% in the Exchange Factor
                                 then in effect. The Exchange Factor resulting
                                 from any of the adjustments specified above
                                 shall be rounded to the nearest one
                                 hundred-thousandth, with five one-millionths
                                 rounded upward. Adjustments to the Exchange
                                 Factor shall be made up to the close of
                                 business on the Determination Date.

                                 No adjustments to the Exchange Factor or method
                                 of calculating the Exchange Factor shall be
                                 required other than as specified above.

                                 The Calculation Agent shall be solely
                                 responsible for the determination and
                                 calculation of any adjustments to the Exchange
                                 Factor or method of calculating the Exchange
                                 Factor 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 Factor or
                                 to the method of calculating the amount payable
                                 at maturity of this HITS made pursuant to
                                 paragraph 5 above upon written request by any
                                 holder of this HITS.

Market Disruption Event......    Market Disruption Event means, with respect to
                                 the Underlying Stock:


                                       16
<PAGE>


                                     (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, if available, during the one-half
                                     hour period preceding the close of the
                                     principal trading session in the applicable
                                     market, in each case as determined by the
                                     Calculation Agent in its sole discretion;
                                     and

                                     (ii) a determination by the Calculation
                                     Agent in its sole discretion that any event
                                     described in clause (i) above materially
                                     interfered with the ability of the Issuer
                                     or any of its affiliates to unwind or
                                     adjust all or a material portion of the
                                     hedge with respect to the HITS.

                                 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


                                       17
<PAGE>


                                 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.

Alternate Exchange
  Calculation in Case of an
  Event of Default...........    In case an Event of Default with respect to the
                                 HITS shall have occurred and be continuing, the
                                 amount declared due and payable per each Stated
                                 Principal Amount of this HITS upon any
                                 acceleration of this HITS (an "Event of Default
                                 Acceleration") shall be determined by the
                                 Calculation Agent and shall be an amount in
                                 cash equal to either (i) the Stated Principal
                                 Amount of this HITS plus accrued but unpaid
                                 interest to but excluding the date of such
                                 acceleration or (ii) if the Trading Price of
                                 the Underlying Stock has decreased to or below
                                 the Trigger Price at any time on any Trading
                                 Day from and including the Pricing Date to and
                                 including the date of such acceleration, (x)
                                 the value, as determined based on the Closing
                                 Price of the Underlying Stock on the date of
                                 such acceleration, of a number of shares of the
                                 Underlying Stock at the Exchange Ratio
                                 multiplied by the Exchange Factor as of the
                                 date of acceleration and (y) accrued but unpaid
                                 interest to but excluding the date of such
                                 acceleration.

Treatment of HITS for
  United States Federal
  Income Tax Purposes........    The Issuer, by its sale of this HITS, and the
                                 holder of this HITS (and any successor holder
                                 of, or holder of a beneficial interest in, this
                                 HITS), 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 HITS for all tax purposes as a
                                 unit consisting of (i) an option (the "Option")
                                 granted by the holder to enter into a forward
                                 contract (the "Forward Contract"),


                                       18
<PAGE>


                                 pursuant to which Forward Contract the holder
                                 of this HITS will be required to purchase from
                                 us the Underlying Stock, for an amount equal to
                                 the Stated Principal Amount (the "Forward
                                 Price") at maturity or, alternatively, upon an
                                 earlier redemption of this HITS and (ii) a
                                 deposit with the Issuer of a fixed amount of
                                 cash, equal to the issue price per each Stated
                                 Principal Amount of this HITS, to secure the
                                 holder's obligation to purchase the Underlying
                                 Stock pursuant to the Forward Contract (the
                                 "Deposit"). The Issuer has determined that the
                                 Deposit bears a quarterly compounded yield of
                                     % per annum, and the remainder of the
                                 interest payments on this HITS ( % per annum)
                                 is attributable to premiums on the Option.
                                 Notwithstanding the foregoing, any interest
                                 payments on this HITS made to non-U.S.
                                 investors will generally be withheld upon at a
                                 rate of 30%.


                                       19
<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 cash or Underlying Stock (or the
amount of Exchange Property), as applicable, as determined in accordance with
the provisions set forth under "Payment 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


                                       20
<PAGE>


date of redemption or repayment, will be made by U.S. dollar check mailed to the
address of the person entitled thereto as such address shall appear in the Note
register. A holder of U.S. $10,000,000 (or the equivalent in a Specified
Currency) or more in aggregate principal amount of Notes having the same
Interest 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


                                       21
<PAGE>


the amount of the Specified Currency payable in the absence of such an election
to such holder and at which the applicable dealer commits to execute a contract.
If such bid quotations are not available, such 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.


                                       22
<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


                                       23
<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.


                                       24
<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.


                                       25
<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.


                                       26
<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)


                                       27
<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.


                                       28
<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;


                                       29
<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


                                       30
<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


                                       31
<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.


                                       32
<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.

                            _______________________


                                       33
<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.


                                       34
<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.


                                       35
<PAGE>