Exhibit 4.1


                             FIXED RATE SENIOR NOTE

REGISTERED                                                      REGISTERED
No. FXR                                                         U.S. $
                                                                CUSIP:

     Unless this certificate is presented by an authorized representative of
The Depository Trust Company (55 Water Street, New York, New York) to the
issuer or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or such other name
as requested by an authorized representative of The Depository Trust Company
and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered
owner hereof, Cede & Co., has an interest herein.


                                      A-1
<PAGE>


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

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

                        10% SPARQS(R) DUE JULY 15, 2005
                            MANDATORILY EXCHANGEABLE
                         FOR SHARES OF COMMON STOCK OF
                                   AVAYA INC.

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

For the purposes of this note, paragraph number 10 of Section 2.08 of the
Amended and Restated Indenture, dated as of May 1, 1999, between the Issuer and
JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank) as Trustee,
shall not apply.

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

Maturity Date.................. July 15, 2005, subject to acceleration as
                                described below in "Price Event Acceleration"
                                and "Alternate Exchange


                                      A-2
<PAGE>


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

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

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

Interest Payment Dates.........

                                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 July 15, 2005, but
                                no interest will accrue on this SPARQS or on
                                such payment during the period from or after
                                the scheduled Maturity Date.


                                      A-3
<PAGE>


Record Date.................... Notwithstanding the definition of "Record Date"
                                on page 22 hereof, the Record Date for each
                                Interest Payment Date, including the Interest
                                Payment Date scheduled to occur on the Maturity
                                Date, shall be the date 5 calendar days prior
                                to such scheduled Interest Payment Date,
                                whether or not that date is a Business Day;
                                provided, however, that in the event that the
                                Issuer exercises the Morgan Stanley Call Right,
                                no Interest Payment Date shall occur after the
                                Morgan Stanley Notice Date, except for any
                                Interest Payment Date for which the Morgan
                                Stanley Notice Date falls on or after the
                                "ex-interest" date for the related interest
                                payment, in which case the related interest
                                payment shall be made on such Interest Payment
                                Date; and provided, further, that accrued but
                                unpaid interest payable on the Call Date, if
                                any, shall be payable to the person to whom the
                                Call Price is payable. The "ex- interest" date
                                for any interest payment is the date on which
                                purchase transactions in the SPARQS no longer
                                carry the right to receive such interest
                                payment.

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

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

Morgan Stanley Call Right.....  On any scheduled Trading Day on or after
                                December   , 2004 or on the Maturity Date
                                (including the Maturity Date as it may be
                                extended and regardless of whether the Maturity
                                Date is a Trading Day), the Issuer may call the
                                SPARQS, in whole but not in part, for mandatory
                                exchange for the Call Price paid in cash
                                (together with accrued but unpaid interest) on
                                the Call Date.

                                On the Morgan Stanley Notice Date, the Issuer
                                shall give notice of the Issuer's exercise of
                                the Morgan Stanley Call Right (i) to the holder
                                of this SPARQS by mailing notice of such
                                exercise, specifying the Call Date on which the
                                Issuer shall effect such exchange, by first
                                class mail,


                                      A-4
<PAGE>


                                postage prepaid, to the holder's last address
                                as it shall appear upon the registry books,
                                (ii) to the Trustee by telephone or facsimile
                                confirmed by mailing such notice to the Trustee
                                by first class mail, postage prepaid, at its
                                New York office and (iii) to the Depositary in
                                accordance with the applicable procedures set
                                forth in the Blanket Letter of Representations
                                prepared by the Issuer. Any notice which is
                                mailed in the manner herein provided shall be
                                conclusively presumed to have been duly given,
                                whether or not the holder of this SPARQS
                                receives the notice. Failure to give notice by
                                mail or any defect in the notice to the holder
                                of any SPARQS shall not affect the validity of
                                the proceedings for the exercise of the Morgan
                                Stanley Call Right with respect to any other
                                SPARQS.

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

                                The notice of the Issuer's exercise of the
                                Morgan Stanley Call Right shall be given by the
                                Issuer or, at the Issuer's request, by the
                                Trustee in the name and at the expense of the
                                Issuer.

                                If this SPARQS is so called for mandatory
                                exchange by the Issuer, then the cash Call
                                Price and any accrued but unpaid interest on
                                this SPARQS to be delivered to the holder of
                                this SPARQS shall be delivered on the Call Date
                                fixed by the Issuer and set forth in its notice
                                of its exercise of the Morgan Stanley Call
                                Right, upon delivery of this SPARQS to the
                                Trustee. The Issuer shall, or shall cause the
                                Calculation Agent to, deliver such cash to the
                                Trustee for delivery to the holder of this
                                SPARQS.


                                      A-5
<PAGE>


                                If this SPARQS is not surrendered for exchange
                                on the Call Date, it shall be deemed to be no
                                longer Outstanding under, and as defined in,
                                the Senior Indenture after the Call Date,
                                except with respect to the holder's right to
                                receive cash due in connection with the Morgan
                                Stanley Call Right.

Morgan Stanley Notice Date..... The scheduled Trading Day on which the Issuer
                                issues its notice of mandatory exchange, which
                                must be at least 10 but not more than 30 days
                                prior to the Call Date.

Final Call Notice Date......... July 5, 2005; provided that if July 5, 2005 is
                                not a Trading Day or if a Market Disruption
                                Event occurs on such day, the Final Call Notice
                                Date will be the immediately succeeding Trading
                                Day on which no Market Disruption Event occurs.

Call Date...................... The day specified in the Issuer's notice of
                                mandatory exchange, on which the Issuer shall
                                deliver cash to the holder of this SPARQS, for
                                mandatory exchange, which day may be any
                                scheduled Trading Day on or after December   ,
                                2004 or the Maturity Date (including the
                                Maturity Date as it may be extended and
                                regardless of whether the Maturity Date is a
                                scheduled Trading Day). See "Maturity Date"
                                above.

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

Exchange at Maturity........... At maturity, subject to a prior call of this
                                SPARQS for cash in an amount equal to the Call
                                Price by the Issuer as described under "Morgan
                                Stanley Call Right" above or any acceleration
                                of the SPARQS, upon delivery of this SPARQS to
                                the Trustee, each $         principal amount of
                                this SPARQS shall be applied by the Issuer as
                                payment for a number of shares of the common
                                stock of Avaya


                                      A-6
<PAGE>


                                Inc. ("Avaya Stock") at the Exchange Ratio, and
                                the Issuer shall deliver with respect to each
                                $         principal amount of this SPARQS an
                                amount of Avaya Stock equal to the Exchange
                                Ratio.

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

                                The Issuer shall, or shall cause the
                                Calculation Agent to, provide written notice to
                                the Trustee at its New York Office and to the
                                Depositary, on which notice the Trustee and
                                Depositary may conclusively rely, on or prior
                                to 10:30 a.m. on the Trading Day immediately
                                prior to maturity of this SPARQS (but if such
                                Trading Day is not a Business Day, prior to the
                                close of business on the Business Day preceding
                                maturity of this SPARQS), of the amount of
                                Avaya Stock (or the amount of Exchange
                                Property) or cash to be delivered with respect
                                to each $         principal amount of this
                                SPARQS and of the amount of any cash to be paid
                                in lieu of any fractional share of Avaya Stock
                                (or of any other securities included in
                                Exchange Property, if applicable); provided
                                that if the maturity date of this SPARQS is
                                accelerated (x) because of a Price Event
                                Acceleration (as described under "Price Event
                                Acceleration" below) or (y) because of an Event
                                of Default Acceleration (as defined under
                                "Alternate Exchange Calculation in Case of an
                                Event of Default" below), the Issuer shall give
                                notice of such acceleration as promptly as
                                possible, and in no case later than (A) in the
                                case of an Event of Default Acceleration, two
                                Trading Days following such deemed maturity
                                date or (B) in the case of a Price Event
                                Acceleration, 10:30 a.m. on the Trading Day
                                immediately prior to the date of acceleration
                                (as defined under "Price Event Acceleration"
                                below), (i) to the holder of this SPARQS by
                                mailing notice of such acceleration by first
                                class mail, postage prepaid, to the


                                      A-7
<PAGE>


                                holder's last address as it shall appear upon
                                the registry books, (ii) to the Trustee by
                                telephone or facsimile confirmed by mailing
                                such notice to the Trustee by first class mail,
                                postage prepaid, at its New York office and
                                (iii) to the Depositary by telephone or
                                facsimile confirmed by mailing such notice to
                                the Depositary by first class mail, postage
                                prepaid. Any notice that is mailed in the
                                manner herein provided shall be conclusively
                                presumed to have been duly given, whether or
                                not the holder of this SPARQS receives the
                                notice. If the maturity of this SPARQS is
                                accelerated, no interest on the amounts payable
                                with respect to this SPARQS shall accrue for
                                the period from and after such accelerated
                                maturity date; provided that the Issuer has
                                deposited with the Trustee the Avaya Stock, the
                                Exchange Property or any cash due with respect
                                to such acceleration by such accelerated
                                maturity date.

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

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

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


                                      A-8
<PAGE>


                                this SPARQS shall receive per SPARQS on the
                                date of acceleration:

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

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

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

No Fractional Shares..........  Upon delivery of this SPARQS to the Trustee at
                                maturity, the Issuer shall deliver the
                                aggregate number of shares of Avaya Stock due
                                with respect to this SPARQS, as described
                                above, but the Issuer shall pay cash in lieu of
                                delivering any fractional share of Avaya Stock
                                in an amount equal to the corresponding
                                fractional Closing Price of such fraction of a
                                share of Avaya Stock as determined by the
                                Calculation Agent as of the second scheduled
                                Trading Day prior to maturity of this SPARQS.

Exchange Ratio.................                   , subject to adjustment for
                                corporate events relating to Avaya Inc.
                                ("Avaya") described under "Antidilution
                                Adjustments" below.

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

                                o if Avaya 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


                                      A-9
<PAGE>


                                securities exchange registered under the
                                Securities Exchange Act of 1934, as amended
                                (the "Exchange Act"), on which Avaya Stock (or
                                any such other security) is listed or admitted
                                to trading,

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

                                o if Avaya Stock (or any such other security)
                                is not listed or admitted to trading on any
                                national securities exchange or a security of
                                the Nasdaq National Market but is included in
                                the OTC Bulletin Board Service (the "OTC
                                Bulletin Board") operated by the National
                                Association of Securities Dealers, Inc. (the
                                "NASD"), the last reported sale price of the
                                principal trading session on the OTC Bulletin
                                Board on such day.

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


                                      A-10
<PAGE>


                                security included in any successor to such
                                system, and the term OTC Bulletin Board Service
                                will include any successor service thereto.

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

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

                                All calculations with respect to the Exchange
                                Ratio and Call Price for the SPARQS shall be
                                made by the Calculation Agent and shall be
                                rounded to the nearest one hundred-thousandth,
                                with five one-millionths rounded upward (e.g.,
                                .876545 would be rounded to .87655); all dollar
                                amounts related to the Call Price resulting
                                from such calculations shall be rounded to the
                                nearest ten-thousandth, with five one
                                hundred-thousandths rounded upward (e.g.,
                                .76545 would be rounded to .7655); and all
                                dollar amounts paid with respect to the Call
                                Price on the aggregate number of SPARQS shall
                                be rounded to the nearest cent, with one-half
                                cent rounded upward.

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

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

                                     1. If Avaya Stock is subject to a stock
                                split or reverse stock split, then once such
                                split has become effective, the Exchange Ratio
                                shall be adjusted to equal the product of the
                                prior Exchange Ratio and the number of shares
                                issued in such stock split or reverse stock
                                split with respect to one share of Avaya Stock.

                                     2. If Avaya Stock is subject (i) to a
                                stock dividend (issuance of additional shares
                                of Avaya Stock) that is given ratably to all
                                holders of shares of Avaya Stock or (ii) to a
                                distribution of Avaya Stock as a result of the


                                      A-11
<PAGE>


                                triggering of any provision of the corporate
                                charter of Avaya Airways, then once the
                                dividend has become effective and Avaya Stock
                                is trading ex-dividend, the Exchange Ratio
                                shall be adjusted so that the new Exchange
                                Ratio shall equal the prior Exchange Ratio plus
                                the product of (i) the number of shares issued
                                with respect to one share of Avaya Stock and
                                (ii) the prior Exchange Ratio.

                                     3. If Avaya issues rights or warrants to
                                all holders of Avaya Stock to subscribe for or
                                purchase Avaya Stock at an exercise price per
                                share less than the Closing Price of Avaya
                                Stock on both (i) the date the exercise price
                                of such rights or warrants is determined and
                                (ii) the expiration date of such rights or
                                warrants, and if the expiration date of such
                                rights or warrants precedes the maturity of
                                this SPARQS, then the Exchange Ratio shall be
                                adjusted to equal the product of the prior
                                Exchange Ratio and a fraction, the numerator of
                                which shall be the number of shares of Avaya
                                Stock outstanding immediately prior to the
                                issuance of such rights or warrants plus the
                                number of additional shares of Avaya Stock
                                offered for subscription or purchase pursuant
                                to such rights or warrants and the denominator
                                of which shall be the number of shares of Avaya
                                Stock outstanding immediately prior to the
                                issuance of such rights or warrants plus the
                                number of additional shares of Avaya Stock
                                which the aggregate offering price of the total
                                number of shares of Avaya Stock so offered for
                                subscription or purchase pursuant to such
                                rights or warrants would purchase at the
                                Closing Price on the expiration date of such
                                rights or warrants, which shall be determined
                                by multiplying such total number of shares
                                offered by the exercise price of such rights or
                                warrants and dividing the product so obtained
                                by such Closing Price.

                                     4. There shall be no adjustments to the
                                Exchange Ratio to reflect cash dividends or
                                other distributions paid with respect to Avaya
                                Stock other than distributions described in
                                paragraph 2, paragraph 3 and clauses (i), (iv)
                                and (v) of the first sentence of paragraph 5
                                and Extraordinary Dividends. "Extraordinary
                                Dividend" means each of (a) the full amount per
                                share of Avaya Stock of any cash dividend or
                                special dividend or distribution that is
                                identified by Avaya as an extraordinary


                                      A-12
<PAGE>


                                or special dividend or distribution, (b) the
                                excess of any cash dividend or other cash
                                distribution (that is not otherwise identified
                                by Avaya as an extraordinary or special
                                dividend or distribution) distributed per share
                                of Avaya Stock over the immediately preceding
                                cash dividend or other cash distribution, if
                                any, per share of Avaya Stock that did not
                                include an Extraordinary Dividend (as adjusted
                                for any subsequent corporate event requiring an
                                adjustment hereunder, such as a stock split or
                                reverse stock split) if such excess portion of
                                the dividend or distribution is more than 5% of
                                the Closing Price of Avaya Stock on the Trading
                                Day preceding the "ex-dividend date" (that is,
                                the day on and after which transactions in
                                Avaya Stock on an organized securities exchange
                                or trading system no longer carry the right to
                                receive that cash dividend or other cash
                                distribution) for the payment of such cash
                                dividend or other cash distribution (such
                                Closing Price, the "Base Closing Price") and
                                (c) the full cash value of any non-cash
                                dividend or distribution per share of Avaya
                                Stock (excluding Marketable Securities, as
                                defined in paragraph 5 below). Subject to the
                                following sentence, if any cash dividend or
                                distribution of such other property with
                                respect to Avaya Stock includes an
                                Extraordinary Dividend, the Exchange Ratio with
                                respect to Avaya Stock shall be adjusted on the
                                ex-dividend date so that the new Exchange Ratio
                                shall equal the product of (i) the prior
                                Exchange Ratio and (ii) a fraction, the
                                numerator of which is the Base Closing Price,
                                and the denominator of which is the amount by
                                which the Base Closing Price exceeds the
                                Extraordinary Dividend. If any Extraordinary
                                Dividend is at least 35% of the Base Closing
                                Price, then, instead of adjusting the Exchange
                                Ratio, the amount payable upon exchange at
                                maturity shall be determined as described in
                                paragraph 5 below, and the Extraordinary
                                Dividend shall be allocated to Reference Basket
                                Stocks in accordance with the procedures for a
                                Reference Basket Event as described in clause
                                (c)(ii) of paragraph 5 below. The value of the
                                non-cash component of an Extraordinary Dividend
                                shall be determined on the ex-dividend date for
                                such distribution by the Calculation Agent,
                                whose determination shall be conclusive in the
                                absence of manifest error. A distribution on
                                Avaya Stock described in clause (i), (iv) or
                                (v) of the first sentence of paragraph 5 below
                                shall cause an adjustment to the Exchange Ratio


                                      A-13
<PAGE>


                                pursuant only to clause (i), (iv) or (v) of the
                                first sentence of paragraph 5, as applicable.

                                     5. Any of the following shall constitute a
                                Reorganization Event: (i) Avaya Stock is
                                reclassified or changed, including, without
                                limitation, as a result of the issuance of any
                                tracking stock by Avaya, (ii) Avaya has been
                                subject to any merger, combination or
                                consolidation and is not the surviving entity,
                                (iii) Avaya completes a statutory exchange of
                                securities with another corporation (other than
                                pursuant to clause (ii) above), (iv) Avaya is
                                liquidated, (v) Avaya issues to all of its
                                shareholders equity securities of an issuer
                                other than Avaya (other than in a transaction
                                described in clause (ii), (iii) or (iv) above)
                                (a "spinoff stock") or (vi) Avaya Stock is the
                                subject of a tender or exchange offer or going
                                private transaction on all of the outstanding
                                shares. If any Reorganization Event occurs, in
                                each case as a result of which the holders of
                                Avaya Stock receive any equity security listed
                                on a national securities exchange or traded on
                                The Nasdaq National Market (a "Marketable
                                Security"), other securities or other property,
                                assets or cash (collectively "Exchange
                                Property"), the amount payable upon exchange at
                                maturity with respect to each $
                                principal amount of this SPARQS following the
                                effective date for such Reorganization Event
                                (or, if applicable, in the case of spinoff
                                stock, the ex-dividend date for the
                                distribution of such spinoff stock) shall be
                                determined in accordance with the following:

                                (a) if Avaya Stock continues to be outstanding,
                                Avaya Stock (if applicable, as reclassified
                                upon the issuance of any tracking stock) at the
                                Exchange Ratio in effect on the third Trading
                                Day prior to the scheduled Maturity Date
                                (taking into account any adjustments for any
                                distributions described under clause (c)(i)
                                below); and

                                (b) for each Marketable Security received in
                                such Reorganization Event (each a "New Stock"),
                                including the issuance of any tracking stock or
                                spinoff stock or the receipt of any stock
                                received in exchange for Avaya Stock where
                                Avaya is not the surviving entity, the number
                                of shares of the New Stock received with
                                respect to one share of Avaya Stock multiplied
                                by the Exchange Ratio for Avaya Stock on the
                                Trading Day immediately prior to the effective
                                date of the Reorganization Event (the "New
                                Stock Exchange Ratio"), as adjusted to the
                                third Trading


                                      A-14
<PAGE>


                                Day prior to the scheduled Maturity Date
                                (taking into account any adjustments for
                                distributions described under clause (c)(i)
                                below); and

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

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

                                   (ii) if the Non-Stock Exchange Property
                                   Value is equal to or exceeds 25% of the
                                   Closing Price of Avaya Stock on the Trading
                                   Day immediately prior to the effective date
                                   relating to such Reorganization Event or, if
                                   Avaya Stock is surrendered exclusively for
                                   Non-Stock Exchange Property (in each case, a
                                   "Reference Basket Event"), an initially
                                   equal-dollar weighted basket of three
                                   Reference Basket Stocks (as defined below)
                                   with an aggregate value on the


                                      A-15
<PAGE>


                                   effective date of such Reorganization Event
                                   equal to the Non-Stock Exchange Property
                                   Value multiplied by the Exchange Ratio in
                                   effect for Avaya Stock on the Trading Day
                                   immediately prior to the effective date of
                                   such Reorganization Event. The "Reference
                                   Basket Stocks" shall be the three stocks
                                   with the largest market capitalization among
                                   the stocks that then comprise the S&P 500
                                   Index (or, if publication of such index is
                                   discontinued, any successor or substitute
                                   index selected by the Calculation Agent in
                                   its sole discretion) with the same primary
                                   Standard Industrial Classification Code
                                   ("SIC Code") as Avaya; provided, however,
                                   that a Reference Basket Stock shall not
                                   include any stock that is subject to a
                                   trading restriction under the trading
                                   restriction policies of Morgan Stanley or
                                   any of its affiliates that would materially
                                   limit the ability of Morgan Stanley or any
                                   of its affiliates to hedge the SPARQS with
                                   respect to such stock (a "Hedging
                                   Restriction"); provided further that if
                                   three Reference Basket Stocks cannot be
                                   identified from the S&P 500 Index by primary
                                   SIC Code for which a Hedging Restriction
                                   does not exist, the remaining Reference
                                   Basket Stock(s) shall be selected by the
                                   Calculation Agent from the largest market
                                   capitalization stock(s) within the same
                                   Division and Major Group classification (as
                                   defined by the Office of Management and
                                   Budget) as the primary SIC Code for Avaya.
                                   Each Reference Basket Stock shall be
                                   assigned a Basket Stock Exchange Ratio equal
                                   to the number of shares of such Reference
                                   Basket Stock with a Closing Price on the
                                   effective date of such Reorganization Event
                                   equal to the product of (a) the Non-Stock
                                   Exchange Property Value, (b) the Exchange
                                   Ratio in effect for Avaya Stock on the
                                   Trading Day immediately prior to the
                                   effective date of such Reorganization Event
                                   and (c) 0.3333333.

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


                                      A-16
<PAGE>


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

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

                                   (z) if applicable, for each Reference Basket
                                Stock, such Reference Basket Stock at the
                                Basket Stock Exchange Ratio then in effect for
                                such Reference Basket Stock.

                                In each case, the applicable Exchange Ratio
                                (including for this purpose, any New Stock
                                Exchange Ratio or Basket Stock Exchange Ratio)
                                shall be determined by the Calculation Agent on
                                the third Trading Day prior to the scheduled
                                Maturity Date.

                                For purposes of paragraph 5 above, in the case
                                of a consummated tender or exchange offer or
                                going-private transaction involving Exchange
                                Property of a particular type, Exchange
                                Property shall be deemed to include the amount
                                of cash or other property paid by the offeror
                                in the tender or exchange offer with respect to
                                such Exchange Property (in an amount determined
                                on the basis of the rate of exchange in such
                                tender or exchange offer or going-private
                                transaction). In the event of a tender or
                                exchange offer or a going-private transaction
                                with respect to Exchange Property in which an
                                offeree may elect to receive cash or other
                                property, Exchange Property shall be deemed to
                                include the kind and amount of cash and other
                                property received by offerees who elect to
                                receive cash.

                                Following the occurrence of any Reorganization
                                Event referred to in paragraphs 4 or 5 above,
                                (i) references to "Avaya Stock" under "No
                                Fractional Shares," "Closing Price" and "Market
                                Disruption Event" shall be deemed to also refer
                                to any New Stock or Reference Basket Stock, and
                                (ii) all other references in this SPARQS to
                                "Avaya Stock" shall be deemed to refer to the
                                Exchange Property into which this SPARQS is
                                thereafter exchangeable and references to a
                                "share" or "shares" of Avaya Stock shall be
                                deemed to refer to the applicable unit or units
                                of such Exchange Property, including any New
                                Stock or Reference Basket Stock, unless the
                                context otherwise requires. The New Stock
                                Exchange Ratio(s) or Basket


                                      A-17
<PAGE>


                                Stock Exchange Ratios resulting from any
                                Reorganization Event described in paragraph 5
                                above or similar adjustment under paragraph 4
                                above shall be subject to the adjustments set
                                forth in paragraphs 1 through 5 hereof.

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

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

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

                                The Calculation Agent shall be solely
                                responsible for the determination and
                                calculation of any adjustments to the Exchange
                                Ratio, any New Stock Exchange Ratio or Basket
                                Stock Exchange Ratio or method of calculating
                                the Exchange Property Value and of any related
                                determinations and calculations with respect to
                                any distributions of stock, other securities or
                                other property or assets (including cash) in
                                connection with any corporate event described
                                in paragraphs 1 through 5 above, and its
                                determinations and calculations with respect
                                thereto shall be conclusive in the absence of
                                manifest error.

                                The Calculation Agent shall provide information
                                as to any adjustments to the Exchange Ratio or
                                to the method of calculating the amount payable
                                upon exchange at maturity of the SPARQS made
                                pursuant to paragraphs 1 through


                                      A-18
<PAGE>


                                5 above upon written request by any holder of
                                this SPARQS.

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

                                   (i) a suspension, absence or material
                                   limitation of trading of Avaya Stock on the
                                   primary market for Avaya 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 Avaya Stock as a result of which
                                   the reported trading prices for Avaya 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
                                   Avaya Stock, if available, during the
                                   one-half hour period preceding the close of
                                   the principal trading session in the
                                   applicable market, in each case as
                                   determined by the Calculation Agent in its
                                   sole discretion; and

                                   (ii) a determination by the Calculation
                                   Agent in its sole discretion that any event
                                   described in clause (i) above materially
                                   interfered with the ability of the Issuer or
                                   any of its affiliates to unwind or adjust
                                   all or a material portion of the hedge with
                                   respect to the SPARQS due July 15, 2005,
                                   Mandatorily Exchangeable for Shares of
                                   Common Stock of Avaya.

                                For purposes of determining whether a Market
                                Disruption Event has occurred: (i) 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, (ii) a
                                decision to permanently discontinue trading in
                                the relevant options contract shall not
                                constitute a Market Disruption Event, (iii)
                                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


                                      A-19
<PAGE>


                                fluctuations shall constitute a suspension,
                                absence or material limitation of trading, (iv)
                                a suspension of trading in options contracts on
                                Avaya Stock by the primary securities market
                                trading in such options, if available, by
                                reason of (a) a price change exceeding limits
                                set by such securities exchange or market, (b)
                                an imbalance of orders relating to such
                                contracts or (c) 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 Avaya Stock and (v) a suspension,
                                absence or material limitation of trading on
                                the primary securities market on which options
                                contracts related to Avaya Stock are traded
                                shall not include any time when such securities
                                market is itself closed for trading under
                                ordinary circumstances.

Alternate Exchange
Calculation in Case of an
Event of Default............... In case an event of default with respect to the
                                SPARQS shall have occurred and be continuing,
                                the amount declared due and payable per each
                                $         principal amount of this SPARQS upon
                                any acceleration of this SPARQS (an "Event of
                                Default Acceleration") shall be determined by
                                the Calculation Agent and shall be an amount in
                                cash equal to the lesser of (i) the product of
                                (x) the Closing Price of Avaya Stock (and/or
                                the value of any Exchange Property) as of the
                                date of such acceleration and (y) the then
                                current Exchange Ratio and (ii) the Call Price
                                calculated as though the date of acceleration
                                were the Call Date (but in no event less than
                                the Call Price for the first Call Date), in
                                each case plus accrued but unpaid interest to
                                but excluding the date of acceleration;
                                provided that if the Issuer has called the
                                SPARQS in accordance with the Morgan Stanley
                                Call Right, the amount declared due and payable
                                upon any such acceleration shall be an amount
                                in cash for each $         principal amount of
                                this SPARQS equal to the Call Price for the
                                Call Date specified in the Issuer's notice of
                                mandatory exchange, plus accrued but unpaid
                                interest to but excluding the date of
                                acceleration.

Treatment of SPARQS for
United States Federal
Income Tax Purposes............ The Issuer, by its sale of this SPARQS, and the
                                holder of this SPARQS (and any successor holder
                                of, or holder of a beneficial interest in, this
                                SPARQS), by its respective purchase hereof,
                                agree (in the absence of an administrative
                                determination or judicial ruling to the


                                      A-20
<PAGE>


                                contrary) to characterize each $
                                principal amount of this SPARQS for all tax
                                purposes as an investment unit consisting of
                                (A) a terminable contract (the "Terminable
                                Forward Contract") that (i) requires the holder
                                of this SPARQS (subject to the Morgan Stanley
                                Call Right) to purchase, and the Issuer to
                                sell, for an amount equal to $         (the
                                "Forward Price"), Avaya Stock at maturity and
                                (ii) allows the Issuer, upon exercise of the
                                Morgan Stanley Call Right, to terminate the
                                Terminable Forward Contract by returning to
                                such holder the Deposit (as defined below) and
                                paying to such holder an amount of cash equal
                                to the difference between the Deposit and the
                                Call Price and (B) a deposit with the Issuer of
                                a fixed amount of cash, equal to the Issue
                                Price per each $         principal amount of
                                this SPARQS, to secure the holder's obligation
                                to purchase Avaya Stock pursuant to the
                                Terminable Forward Contract (the "Deposit"),
                                which Deposit bears a quarterly compounded
                                yield of     % per annum.


                                      A-21
<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 Avaya Stock (or other Exchange
Property), as determined in accordance with the provisions set forth under
"Exchange at Maturity" above, due with respect to the principal sum of U.S.
$             (UNITED STATES DOLLARS                         ) on the Maturity
Date specified above (except to the extent redeemed or repaid prior to
maturity) and to pay interest thereon at the Interest Rate per annum specified
above, from and including the Interest Accrual Date specified above until the
principal hereof is paid or duly made available for payment weekly, monthly,
quarterly, semiannually or annually in arrears as specified above as the
Interest Payment Period on each Interest Payment Date (as specified above),
commencing on the Interest Payment Date next succeeding the Interest Accrual
Date specified above, and at maturity (or on any redemption or repayment date);
provided, however, that if the Interest Accrual Date occurs between a Record
Date, as defined below, and the next succeeding Interest Payment Date, interest
payments will commence on the second Interest Payment Date succeeding the
Interest Accrual Date to the registered holder of this Note on the Record Date
with respect to such second Interest Payment Date; and provided, further, that
if this Note is subject to "Annual Interest Payments," interest payments shall
be made annually in arrears and the term "Interest Payment Date" shall be
deemed to mean the first day of March in each year.

     Interest on this Note will accrue from and including the most recent date
to which interest has been paid or duly provided for, or, if no interest has
been paid or duly provided for, from and including the Interest Accrual Date,
until but excluding the date the principal hereof has been paid or duly made
available for payment. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, subject to certain exceptions
described herein, be paid to the person in whose name this Note (or one or more
predecessor Notes) is registered at the close of business on the date 15
calendar days prior to such Interest Payment Date (whether or not a Business
Day (as defined below)) (each such date, a "Record Date"); provided, however,
that interest payable at maturity (or any redemption or repayment date) will be
payable to the person to whom the principal hereof shall be payable. As used
herein, "Business Day" means any day, other than a Saturday or Sunday, (a) that
is neither a legal holiday nor a day on which banking institutions are
authorized or required by law or regulation to close (x) in The City of New
York or (y) if this Note is denominated in a Specified Currency other than U.S.
dollars, euro or Australian dollars, in the principal financial center of the
country of the Specified Currency, or (z) if this Note is denominated in
Australian dollars, in Sydney and (b) if this Note is denominated in euro, that
is also a day on which the Trans-European Automated Real-time Gross Settlement
Express Transfer System ("TARGET") is operating (a "TARGET Settlement Day").

     Payment of the principal of this Note, any premium and the interest due at
maturity (or any redemption or repayment date), unless this Note is denominated
in a Specified Currency other than U.S. dollars and is to be paid in whole or
in part in such Specified Currency, will be made in immediately available funds
upon surrender of this Note at the office or agency of the Paying Agent, as
defined on the reverse hereof, maintained for that purpose in the Borough of
Manhattan, The City of New York, or at such other paying agency as the Issuer
may determine, in U.S. dollars. U.S. dollar payments of interest, other than
interest due at maturity or on any date of redemption or repayment, will be
made by U.S. dollar check mailed to the address of the person entitled thereto
as such address shall appear in the Note register. A holder of U.S. $10,000,000
(or the equivalent


                                      A-22
<PAGE>


in a Specified Currency) or more in aggregate principal amount of Notes having
the same Interest Payment Date, the interest on which is payable in U.S.
dollars, shall be entitled to receive payments of interest, other than interest
due at maturity or on any date of redemption or repayment, by wire transfer of
immediately available funds if appropriate wire transfer instructions have been
received by the Paying Agent in writing not less than 15 calendar days prior to
the applicable Interest Payment Date.

     If this Note is denominated in a Specified Currency other than U.S.
dollars, and the holder does not elect (in whole or in part) to receive payment
in U.S. dollars pursuant to the next succeeding paragraph, payments of
interest, principal or any premium with regard to this Note will be made by
wire transfer of immediately available funds to an account maintained by the
holder hereof with a bank located outside the United States if appropriate wire
transfer instructions have been received by the Paying Agent in writing, with
respect to payments of interest, on or prior to the fifth Business Day after
the applicable Record Date and, with respect to payments of principal or any
premium, at least ten Business Days prior to the Maturity Date or any
redemption or repayment date, as the case may be; provided that, if payment of
interest, principal or any premium with regard to this Note is payable in euro,
the account must be a euro account in a country for which the euro is the
lawful currency, provided, further, that if such wire transfer instructions are
not received, such payments will be made by check payable in such Specified
Currency mailed to the address of the person entitled thereto as such address
shall appear in the Note register; and provided, further, that payment of the
principal of this Note, any premium and the interest due at maturity (or on any
redemption or repayment date) will be made upon surrender of this Note at the
office or agency referred to in the preceding paragraph.

     If so indicated on the face hereof, the holder of this Note, if
denominated in a Specified Currency other than U.S. dollars, may elect to
receive all or a portion of payments on this Note in U.S. dollars by
transmitting a written request to the Paying Agent, on or prior to the fifth
Business Day after such Record Date or at least ten Business Days prior to the
Maturity Date or any redemption or repayment date, as the case may be. Such
election shall remain in effect unless such request is revoked by written
notice to the Paying Agent as to all or a portion of payments on this Note at
least five Business Days prior to such Record Date, for payments of interest,
or at least ten calendar days prior to the Maturity Date or any redemption or
repayment date, for payments of principal, as the case may be.

     If the holder elects to receive all or a portion of payments of principal
of, premium, if any, and interest on this Note, if denominated in a Specified
Currency other than U.S. dollars, in U.S. dollars, the Exchange Rate Agent (as
defined on the reverse hereof) will convert such payments into U.S. dollars. In
the event of such an election, payment in respect of this Note will be based
upon the exchange rate as determined by the Exchange Rate Agent based on the
highest bid quotation in The City of New York received by such Exchange Rate
Agent at approximately 11:00 a.m., New York City time, on the second Business
Day preceding the applicable payment date from three recognized foreign
exchange dealers (one of which may be the Exchange Rate Agent unless such
Exchange Rate Agent is an affiliate of the Issuer) for the purchase by the
quoting dealer of the Specified Currency for U.S. dollars for settlement on
such payment date in the amount of the Specified Currency payable in the
absence of such an election to such holder and at which the applicable dealer
commits to execute a contract. If such bid quotations are not available, such


                                      A-23
<PAGE>


payment will be made in the Specified Currency. All currency exchange costs
will be borne by the holder of this Note by deductions from such payments.

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

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


                                      A-24
<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,
    as Trustee


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


                                      A-25
<PAGE>


                              REVERSE OF SECURITY

     This Note is one of a duly authorized issue of Senior Global Medium-Term
Notes, Series C, having maturities more than nine months from the date of issue
(the "Notes") of the Issuer. The Notes are issuable under an Amended and
Restated Senior Indenture, dated as of May 1, 1999, between the Issuer and
JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), as Trustee
(the "Trustee," which term includes any successor trustee under the Senior
Indenture) (as may be amended or supplemented from time to time, the "Senior
Indenture"), to which Senior Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities of the Issuer, the Trustee and holders of the
Notes and the terms upon which the Notes are, and are to be, authenticated and
delivered. The Issuer has appointed JPMorgan Chase Bank at its corporate trust
office in The City of New York as the paying agent (the "Paying Agent," which
term includes any additional or successor Paying Agent appointed by the Issuer)
with respect to the Notes. The terms of individual Notes may vary with respect
to interest rates, interest rate formulas, issue dates, maturity dates, or
otherwise, all as provided in the Senior Indenture. To the extent not
inconsistent herewith, the terms of the Senior Indenture are hereby
incorporated by reference herein.

     Unless otherwise indicated on the face hereof, this Note will not be
subject to any sinking fund and, unless otherwise provided on the face hereof
in accordance with the provisions of the following two paragraphs, will not be
redeemable or subject to repayment at the option of the holder prior to
maturity.

     If so indicated on the face hereof, this Note may be redeemed in whole or
in part at the option of the Issuer on or after the Initial Redemption Date
specified on the face hereof on the terms set forth on the face hereof,
together with interest accrued and unpaid hereon to the date of redemption. If
this Note is subject to "Annual Redemption Percentage Reduction," the Initial
Redemption Percentage indicated on the face hereof will be reduced on each
anniversary of the Initial Redemption Date by the Annual Redemption Percentage
Reduction specified on the face hereof until the redemption price of this Note
is 100% of the principal amount hereof, together with interest accrued and
unpaid hereon to the date of redemption. Notice of redemption shall be mailed
to the registered holders of the Notes designated for redemption at their
addresses as the same shall appear on the Note register not less than 30 nor
more than 60 calendar days prior to the date fixed for redemption or within the
Redemption Notice Period specified on the face hereof, subject to all the
conditions and provisions of the Senior Indenture. In the event of redemption
of this Note in part only, a new Note or Notes for the amount of the unredeemed
portion hereof shall be issued in the name of the holder hereof upon the
cancellation hereof.

     If so indicated on the face of this Note, this Note will be subject to
repayment at the option of the holder on the Optional Repayment Date or Dates
specified on the face hereof on the terms set forth herein. On any Optional
Repayment Date, this Note will be repayable in whole or in part in increments
of $1,000 or, if this Note is denominated in a Specified Currency other than
U.S. dollars, in increments of 1,000 units of such Specified Currency (provided
that any remaining principal amount hereof shall not be less than the minimum
authorized denomination hereof) at the option of the holder hereof at a price
equal to 100% of the principal amount to be repaid, together with interest
accrued and unpaid hereon to the date of repayment, provided that if this Note
is issued with original


                                      A-26
<PAGE>


issue discount, this Note will be repayable on the applicable Optional
Repayment Date or Dates at the price(s) specified on the face hereof. For this
Note to be repaid at the option of the holder hereof, the Paying Agent must
receive at its corporate trust office in the Borough of Manhattan, The City of
New York, at least 15 but not more than 30 calendar days prior to the date of
repayment, (i) this Note with the form entitled "Option to Elect Repayment"
below duly completed or (ii) a telegram, telex, facsimile transmission or a
letter from a member of a national securities exchange or the National
Association of Securities Dealers, Inc. or a commercial bank or a trust company
in the United States setting forth the name of the holder of this Note, the
principal amount hereof, the certificate number of this Note or a description
of this Note's tenor and terms, the principal amount hereof to be repaid, a
statement that the option to elect repayment is being exercised thereby and a
guarantee that this Note, together with the form entitled "Option to Elect
Repayment" duly completed, will be received by the Paying Agent not later than
the fifth Business Day after the date of such telegram, telex, facsimile
transmission or letter; provided, that such telegram, telex, facsimile
transmission or letter shall only be effective if this Note and form duly
completed are received by the Paying Agent by such fifth Business Day. Exercise
of such repayment option by the holder hereof shall be irrevocable. In the
event of repayment of this Note in part only, a new Note or Notes for the
amount of the unpaid portion hereof shall be issued in the name of the holder
hereof upon the cancellation hereof.

     Interest payments on this Note will include interest accrued to but
excluding the Interest Payment Dates or the Maturity Date (or any earlier
redemption or repayment date), as the case may be. Unless otherwise provided on
the face hereof, interest payments for this Note will be computed and paid on
the basis of a 360-day year of twelve 30-day months.

     In the case where the Interest Payment Date or the Maturity Date (or any
redemption or repayment date) does not fall on a Business Day, payment of
interest, premium, if any, or principal otherwise payable on such date need not
be made on such date, but may be made on the next succeeding Business Day with
the same force and effect as if made on the Interest Payment Date or on the
Maturity Date (or any redemption or repayment date), and no interest on such
payment shall accrue for the period from and after the Interest Payment Date or
the Maturity Date (or any redemption or repayment date) to such next succeeding
Business Day.

     This Note and all the obligations of the Issuer hereunder are direct,
unsecured obligations of the Issuer and rank without preference or priority
among themselves and pari passu with all other existing and future unsecured
and unsubordinated indebtedness of the Issuer, subject to certain statutory
exceptions in the event of liquidation upon insolvency.

     This Note, and any Note or Notes issued upon transfer or exchange hereof,
is issuable only in fully registered form, without coupons, and, if denominated
in U.S. dollars, unless otherwise stated above, is issuable only in
denominations of U.S. $1,000 and any integral multiple of U.S. $1,000 in excess
thereof. If this Note is denominated in a Specified Currency other than U.S.
dollars, then, unless a higher minimum denomination is required by applicable
law, it is issuable only in denominations of the equivalent of U.S. $1,000
(rounded to an integral multiple of 1,000 units of such Specified Currency), or
any amount in excess thereof which is an integral multiple of 1,000 units of
such Specified Currency, as determined by reference to the noon dollar buying
rate in The City of New York for cable transfers of such Specified Currency
published by the Federal


                                      A-27
<PAGE>


Reserve Bank of New York (the "Market Exchange Rate") on the Business Day
immediately preceding the date of issuance.

     The Trustee has been appointed registrar for the Notes, and the Trustee
will maintain at its office in The City of New York a register for the
registration and transfer of Notes. This Note may be transferred at the
aforesaid office of the Trustee by surrendering this Note for cancellation,
accompanied by a written instrument of transfer in form satisfactory to the
Issuer and the Trustee and duly executed by the registered holder hereof in
person or by the holder's attorney duly authorized in writing, and thereupon
the Trustee shall issue in the name of the transferee or transferees, in
exchange herefor, a new Note or Notes having identical terms and provisions and
having a like aggregate principal amount in authorized denominations, subject
to the terms and conditions set forth herein; provided, however, that the
Trustee will not be required (i) to register the transfer of or exchange any
Note that has been called for redemption in whole or in part, except the
unredeemed portion of Notes being redeemed in part, (ii) to register the
transfer of or exchange any Note if the holder thereof has exercised his right,
if any, to require the Issuer to repurchase such Note in whole or in part,
except the portion of such Note not required to be repurchased, or (iii) to
register the transfer of or exchange Notes to the extent and during the period
so provided in the Senior Indenture with respect to the redemption of Notes.
Notes are exchangeable at said office for other Notes of other authorized
denominations of equal aggregate principal amount having identical terms and
provisions. All such exchanges and transfers of Notes will be free of charge,
but the Issuer may require payment of a sum sufficient to cover any tax or
other governmental charge in connection therewith. All Notes surrendered for
exchange shall be accompanied by a written instrument of transfer in form
satisfactory to the Issuer and the Trustee and executed by the registered
holder in person or by the holder's attorney duly authorized in writing. The
date of registration of any Note delivered upon any exchange or transfer of
Notes shall be such that no gain or loss of interest results from such exchange
or transfer.

     In case this Note shall at any time become mutilated, defaced or be
destroyed, lost or stolen and this Note or evidence of the loss, theft or
destruction thereof (together with the indemnity hereinafter referred to and
such other documents or proof as may be required in the premises) shall be
delivered to the Trustee, the Issuer in its discretion may execute a new Note
of like tenor in exchange for this Note, but, if this Note is destroyed, lost
or stolen, only upon receipt of evidence satisfactory to the Trustee and the
Issuer that this Note was destroyed or lost or stolen and, if required, upon
receipt also of indemnity satisfactory to each of them. All expenses and
reasonable charges associated with procuring such indemnity and with the
preparation, authentication and delivery of a new Note shall be borne by the
owner of the Note mutilated, defaced, destroyed, lost or stolen.

     The Senior Indenture provides that (a) if an Event of Default (as defined
in the Senior Indenture) due to the default in payment of principal of,
premium, if any, or interest on, any series of debt securities issued under the
Senior Indenture, including the series of Senior Medium-Term Notes of which
this Note forms a part, or due to the default in the performance or breach of
any other covenant or warranty of the Issuer applicable to the debt securities
of such series but not applicable to all outstanding debt securities issued
under the Senior Indenture shall have occurred and be continuing, either the
Trustee or the holders of not less than 25% in aggregate principal amount of
the outstanding debt securities of each affected series, voting as one class,
by notice in


                                      A-28
<PAGE>


writing to the Issuer and to the Trustee, if given by the securityholders, may
then declare the principal of all debt securities of all such series and
interest accrued thereon to be due and payable immediately and (b) if an Event
of Default due to a default in the performance of any other of the covenants or
agreements in the Senior Indenture applicable to all outstanding debt
securities issued thereunder, including this Note, or due to certain events of
bankruptcy, insolvency or reorganization of the Issuer, shall have occurred and
be continuing, either the Trustee or the holders of not less than 25% in
aggregate principal amount of all outstanding debt securities issued under the
Senior Indenture, voting as one class, by notice in writing to the Issuer and
to the Trustee, if given by the securityholders, may declare the principal of
all such debt securities and interest accrued thereon to be due and payable
immediately, but upon certain conditions such declarations may be annulled and
past defaults may be waived (except a continuing default in payment of
principal or premium, if any, or interest on such debt securities) by the
holders of a majority in aggregate principal amount of the debt securities of
all affected series then outstanding.

     If the face hereof indicates that this Note is subject to "Modified
Payment upon Acceleration or Redemption," then (i) if the principal hereof is
declared to be due and payable as described in the preceding paragraph, the
amount of principal due and payable with respect to this Note shall be limited
to the aggregate principal amount hereof multiplied by the sum of the Issue
Price specified on the face hereof (expressed as a percentage of the aggregate
principal amount) plus the original issue discount amortized from the Interest
Accrual Date to the date of declaration, which amortization shall be calculated
using the "interest method" (computed in accordance with generally accepted
accounting principles in effect on the date of declaration), (ii) for the
purpose of any vote of securityholders taken pursuant to the Senior Indenture
prior to the acceleration of payment of this Note, the principal amount hereof
shall equal the amount that would be due and payable hereon, calculated as set
forth in clause (i) above, if this Note were declared to be due and payable on
the date of any such vote and (iii) for the purpose of any vote of
securityholders taken pursuant to the Senior Indenture following the
acceleration of payment of this Note, the principal amount hereof shall equal
the amount of principal due and payable with respect to this Note, calculated
as set forth in clause (i) above.

     If the face hereof indicates that this Note is subject to "Tax Redemption
and Payment of Additional Amounts," this Note may be redeemed, as a whole, at
the option of the Issuer at any time prior to maturity, upon the giving of a
notice of redemption as described below, at a redemption price equal to 100% of
the principal amount hereof, together with accrued interest to the date fixed
for redemption (except that if this Note is subject to "Modified Payment upon
Acceleration or Redemption," such redemption price would be limited to the
aggregate principal amount hereof multiplied by the sum of the Issue Price
specified on the face hereof (expressed as a percentage of the aggregate
principal amount) plus the original issue discount amortized from the Interest
Accrual Date to the date of redemption, which amortization shall be calculated
using the "interest method" (computed in accordance with generally accepted
accounting principles in effect on the date of redemption) (the "Amortized
Amount")), if the Issuer determines that, as a result of any change in or
amendment to the laws, or any regulations or rulings promulgated thereunder, of
the United States or of any political subdivision or taxing authority thereof
or therein affecting taxation, or any change in official position regarding the
application or interpretation of such laws, regulations or rulings, which
change or amendment becomes effective on or after the Initial Offering Date
hereof, the Issuer has or will become obligated to pay Additional Amounts, as
defined below, with respect to this Note


                                      A-29
<PAGE>


as described below. Prior to the giving of any notice of redemption pursuant to
this paragraph, the Issuer shall deliver to the Trustee (i) a certificate
stating that the Issuer is entitled to effect such redemption and setting forth
a statement of facts showing that the conditions precedent to the right of the
Issuer to so redeem have occurred, and (ii) an opinion of independent legal
counsel satisfactory to the Trustee to such effect based on such statement of
facts; provided that no such notice of redemption shall be given earlier than
60 calendar days prior to the earliest date on which the Issuer would be
obligated to pay such Additional Amounts if a payment in respect of this Note
were then due.

     Notice of redemption will be given not less than 30 nor more than 60
calendar days prior to the date fixed for redemption or within the Redemption
Notice Period specified on the face hereof, which date and the applicable
redemption price will be specified in the notice.

     If the face hereof indicates that this Note is subject to "Tax Redemption
and Payment of Additional Amounts," the Issuer will, subject to certain
exceptions and limitations set forth below, pay such additional amounts (the
"Additional Amounts") to the holder of this Note who is a United States Alien
as may be necessary in order that every net payment of the principal of and
interest on this Note and any other amounts payable on this Note, after
withholding or deduction for or on account of any present or future tax,
assessment or governmental charge imposed upon or as a result of such payment
by the United States, or any political subdivision or taxing authority thereof
or therein, will not be less than the amount provided for in this Note to be
then due and payable. The Issuer will not, however, make any payment of
Additional Amounts to any such holder who is a United States Alien for or on
account of:

          (a) any present or future tax, assessment or other governmental
     charge that would not have been so imposed but for (i) the existence of
     any present or former connection between such holder, or between a
     fiduciary, settlor, beneficiary, member or shareholder of such holder, if
     such holder is an estate, a trust, a partnership or a corporation for
     United States federal income tax purposes, and the United States,
     including, without limitation, such holder, or such fiduciary, settlor,
     beneficiary, member or shareholder, being or having been a citizen or
     resident thereof or being or having been engaged in a trade or business or
     present therein or having, or having had, a permanent establishment
     therein or (ii) the presentation by or on behalf of the holder of this
     Note for payment on a date more than 15 calendar days after the date on
     which such payment became due and payable or the date on which payment
     thereof is duly provided for, whichever occurs later;

          (b) any estate, inheritance, gift, sales, transfer, excise or
     personal property tax or any similar tax, assessment or governmental
     charge;

          (c) any tax, assessment or other governmental charge imposed by
     reason of such holder's past or present status as a personal holding
     company or foreign personal holding company or controlled foreign
     corporation or passive foreign investment company with respect to the
     United States or as a corporation which accumulates earnings to avoid
     United States federal income tax or as a private foundation or other
     tax-exempt organization or a bank receiving interest under Section
     881(c)(3)(A) of the Internal Revenue Code of 1986, as amended;


                                      A-30
<PAGE>


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

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

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

          (g) any tax, assessment or other governmental charge imposed by
     reason of such holder's past or present status as the actual or
     constructive owner of 10% or more of the total combined voting power of
     all classes of stock entitled to vote of the Issuer or as a direct or
     indirect subsidiary of the Issuer; or

          (h) any combination of items (a), (b), (c), (d), (e), (f) or (g).

In addition, the Issuer shall not be required to make any payment of Additional
Amounts (i) to any such holder where such withholding or deduction is imposed
on a payment to an individual and is required to be made pursuant to any law
implementing or complying with, or introduced in order to conform to, any
European Union Directive on the taxation of savings; or (ii) by or on behalf of
a holder who would have been able to avoid such withholding or deduction by
presenting this Note or the relevant coupon to another Paying Agent in a member
state of the European Union. Nor shall the Issuer pay Additional Amounts with
respect to any payment on this Note to a United States Alien who is a fiduciary
or partnership or other than the sole beneficial owner of such payment to the
extent such payment would be required by the laws of the United States (or any
political subdivision thereof) to be included in the income, for tax purposes,
of a beneficiary or settlor with respect to such fiduciary or a member of such
partnership or a beneficial owner who would not have been entitled to the
Additional Amounts had such beneficiary, settlor, member or beneficial owner
been the holder of this Note.

     The Senior Indenture permits the Issuer and the Trustee, with the consent
of the holders of not less than a majority in aggregate principal amount of the
debt securities of all series issued under the Senior Indenture then
outstanding and affected (voting as one class), to execute supplemental
indentures adding any provisions to or changing in any manner the rights of the
holders of each series so affected; provided that the Issuer and the Trustee
may not, without the consent of the holder of each outstanding debt security
affected thereby, (a) extend the final maturity of any such debt security, or
reduce the principal amount thereof, or reduce the rate or extend the time of
payment of interest thereon, or reduce any amount payable on redemption
thereof, or change the currency of payment thereof, or modify or amend the
provisions for conversion of any currency into any other currency, or modify or
amend the provisions for 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


                                      A-31
<PAGE>


than as provided in the antidilution provisions or other similar adjustment
provisions of the debt securities or otherwise in accordance with the terms
thereof), or impair or affect the rights of any holder to institute suit for
the payment thereof or (b) reduce the aforesaid percentage in principal amount
of debt securities the consent of the holders of which is required for any such
supplemental indenture.

     Except as set forth below, if the principal of, premium, if any, or
interest on this Note is payable in a Specified Currency other than U.S.
dollars and such Specified Currency is not available to the Issuer for making
payments hereon due to the imposition of exchange controls or other
circumstances beyond the control of the Issuer or is no longer used by the
government of the country issuing such currency or for the settlement of
transactions by public institutions within the international banking community,
then the Issuer will be entitled to satisfy its obligations to the holder of
this Note by making such payments in U.S. dollars on the basis of the Market
Exchange Rate on the date of such payment or, if the Market Exchange Rate is
not available on such date, as of the most recent practicable date; provided,
however, that if the euro has been substituted for such Specified Currency, the
Issuer may at its option (or shall, if so required by applicable law) without
the consent of the holder of this Note effect the payment of principal of,
premium, if any, or interest on, any Note denominated in such Specified
Currency in euro in lieu of such Specified Currency in conformity with legally
applicable measures taken pursuant to, or by virtue of, the Treaty establishing
the European Community, as amended. Any payment made under such circumstances
in U.S. dollars or euro where the required payment is in an unavailable
Specified Currency will not constitute an Event of Default. If such Market
Exchange Rate is not then available to the Issuer or is not published for a
particular Specified Currency, the Market Exchange Rate will be based on the
highest bid quotation in The City of New York received by the Exchange Rate
Agent at approximately 11:00 a.m., New York City time, on the second Business
Day preceding the date of such payment from three recognized foreign exchange
dealers (the "Exchange Dealers") for the purchase by the quoting Exchange
Dealer of the Specified Currency for U.S. dollars for settlement on the payment
date, in the aggregate amount of the Specified Currency payable to those
holders or beneficial owners of Notes and at which the applicable Exchange
Dealer commits to execute a contract. One of the Exchange Dealers providing
quotations may be the Exchange Rate Agent unless the Exchange Rate Agent is an
affiliate of the Issuer. If those bid quotations are not available, the
Exchange Rate Agent shall determine the market exchange rate at its sole
discretion.

     The "Exchange Rate Agent" shall be Morgan Stanley & Co. Incorporated,
unless otherwise indicated on the face hereof.

     All determinations referred to above made by, or on behalf of, the Issuer
or by, or on behalf of, the Exchange Rate Agent shall be at such entity's sole
discretion and shall, in the absence of manifest error, be conclusive for all
purposes and binding on holders of Notes and coupons.

     So long as this Note shall be outstanding, the Issuer will cause to be
maintained an office or agency for the payment of the principal of and premium,
if any, and interest on this Note as herein provided in the Borough of
Manhattan, The City of New York, and an office or agency in 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


                                      A-32
<PAGE>


there shall be such an agency, the Issuer shall keep the Trustee advised of the
names and locations of such agencies, if any are so designated. If any European
Union Directive on the taxation of savings comes into force, the Issuer will,
to the extent possible as a matter of law, maintain a Paying Agent in a member
state of the European Union that will not be obligated to withhold or deduct
tax pursuant to any such Directive or any law implementing or complying with,
or introduced in order to conform to, such Directive.

     With respect to moneys paid by the Issuer and held by the Trustee or any
Paying Agent for payment of the principal of or interest or premium, if any, on
any Notes that remain unclaimed at the end of two years after such principal,
interest or premium shall have become due and payable (whether at maturity or
upon call for redemption or otherwise), (i) the Trustee or such Paying Agent
shall notify the holders of such Notes that such moneys shall be repaid to the
Issuer and any person claiming such moneys shall thereafter look only to the
Issuer for payment thereof and (ii) such moneys shall be so repaid to the
Issuer. Upon such repayment all liability of the Trustee or such Paying Agent
with respect to such moneys shall thereupon cease, without, however, limiting
in any way any obligation that the Issuer may have to pay the principal of or
interest or premium, if any, on this Note as the same shall become due.

     No provision of this Note or of the Senior Indenture shall alter or impair
the obligation of the Issuer, which is absolute and unconditional, to pay the
principal of, premium, if any, and interest on this Note at the time, place,
and rate, and in the coin or currency, herein prescribed unless otherwise
agreed between the Issuer and the registered holder of this Note.

     Prior to due presentment of this Note for registration of transfer, the
Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the
holder in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and none of the Issuer, the
Trustee or any such agent shall be affected by notice to the contrary.

     No recourse shall be had for the payment of the principal of, premium, if
any, or the interest on this Note, for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Senior Indenture or any
indenture supplemental thereto, against any incorporator, shareholder, officer
or director, as such, past, present or future, of the Issuer or of any
successor corporation, either directly or through the Issuer or any successor
corporation, whether by virtue of any constitution, statute or rule of law or
by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the consideration for
the issue hereof, expressly waived and released.

     This Note shall for all purposes be governed by, and construed in
accordance with, the laws of the State of New York.

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


                                      A-33
<PAGE>


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


                                      A-34
<PAGE>


                                 ABBREVIATIONS

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

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

     UNIF GIFT MIN ACT - __________________ Custodian _________________________
                               (Minor)                         (Cust)

     Under Uniform Gifts to Minors Act ________________________________
                                                  (State)

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

                            -----------------------


                                      A-35
<PAGE>


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


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

_______________________________________________________________________________

_______________________________________________________________________________

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

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


Dated: _______________________


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


                                      A-36
<PAGE>


                           OPTION TO ELECT REPAYMENT

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

_______________________________________________________________________________

_______________________________________________________________________________

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


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


                                      A-37